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[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this 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 Duffy, 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.\nWe hope you and your families are safe and healthy.\nWill is an extremely important member of the Walker & Dunlop team, having joined W&D right out of college and risen to become one of our most successful bankers and team members.\nThere's another member of our team, Howard Smith, who also joined Walker & Dunlop right out of college, also rose to become one of our most successful bankers, and has been my partner in building this business as our President.\nHoward will celebrate 40 years at Walker & Dunlop on November 24.\nIt is people like Will and Howard that make Walker & Dunlop what it is, and I want to reiterate our condolences to Will and the entire Baker family for their loss.\nAs a company that finances millions of safe, affordable apartment homes and understands the direct correlation between vibrant, integrated communities and economic growth; we remain very focused on the COVID pandemic and issues of racial justice that have impacted our country so dramatically over the past eight months.\nWe have continued to provide credit to the multifamily industry as landlords have changed how they operate their buildings due to the pandemic and also dealt with rental forbearance.\nWe have raised and donated money to nonprofits that focus on healthcare and housing.\nAnd we have made hires and changes to our corporate leadership and governance that will continue to make Walker & Dunlop a leader on issues of racial and gender diversity and economic opportunity.\nAnd while doing all of this in the midst of the pandemic and social unrest, our company continues to perform extraordinarily.\nOur team, the W&D brand, the investments we have made in technology, and our long-standing focus on multifamily housing have allowed us to not only weather the storms we have seen in 2020 but make investments that will drive continued growth and outperformance over the coming years.\nOur financial performance in Q3 was exceptional, as we grew market share and continued expanding our client base.\nAs you can see on slide three, we generated total revenues of $247 million, up 16% from the third quarter of last year and diluted earnings per share of $1.66, up 19% year-over-year.\nThose growth rates are dramatic given the strength of our performance last year and all that has transpired this year to impact our business model, a pullback in credit to office, retail and hospitality assets, a prolonged pause in the property sales market, remote work and a dramatic drop in interest rates, which has diminished the returns we earn on escrow deposits and balance sheet loans.\nYet even with those headwinds, our team has found ways to continue growing and gaining market share.\nAs shown on slide four, on a year-to-date basis, of an exceedingly successful 2019, we have grown total revenues by 22% and diluted earnings per share by 24%.\nMany Walker & Dunlop investors have benefited over the years from our company's outperformance versus our direct competitors and industry.\nFor example, slide five shows W&D's performance versus the median of the S&P 600 Financials Index over the past several years.\nAs you can see, W&D has grown significantly faster than the index in total revenues and earnings over both the past three and five years.\nYet as the right side of this slide shows, the median price to earnings ratio for the S&P 600 Financials Index is 16.5, while it is 8.5 for Walker & Dunlop.\nAs W&D continues to outperform, it is our strong belief that our multiple will trend closer and closer to the S&P Financials Index.\nAs we have scaled our business, we have diversified our capital sources and the volumes of lending we do on all commercial real estate asset classes.\nYou can see on this slide that our Q1 lending was done 57% with the agencies and 43% with other capital sources.\nYet as the pandemic hit in Q2, private capital fled the market, and the agencies assumed their role of providing consistent capital flows to the multifamily industry.\nAs a result, in Q2, our agency volumes expanded to 77% of total financing, while capital from banks, CMBS and insurance companies contracted to only 23%.\nThat trend continued into Q3.\n75% of the $7.3 billion of debt financing we did in Q3 was with the agencies on multifamily properties, while only $1.8 billion or 25% was with banks, life insurance companies and other sources.\nThere are two key points inside this data.\nFirst, our business model and team allowed us to deploy a huge amount of agency capital during the pandemic that has driven our tremendous financial performance; and second, while deploying $1.8 billion of capital from banks, CMBS and life companies during Q3 is a significant accomplishment, we lend over $3 billion with these capital sources last year during Q3, showing the significant upside to our transaction volumes as the market normalizes.\nOur multifamily property sales business rebounded nicely in Q3.\nWe started the year with a very strong first quarter sales volume of $1.7 billion and then watched the market collapse in Q2, closing only $447 million of sales.\nBut due to our team, brand and technology investments, we saw our multifamily property sales volume rebound to $1.1 billion in Q3 as investors reentered the market with conviction.\nWe have a significant pipeline moving into Q4 and expect to close $2 billion to $3 billion in property sales volume in the quarter, bringing our annual total to over $5 billion, which is a significant accomplishment given the market fluctuations this year.\nOur lending and brokerage volumes and overall financial performance in 2020 are due to having the very best people, brand and technology in the commercial real estate industry.\nWe have continued to add the very best bankers and brokers to our team despite the impact of the pandemic, bringing on new brokerage teams in Austin, Miami, Nashville and San Diego and new bankers in New York, Dallas and Columbus so far in 2020.\nWe have a distinct competitive advantage against our larger competitors today, where our domestic focus on multifamily is generating strong financial performance, cash flow and the ability to continue investing in our platform to drive growth and market share gains.\nWinning and closing the largest multifamily financing likely to be done in 2020, the $2.4 billion Southern Management deal that we closed in Q2; was a marquee deal, where Walker & Dunlop went head-to-head against our three largest competitors and won.\nEvery subsequent time, we have gone head-to-head with one of those three competitors we have been able to reference that deal and underscore how and why W&D won.\nOur email distribution list has expanded from 19,000 distinct email addresses at the beginning of the pandemic to over 120,000 today.\nFinally, as our team and brand have expanded, our investment in and use of technology has continued to differentiate Walker & Dunlop and allowed us to gain market share.\nAs you can see on slide seven, we have taken our market share with the GSEs from 10% last year to 13% this year.\nOur growth in 2020 has been due to a combination of exceptional service from our talented bankers, brokers and underwriters, the breadth of our brand and the insights our technology provides to both us and our clients.\nIn the third quarter, 69% of the loans we've refinanced were new to Walker & Dunlop.\nLet me repeat that number.\n69% of the loans we refinanced in Q3 2020 were not from our servicing portfolio and were either new loans from an existing Walker & Dunlop client or new loans from a new client.\nAnd as it relates to new clients, 25% of our total financing volume in the third quarter was with new clients to Walker & Dunlop.\nWe will continue to grow our client base and market share by leveraging off our incredible team, brand and technology.\nWhile the current market conditions make the success of our technology strategy, most apparent in our debt financing business, we have also been focused on integrating the data science and data analytics that power our multifamily appraisal business, Apprise throughout our platform.\nAt its core, our business is a valuation business, relying on value to make loans, sell assets and manage our servicing portfolio, and we have been investing heavily in developing and scaling our faster and more accurate method for valuing multifamily properties.\nWe are extremely excited about what the integration of this technology will do for our business over the next several years.\nOur third quarter financial performance once again demonstrates the strength and durability of the Walker & Dunlop business model, as we continue to perform incredibly well during these challenging times.\nOur combination of steady cash generation, extremely strong credit fundamentals and long-term focus on providing exceptional multifamily financing and sales capabilities continue to generate above-market growth in top and bottom line performance.\nAs evidenced by the 16% year-over-year increase in revenue during the quarter to $247 million and 19% growth in diluted earnings per share to $1.66.\nIn addition, return on equity for the quarter was 20%, up from 18% last year, while operating margin held steady at 28%.\nQ3 adjusted EBITDA was $45.2 million, down from $54.5 million in Q3 of last year.\nThere is significant upside to EBITDA in 2021 and beyond as the cash-generating components of our business increase.\nFirst, our servicing portfolio has grown by 13% over the past year and now stands at $103 billion, as you can see on slide eight.\nIn addition, the weighted average servicing fee on the portfolio has increased to 23.4 basis points at the end of Q3.\nWe earned $60 million of high-margin cash servicing fees in Q3, up 10% from last year, and those revenues will only continue to grow with the increase to both the portfolio and the weighted average servicing fee.\nSecond, volumes from our debt brokerage and property sales teams have been constrained in 2020 due to the impacts of the pandemic on the commercial real estate market.\nAs a result, we have not seen the boost in adjusted EBITDA that these cash-generating businesses can provide, when they are operating with their full capacity as we saw in the first quarter of this year.\nAnd finally, while we expect interest rates to remain low in the near term, any future increase in short-term rates will have a positive impact on the interest income we earned from our now $2.8 billion of escrow deposits, a balance we expect will continue growing as our overall servicing portfolio grows.\nWe ended the quarter with close to $300 million of cash on the balance sheet, further bolstering our already strong liquidity.\nDuring the quarter, we repurchased 254,000 shares at an average price of $53.12 per share, utilizing $13.5 million of our $50 million authorization.\nWe felt that repurchasing stock at these levels presented a very attractive return for our shareholders.\nBased on our future outlook for the business, including our expectations for continued strong earnings growth, the current exceptional credit performance of our portfolio and the significant reserves we've already taken to cover any future losses.\nWe currently have $26 million available for share repurchases to use between now and early February of next year.\nAnd yesterday, our Board of Directors approved a dividend of $0.36 per share payable to shareholders of record as of November 13.\nI think it is important to point out that many companies have had to eliminate or significantly reduce their dividends during this crisis, while we have been able to maintain ours due to the underlying strength of our business model.\nWe fully expect to increase the dividend rate next quarter as we have done each year since we instituted it in 2018.\nWe remain active in seeking out growth opportunities in the market, including recruiting and M&A opportunities as our financial performance and liquidity position give us the ability to take an offensive stance that will let us set us up for continued growth in the future.\nAs I mentioned, we continue to see fantastic credit performance in the portfolio.\nAt the end of the quarter, we had only one $6 million Fannie Mae loan still in forbearance.\nThat is one loan in a portfolio of over 2,500 loans, which, by the way, we believe with our production volumes this year is now the largest Fannie Mae portfolio in the country.\nThird quarter provision expense was $3.5 million and included a $2.4 million charge related to an increase to the reserve on the one loan in our interim loan portfolio that defaulted in the first quarter of last year.\nThe remaining $1.1 million of the quarterly provision expense was driven by the growth in the at-risk portfolio during Q3 as we did not make any changes to our loan loss assumptions during the quarter.\nThere were no other delinquent loans in our at-risk servicing or interim loan portfolios at the end of September.\nThis performance is a testament to the durability of the agency model and the strength of multifamily lending.\nAs detailed on slide nine, in our portfolio of 5,345 Fannie, Freddie and HUD loans, we had only nine loans in forbearance at September 30 or 0.2% of the entire agency portfolio.\nAnd as I noted earlier, we only have credit risk on one of those loans.\nWe feel great about the performance of the portfolio so far, but it's still too early to declare victory.\nThe unemployment rate continues to remain at a high level, and the economy is not even close to performing at pre pandemic levels.\nWe continue to believe that meaningful jobs gains are necessary to stabilize the economy before we can put credit in the rearview mirror.\nIn the meantime, we continue to think the current reserve balance is sufficient to absorb any losses that may come through in the portfolio.\nWe had an amazing first three quarters of the year and are carrying a lot of momentum into the fourth quarter.\nThe pipeline looks great and includes a continued rebound in both debt brokerage and property sales volumes.\nAfter posting a gain on sale margin of 223 basis points in Q3, we expect the increase in debt brokerage volumes and continued strong agency originations to deliver a gain on sale margin in the range of 200 to 220 basis points in Q4.\nAnd with year-to-date earnings-per-share growth of 24%, we are well on track to delivering double-digit earnings growth for the seventh year of our 10 years as a public company.\nOur portfolio is performing extremely well.\nOur transaction platform is taking market share from the competition, and we amassed a significant cash position, all of which gives us flexibility to both return capital to shareholders through our quarterly dividend and share buybacks and evaluate market opportunities that will position us for continued growth over the next several years.\nAs borne out by the stats that Willy went over, related to our historical performance relative to the S&P 600 financials, our business model consistently demonstrates that it is built to sustain market downturns due to our focus on multifamily, access to countercyclical capital, and the strong credit standards that underpin our servicing portfolio; while our business also performs well when times are good as a result of our great people, strong brand and investments in growth in technology.\nAs we close out on 2020 and look ahead, we will continue to leverage this winning formula to power our future success.\nOur exceptional performance over the past several years and through the first three quarters of 2020 puts us at the doorstep of achieving almost all of the component parts of the five-year growth plan that we set out at the end of 2015 called Vision 2020.\nOur long-standing mission has been to build the premier commercial real estate finance company in the United States.\nAnd as we have set ambitious growth objectives to bring us closer to achieving that goal, exceptional financial results have followed.\nThe first part of Vision 2020 was to grow our debt financing volume to over $30 billion by the end of 2020.\nOn a trailing 12-month basis, we are now at $31.4 billion of debt financing and are projecting that we end 2020 at a similar annual run rate.\nAs you can see on slide 11, over the past five years, we have grown annual loan originations at a 14% compound annual growth rate, and we believe we continue that growth trajectory, given the people, brand and technology we have built.\nAs the right-hand side of this slide shows, we have grown our servicing portfolio at a 16% compound annual growth rate, which pushed the portfolio over the $100 billion mark early in the third quarter, achieving the second component of Vision 2020.\nWe have doubled the size of our servicing portfolio from $50 billion to over $100 billion over the past five years and now stand as the eighth largest commercial loan servicer in the United States.\nThe third objective was to grow our multifamily property sales volume to over $8 billion a year.\nAnd while we will come up short of that goal, as you can see on Slide 12, we have grown that business from $1.5 billion in 2015 to $5.3 billion for the trailing 12 months ending Q3 2020, a 28% compound annual growth rate.\nWe are seeing acquisition volume pick up as institutional capital begins to reenter the market and investors look for opportunities to invest in multifamily properties.\nThe fourth component of Vision 2020 was to build an $8 billion asset management platform.\nAnd while we won't achieve that goal after entering that business later than we anticipated with the acquisition of JCR Capital in 2018.\nAs you can see on the right-hand side of the slide, since setting our Vision 2020 objective, we have grown our AUM to $1.9 billion, and we continue to focus on building out this area of our business over the next several years.\nWhen we established Vision 2020 in 2015, the underlying goal was to take W&D's annual revenues from $468 million to $1 billion.\nAnd as we have seen, since we started establishing bold, ambitious five-year growth plans for Walker & Dunlop back in 2007, with our team, focus and determination, we have consistently achieved the majority of our goals.\nAs shown on slide 13, over the trailing 12 months, we have generated $951 million of total revenues.\nAnd over the last two quarters, we are on a $1 billion annual run rate, an incredible accomplishment for our team.\nSo with Vision 2020 behind us, the drive to '25 begins now.\nOur next five-year bold, ambitious, strategic plan will be rolled out at our Investor Day on December 10.\nBut I will share a number of component parts we are focusing on today.\nAt our core W&D finances communities, places where Americans shop, work, play and live.\nAnd our future growth plan is based upon expanding our impact on American communities as we continue to scale our business and deliver strong financial results.\nThe first component will be to become the number one multifamily lender in the country; after finishing 2019 as the fifth largest with $16.7 billion of lending volume.\nThree of the companies ahead of us in the league tables have specific capabilities that we are going to invest in to advance in the league tables.\nJPMorgan is the largest multifamily lender at $22.7 billion of financing in 2019, with the majority of that lending done on small loans.\nWe are a licensed small loan lender with both Fannie Mae and Freddie Mac, and we will invest in technology solutions that will allow us to scale our small loan origination business dramatically.\nWells Fargo finished 2019 as the second largest multifamily lender in the country, leveraging off their commercial and investment banking platforms.\nWe will build investment banking capabilities that will be married up with our scale lending platform to expand the services we provide to our clients and grow revenues.\nFinally, CBRE was the third largest multifamily lender in 2019; using their position as the largest multifamily property sales brokerage firm to drive financing volumes.\nWalker & Dunlop will continue to recruit the very best investment sales brokers to our company as well as continue to invest in cutting-edge technology to become the largest multifamily property sales broker in the country.\nAll of these investments in people and technology will drive revenue and profit growth and make Walker & Dunlop the number one multifamily lender in the country.\nAnd at the same time, we will be financing tens of thousands of safe, affordable homes for Americans.\nThe investments we make to achieve number one in multifamily lending will also help us expand into financing other commercial real estate asset classes, where people work, shop and play.\nWe will continue to add debt brokers to our team, who can finance office, retail and hospitality assets with third-party capital as well as capital Walker & Dunlop raises and controls.\nThe technology investments we continue to make in Apprise and the small balance lending business will allow us to provide insights to our clients that will power new investment banking capabilities such as valuation, capital raising and M&A advisory.\nFinally, we will continue to focus on recruiting the very best and most diverse workforce to Walker & Dunlop to allow us to meet our clients' needs with exceptional service and execution.\nThese are extremely challenging times for our world, country and industry.\nThere are Americans suffering and dying from COVID-19.\nThere are millions of unemployed Americans who want to get back to work.\nAnd there are clients of Walker & Dunlop who have hotels, retail properties and office buildings that are suffering due to the economic downturn.\nWe are mindful of all of these challenges and remain focused on providing capital and advisory services to our clients to help them weather this storm, while we continue to invest in our people, brand, technology and to finance communities where people work, shop, play and live.\nWe have an incredible track record of growth and profit since our IPO in 2010.\nAnd with the scale we have achieved by accomplishing Vision 2020 and the investments we will continue to make, we have the opportunity to scale our company dramatically over the coming years.\nWe have done so much right, and as reflected in our growth, client satisfaction, market share and financial results.\n", "role": "user" }, { "content": "compname reports q3 earnings per share $1.66.\ncompname reports 21% growth in earnings on quarterly revenues of $247 million.\nq3 earnings per share $1.66.\nq3 revenue $247 million versus refinitiv ibes estimate of $206.7 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Across almost every measure, 2020 was a year of record performance for Walker & Dunlop during a tremendously challenging year for our country and the world.\nThe COVID pandemic, and it's far-reaching impact on jobs, the global economy and the health of colleagues and loved ones was felt by all Americans.\nAnd the issues of racial justice and a tumultuous political season left enduring impacts on our society.\nYet despite the many challenges that 2020 presented, the W&D team continued to step-up for our clients, our communities and for one another every day.\nAfter an exceedingly strong Q1 followed by the transition to remote work in Q2, the W&D team adapted to selling, underwriting and closing financings and property sales in Q3 and Q4 to generate record total transaction volume of $41.1 billion for the year, up 29% from 2019.\nWe closed out 2020 with record Q4 revenues of $350 million, up 61% over -- year-over-year pushing our annual total revenues to $1.1 billion.\nAs long-term investors in Walker & Dunlop know, we have established bold, highly ambitious five-year growth plans for our company.\nAnd in 2015, established the goal of more than doubling our revenues to $1 billion by 2020.\nAs you can see on this slide, we grew total revenues an impressive 18% compound annual growth rate over the five-year period and grew debt financing volumes by a 17% compound annual growth rate to end 2020 at $35 billion.\nAnd our servicing portfolio more than doubled over the five-year period to $107 billion, a 16% compound annual growth rate.\nFinally, we grew our property sales business at a compound annual growth rate of 32%.\nAnd even with the pandemic-induced shutdown of property sales for most of Q2 and Q3, we increased our volume to $6.1 billion in 2020, a truly spectacular 14% growth rate over 2019.\nAll of this growth and record transaction volume generated 2020 diluted earnings per share of $7.69, up 41% over 2019.\nAs you can see on this slide, we have grown earnings per share at an impressive compound annual growth rate of 24% over the past five years, while maintaining our weighted average diluted share count at around 31 million shares with less than 1% increase in diluted shares over the period due to prudent management of our share count.\nAnd this consistent and dramatic growth in EPS, combined with our annual increase to our dividend that Steve will mention momentarily, has driven total shareholder return of 46% over one year, 107% over three years and 241% over five years, handily beating the market and our peer group.\nI've been told time and time again that investors don't care about what you did yesterday, only what you are going to do tomorrow.\nAnd while I both understand and appreciate that, I think it is extremely important for investors in Walker & Dunlop to hear and see the incredible compounding growth numbers of Walker & Dunlop over the past five years.\nBecause while history rarely repeats itself, as Mark Twain once said, it does often rhyme.\nAnd as a high-growth company with a massive market opportunity, an incredibly talented team of professionals, our growth over the coming years will continue to rhyme with the past.\nDriving our performance in 2020 was the combination of our exceptional people, expanding brand and actionable technology, which all came together to transform our business and produce exceptional results.\nDespite the challenges presented by the remote work environment, our people continue to deliver and remain wildly productive.\nWe just hired employee number 1,000 at Walker & Dunlop.\nAnd while we have had headcount over the past several years, in conjunction with our dramatic growth in transaction volumes and servicing portfolio, we have maintained our industry-leading metric of over $1 million in revenue per employee.\nAnd while we now compete head-to-head with the largest commercial real estate finance and services firms, we have maintained the small company touch and feel that Walker & Dunlop was built upon by my grandfather and my father.\nThe combination of big company capabilities with small company touch and feel is a competitive advantage in the marketplace, which we aim to maintain going forward, whether we have 1,000 employees or 5,000 employees.\nOur website traffic grew by 80% in 2020.\nOur email list grew by over 500% and our PR media hits grew by over 400% last year, including an upswing in top-tier and broadcast media.\nCompared to last year, we are reaching an audience that is 8 times larger overall, bolstering our brand as the premier commercial real estate finance company in the United States.\nFinally, our investments in actionable technology came to life in 2020.\nWe began investing in databases several years ago, then acquired Enodo early in 2019 to apply machine learning to those databases, and then we turn that data over to our bankers and brokers.\nAnd the results with regard to new clients, and new transactions to Walker & Dunlop has been truly amazing.\nWhile many of our competitor firms were refinancing their own loan portfolios as interest rates dropped at the onset of the pandemic, 66% of our 2020 refinancing volume was new loans to Walker & Dunlop, 66%.\nAnd while technology and talented bankers and brokers generated that growth with existing clients, it was the combination of great bankers and brokers, technology and our expanding brand that allowed us to have 23% of our total transaction volume in 2020, be with new clients to Walker & Dunlop who had never worked with us before.\nThose are pretty astounding numbers during the year when face-to-face meetings and the traditional sales channel and processes did not exist.\nThat is the power of our people, brand and technology, and it sets us up exceedingly well for continued growth for many years to come.\nAnd then I'll come back to discuss our Drive to 2025 and what investors should expect to see over the coming years.\nWe ended 2020 with fantastic fourth quarter financial results, including record total transaction volume of $14.2 billion, up 45% year-over-year and record earnings of $2.59 per share, up an astounding 93% over Q4 of 2019.\nOur full year transaction volume of $41.1 billion is 29% higher than 2019, while record full year earnings per share of $7.69, increased 41% over the prior year.\nThe fact that these incredible results came in the midst of a pandemic, are a true testament to the resiliency of our business model and the hard work and dedication of our team.\nOur strong performance in the quarter and year shined through in our key metrics.\nOperating margin in Q4 was 34%, well above our target range of 27% to 30%, leading to full year operating margin of 30% for 2020.\nReturn on equity was 29% for the quarter and 23% for the full year, well above our annual goal of 18% to 20%.\nPersonnel expense for the quarter was 45% of revenue in line with Q4 of last year and was 43% for the full year, just slightly higher than 2019's 42% due to growth in commission and bonus expense resulting from our phenomenal performance in 2020.\nTotal transaction volume for the quarter included $2.8 billion of property sales volume, a 44% increase over last year and a quarterly record.\nThis pickup is notable given the challenging market dynamics that this part of our business faced in 2020 when the impacts of the pandemic caused buyers and sellers to exit the market for several months.\nA record volume in the quarter is indicative of a return to a robust multifamily acquisitions market that has moved past the market disruption that began in mid-March.\nThe attractiveness of multifamily assets will continue to drive investment into the space, and we expect to see a very healthy market and strong growth in multifamily property sales volume in 2021.\nOur fourth quarter debt financing volume was led by agency financing including a record quarter of $844 million of lending with HUD.\nDebt brokerage volume totaled $3.8 billion, down 3% from Q4 '19, but up significantly from the second and third quarters of 2020.\nThis is another notable pickup in an area of our business, which is very challenged for the better part of the year.\nWe expect that our debt brokerage business will continue to gain momentum as we move into 2021 and are excited for what our team can accomplish.\nBased on the strength of our debt financing volume in 2020, we grew our servicing portfolio by nearly $14 billion or 15% to $107 billion as of December 31, 2020.\nAs the portfolios continue to grow, the contractual cash servicing fees have grown along with it to $236 million in 2020, up 10% from 2019.\nThat growth rate accelerated as the year went on, with Q4 servicing fees increasing by 15% over last year to $63 million for the quarter.\nThis acceleration was due in part to the strong volumes in the second half of the year, but is primarily the result of a sizable increase in the average servicing fee for the portfolio to 24 basis points from 23.2 basis points at the beginning of the year.\nThis increase is significant when you consider the overall size of our portfolio, and is worth more than $8.5 million of additional annual cash revenue on a portfolio of $107 billion.\nThe combination of strong growth in both the portfolio and the weighted average servicing fee sets the stage for accelerated cash servicing fee growth in 2021.\nIn addition, the mortgage servicing rights related to the portfolio now have a fair value of over $1 billion, reflective of the significant future cash flow streams we will receive from the portfolio beyond just the next year.\nI also want to mention one other item related to our servicing operation.\nDuring the fourth quarter, we made the decision to remain with our existing servicing technology vendor.\nConsequently, we ended our planned conversion to a new servicing system, resulting in a $5.8 million charge to expense either we took during the quarter related to the write-off of previously capitalized software costs and a termination payment on the contract.\nWe do not expect to incur any additional costs associated with that contract going forward.\nDuring the fourth quarter, we recorded additional provision for credit losses of $5.5 million.\nJust more than half of that expense was driven by the strong growth in the at-risk portfolio during the quarter, while the other half relates to an increase in the specific reserves associated with the two student housing loans that defaulted in 2019 and our one interim loan that also defaulted in 2019.\nWe delivered record earnings in a year in which we have taken provision expense of $37 million, $30 million more than in all of 2019.\nWe have always prided ourselves in our exceptional and relatively conservative credit culture and the overall performance of our portfolio in 2020 with limited forbearance requests and no new defaults in our at-risk interim portfolios has been fantastic.\nHowever, COVID remains a significant uncertainty with respect to its impact on future employment levels and overall economic performance.\nAs a result, we don't believe any downward adjustment to our overall reserve balance is appropriate at this time.\n2020 adjusted EBITDA of $215.8 million was down 13% from 2019, primarily due to a significant year over decrease in escrow earnings, resulting from historically low interest rates during the year.\n2020's low interest rate environment reduced our annual escrow earnings to $18 million compared to $57 million in 2019.\nAs a reminder, we currently hold escrow deposits on loans that we service with an average balance of $2.8 billion, and we earn interest income tied to short-term rates on those deposits.\nEvery 25 basis point increase in the deposit rate translates into approximately $7 million of additional pre-tax earnings per year.\nWe ended the year with $321 million of cash on the balance sheet.\nAs shareholders in Walker & Dunlop know, we will continue to prioritize reinvesting our capital into the business to drive future growth opportunities.\nAs you will hear shortly when Willy lays out our Drive to 2025 objectives, maintaining our growth trajectory and achieving these ambitious goals will require investments in bankers and brokers, new business areas and technology.\nWe feel that we are in a very strong financial position that will allow us to continue deploying capital into our growth initiatives while also returning capital to shareholders.\nTo that end, our Board of Directors voted yesterday to increase our quarterly dividend payment to $0.50 per share, a 39% increase.\nThis is our third annual increase since we initiated the dividend in February of 2018 at $0.25 per share.\nThis results in a cumulative increase of 100% since we started the dividend.\nThis is a strong growth rate that reflects our fantastic financial performance during that period.\nThe current annualized dividend of $2 represents a payout ratio of 26% on 2020 net income and 29% on 2020 adjusted EBITDA, a level that we feel is appropriate given our expectations for continued growth in earnings and strong cash flow going forward.\nFinally, our Board authorized a share repurchase plan in the amount of $75 million to be executed over the next 12 months, giving us the ability to continue opportunistically buying back our stock.\nWe feel very well positioned to keep growing our business in 2021 by continuing to hire great people, leveraging our unique brand and making additional investments in technology, and we have established ambitious financial targets for the year.\nWe are again targeting double-digit growth in both earnings per share and adjusted EBITDA in 2021.\nThough we did not grow adjusted EBITDA at this rate in 2020, the increase in our servicing portfolio and average servicing fee during 2020 and our expectations for stronger debt brokerage and property sales volumes in 2021 should positively impact EBITDA.\nAnd while we believe the Fed is likely to keep short-term interest rates low for the foreseeable future, if there is any increase in short-term rates, our adjusted EBITDA will benefit from the increased interest we would earn from our escrow deposits.\nWe're raising our operating margin target range to 29% to 32% for 2021 and our return on equity range to 19% to 22% for the year.\nDuring 2020, we saw operating margin and ROE expansion in our business as we realized economies of scale and continue to closely manage our people and expenses, even while some parts of our business were not operating at full efficiency.\nAs a result, we raised the range for both metrics due to our expectations for continued growth in transaction volumes and particularly a return to normalcy in both debt brokerage and investment sales in 2021.\nWith respect to the first quarter of 2021, remember that last year included $2.1 billion of the Southern Management transaction.\nAbsent that, our pipeline compares favorably to Q1 of 2020 and the expected size of the market this year has us poised for another year of growth and financial success in 2021.\nI'm extremely pleased with our financial performance this year and our team's ability to come together during a difficult year to generate incredible results.\nWe are moving into 2021 with a renewed sense of energy and purpose as we drive toward our five-year financial targets.\nWe entered 2021 with strong momentum and confidence in our ability to deliver the ambitious financial targets that Steve just ran through.\nMultifamily has continued to outperform other commercial real estate asset classes in the pandemic and during this economic cycle.\nAmericans feel more tied to their homes today than ever before, and renters have gone to great lengths to continue making their rent payments and preserving their homes.\nAnd while Walker & Dunlop's market position in multifamily financing and sales is extremely strong, we also finance places where people work, shop and play.\nAnd that while work from home will impact work schedules, it will not do away with the need for office space.\nAnd that while the annual projection for 2021 is in line with 2020 around 50%, leisure travel could snap back quickly once herd immunity is thought to be achieved.\nI would add that we believe work travel will snap back much quicker than currently anticipated.\nAnd while Walmart is working hard to compete with Amazon and online retail, John underscored the fact that in Q2 of 2020, at the height of the pandemic shutdown, only 16% of total U.S. retail sales were online, and that 84% of sales still ran through bricks-and-mortar stores.\nOnline is growing fast, but the future of retail is clearly multichannel, not simply online.\nAs all of these commercial asset classes evolve and recover from the pandemic, Walker & Dunlop bankers and brokers will be there to assist owners in implementing the proper financing strategy.\nWe established the mission to become the premier commercial real estate finance company in the United States when we went public in 2010 with less than $100 million in revenues and a market capitalization of $220 million.\n10 years later, we have revenues of over $1 billion, a market cap close to $3 billion, and yet the mission remains the same.\nWe are just a heck of a lot closer to achieving it.\nWe rolled out to W&D employees and investors in early December, our next five-year strategic plan titled the Drive to 2025.\nThe components of the Drive to 2025 are to grow revenues to $2 billion, by expanding our annual debt financing volumes to $65 billion, grow our servicing portfolio to over $160 billion, grow annual property sales volume to $25 billion, grow our fund management business to over $10 billion in assets under management and the continued development of three new growth businesses: small balance lending, our appraisal business surprise and investment banking.\nAnd while accomplishing these highly ambitious business goals, we will continue to be a leader with our environmental; social, which includes a heavy emphasis on gender and racial diversity and inclusion; and governance efforts.\nIn order to achieve these goals, we will continue to bring on the very best people to our platform, further expand our brand and invest in innovative technology that will make us more insightful and more efficient for our customers.\nTo achieve $65 billion in annual debt financing, we will first become the largest multifamily lender in the country.\nOur $35 billion of debt financing in 2020 included $24 billion of direct multifamily lending.\nAs shown on this slide, in 2019, we held the number five spot in the multifamily lender rankings with $16.7 billion.\nAs you can see, our 2020 volume of $24 billion would advance us to the number one spot, if the other lenders stood still or moved back in their lending volumes during the year.\nThe Mortgage Bankers Association rankings will be released in the next few weeks, but we do know from the release of the Fannie Mae and Freddie Mac league tables last week that we have jumped ahead of Berkadia and Wells Fargo, and we'll wait to see what CBRE and JPMorgan did outside of the GSEs to see if we are number one, number two or number three.\nWherever we end up in the multifamily rankings for 2020, like all goals we establish at W&D, we remain focused on advancing to the number one position in the market.\nWe will also continue to grow our debt brokerage platform that provides financing on all commercial property types using capital from banks, life insurance companies, CMBS conduits and debt funds.\nAs you just heard from Steve, we expect strong contributions from this area of our business in 2021 as the market recovers.\nOur 2025 property sales goal of $25 billion is very ambitious.\nBut given the best-in-class platform we have established over the past five years, we are very excited about the growth potential in this line of business.\nThere are geographies such as Phoenix, Denver and Seattle, where we need to add the very best multifamily property brokers available as well as specialty products, such as student housing, affordable housing and built-for-rent properties that will complete our national footprint and add significant volume.\nWe have seen our property sales and financing teams collaborate in spectacular fashion over the past several years to deliver value to our customers and revenues to Walker & Dunlop.\nAnd we expect to see this collaboration continue to grow over the coming years as volumes on both platforms expand dramatically.\nFinally, our brand has expanded and our customer relationships have deepened, our clients have begun seeking new services that are complementary to our established commercial real estate finance and property sales capabilities.\nTo meet this demand, we plan to build out investment banking capabilities that will allow us to help our clients value their platforms, raise more complex equity capital solutions, provide detailed market research or raise equity that can be invested in their developments.\nPart of our investment banking strategy will involve continuing to grow our asset management business, Walker & Dunlop investment partners to $10 billion in AUM by 2025.\nOur investment banking services and growth in our fund management business will provide us with both the expertise and access to capital to meet virtually any request that comes our way making us a more valuable partner to our existing customer base and attracting new clients along the way.\nIf we achieve the component parts of the Drive to 2025 over the next five years, we will grow revenues to $2 billion and diluted earnings per share from $13 to $15.\nIt is incredibly exciting for me, having worked with our team over 15 years to establish three incredibly ambitious five-year growth plans that we all achieved to reset our sights on a new set of objectives that our team is already pursuing.\nAs I have said before, history will not repeat itself, but with regard to Walker & Dunlop achieving long-term business and financial goals, it usually rhymes.\nAs we pursue these financial targets, we will continue to focus on environmental, social and governance or ESG issues.\nWe take ESG extremely seriously at Walker & Dunlop, and have invested for many years to be a leader in this space.\nOn environmental issues, we have been carbon neutral for the past four years and have established concrete corporate goals to materially reduce our carbon emissions by 2025.\nAnd finally, our governance has been exemplary.\nWe have a very diverse board that has provided consistent and exceptional governance over Walker & Dunlop since the company went public in 2010 and have received the National Association of Corporate Directors highest ranking with regard to Board performance.\nWe remain extremely focused on our ESG initiatives over the next five years and have incorporated quantitative metrics surrounding ESG objectives that we plan to achieve as part of the Drive to 2025.\nAs we move into 2021, we feel very well positioned to continue growing and building out our platform to deliver double-digit growth in earnings per share once again.\nWe remain focused on hiring top bankers and brokers to the platform, and expanding our client base as we were so successful in doing in 2020.\nWe have every intention of maintaining our leadership position with the GSEs and are confident that given the current low interest rate environment and attractiveness of multifamily, we will have another successful year of multifamily lending.\nAs the multifamily acquisitions market continues to recover and more and more capital enters the space, we expect that previous investments in our property sales platform will drive significant volume growth in that business in the coming year.\nAnd as other asset classes begin to rebound, there will be a need for capital to office, retail and hospitality properties, and our debt brokerage platform will step up and meet the needs of our clients in these markets.\nFinally, we will be investing heavily in our emerging businesses like our appraisal platform and small business lending that will be powered by technology and should become larger contributors to our top and bottom line over time.\nAll of this should make investors in Walker & Dunlop very excited for the next year and our path to 2025.\nBefore we conclude the call, I'd like to offer my sincerest gratitude to my 1,000 colleagues at Walker & Dunlop, for making 2020 the incredibly successful year that it was.\nWe are still in the midst of a pandemic, family and friends still run the risk of suffering from this deadly virus and many people have been isolated for months, yearning for life to return to something close to normal.\nAnd yet we forge ahead, always focused on our customer and providing the best -- very best service possible.\nI hope many of you will join us for what should be a very insightful discussion.\n", "role": "user" }, { "content": "compname reports q4 earnings per share of $2.59.\nwalker & dunlop q4 revenues up 61% to $350 million and net income up 94% to $83 million.\nq4 earnings per share $2.59.\nq4 revenue rose 61 percent to $349.7 million.\nincreases quarterly dividend by 39 percent to $0.50per share.\ncompname says on february 3, co's board authorized repurchase of up to $75 million of common stock.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We have Kevin Fletcher, our President and CEO; Scott Lauber, our Chief Operating Officer; Xia Liu, our Chief Financial Officer; and Beth Straka, Senior Vice President of Corporate Communications and Investor Relations.\nAs always, our focus on operating excellence was a major factor in our performance.\nIn addition, we saw the positive impact of colder weather and economic recovery in our region.\nXia will provide you with more details on our metrics in just a few minutes.\nBut first, a comment about the polar vortex events that we experienced in February.\nOur people and our infrastructure were put to the test, literally, and performed remarkably during that bitter cold stretch when temperatures dropped to minus 42 degrees Fahrenheit in the northern portion of our service area.\nI'm pleased to report that the investments we've made in our energy grid and our diverse fuel mix got the economy moving and our customers safe and warm.\nNow, as you know, just over a year has passed since we first saw the impact of the COVID-19 pandemic.\nOur commitment to safety, efficiency and reliability has only been enhanced by the operational challenges we faced.\nOur company today stands stronger than ever and our $16.1 billion capital plan, the largest in company history, is on track.\nOver the next five years, we expect our investment plan to drive average annual growth in our asset base of 7%.\nAt the same time, it will bolster our sustainability as we continue to invest in renewable energy and state-of-the-art infrastructure.\nIn fact, the potential we see in renewables and battery storage, the progress we made across our system already, and supportive public policy have allowed us to step back and reassess our future environmental goals.\nToday, I'm pleased to announce that we're setting even more aggressive targets for the next several years.\nOur goal is now a 60% reduction in carbon emissions by 2025 and then an 80% reduction by the end of 2030, both from a 2005 baseline.\nWe believe we can accomplish these targets with the retirement of older, less efficient units, some operating refinements and the use of existing technology as we continue to execute our capital plan.\nAnd, of course, our long-term goal remains net zero carbon emissions from our generating fleet by 2050.\nIn emission, on the natural gas distribution side of our business, we're now targeting net zero methane emissions by the end of 2030.\nOur ongoing effort to upgrade our gas delivery networks and incorporate renewable natural gas into our system will clearly help us achieve this 2030 milestone.\nYou'll be able to read more about these goals in our updated Climate Report.\nAnd as I mentioned earlier in the call, we're making really good headway on our capital plan.\nWe call it our ESG Progress Plan.\nSince our last visit with you, we've announced four renewable projects for our regulated business in Wisconsin and another wind project, the Jayhawk Wind Farm at our WEC Infrastructure segment.\nScott and Kevin are on tap to fill you in on the details.\nBut I will add two important points about the impact of our ESG Progress Plan.\nAs we continue to reshape our asset mix, we project that less than 10% of our revenues, and less than 10% of our assets will be tied to coal by the end of 2025.\nAnd we would more than triple our investments in renewables across our enterprise.\nYou put it all together and we expect to deliver among the best risk-adjusted returns the industry has to offer.\nWe have strong credit quality and no need to issue equity.\nAt the heart of it all is our ability to deliver the affordable, reliable and clean energy that our customers depend on.\nNow, switching gears for a moment, let's take a quick look at the regional economy.\nWith the rollout of the COVID-19 vaccinations well under way, we're seeing more signs of economic recovery.\nWisconsin's unemployment rate stands today at 3.8%.\nThat's close to pre-pandemic levels and more than a percentage point better than the national average.\nIn addition, a recent business survey by the University of Wisconsin confirm that all core indicators from productivity to income are looking up.\nAlso, you may have seen the announcement last week that Foxconn has reached a new agreement with the State of Wisconsin regarding Foxconn's high-tech campus itself at Milwaukee.\nThe agreement provides for up to $80 million of performance-based incentives if Foxconn hires 1,454 qualified workers and invest $672 million by 2026.\nIt also importantly gives Foxconn the flexibility to be responsive to the marketplace.\nThis time the Foxconn campus is expected to focus on producing computer servers and server parts; that's one of the Foxconn's specialties.\nIn fact, we understand that Foxconn supply is approximately 40% of the worldwide market for servers.\nFoxconn also noted that, over time, it plans to make the Wisconsin site, one of the largest, if not the largest, manufacturer of data infrastructure hardware in the United States.\nSo as business opportunities continue to arise, Foxconn will work with the state on contract changes that would incorporate additional jobs and more new investment beyond this agreement.\nAs we look further across our service area, we see numerous green shoots of growth.\nFor example, Green Bay Packaging just completed a $500 million expansion of its paper mill in Northeastern Wisconsin.\nAmazon continues to expand.\nThe company just announced another fulfillment center.\nThis one will be located in one of our Western suburbs.\nAnd Uline is growing again, building two new distribution warehouses in the Kenosha area south of Milwaukee with a projected investment of $130 million.\nIf you're not familiar with the name, Uline is one of the nation's leading distributor of shipping, industrial and packaging materials.\nSo with all the developments we're seeing in the ground, we remain optimistic about the growth of the regional economy and our long-term sales growth.\nTurning now to sales.\nWe continue to see customer growth across our system.\nAt the end of March, our utilities were serving approximately 7,000 more electric customers and 25,000 more natural gas customers compared to a year ago.\nRetail electric and natural gas sales volumes are shown on a comparative basis beginning on Page 10 of the earnings package.\nIn Wisconsin, we saw sales growth on a weather normal basis across our entire retail business compared to the first quarter of 2020.\nNatural gas deliveries in Wisconsin increased 3.2%.\nThis excludes gas used for power generation.\nAnd on a weather normal basis, natural gas deliveries in Wisconsin increased by 0.005% [Phonetic].\nRetail deliveries of electricity, excluding the iron ore mine, were up 1.1% from the first quarter of 2020 and on a weather normal basis were up 1.4%.\nOverall, our growth is tracking ahead of our forecast as the economy begins to open up.\nAs we announced in March, we are adding another project to our infrastructure segment.\nWe acquired a 90% ownership interest in the Jayhawk Wind Farm.\nThis project will be built in Kansas and consists of 70 wind turbines with a combined capacity of more than 190 megawatts.\nJayhawk is expected to go into service by the end of this year.\nThis project fits our investment criteria well.\nThere is a long-term off-take agreement with Facebook for all of the energy produced.\nWe plan to invest $302 million for the 90% ownership interest and substantially all of the tax benefits.\nAs a reminder, our Thunderhead Wind investment is now projected to go into service by year-end.\nWe now have seven wind projects announced or in operations in our infrastructure segment.\nThis represents $1.9 billion of investment.\nWith a strong pipeline of opportunities ahead, we expect to invest an additional $1.5 billion in this segment through 2025.\nWhile COVID-19 statistics have been improving in our service areas, we remain focused on keeping our employees and customer safe.\nWe continue to realize efficiencies across our system of companies and we'll apply the lessons learned as we design workforce practices post-pandemic.\nNow, let me touch on some recent developments in our ESG Progress Plan.\nSince our last call, we announced four large-scale renewable projects for our Wisconsin utilities: the Paris, Darien, and Koshkonong Solar Battery Parks, as well as the Red Barn Wind Park.\nIn total, our shares of these projects would provide 675 megawatts of solar generation, 316 megawatts of battery storage, and 82 megawatts of wind.\nPending on the Commission's approval, we will invest approximately $1.5 billion to bring them online between 2022 and 2024.\nWe expect these projects to deliver significant operating cost savings and maintain reliability.\nThese projects, of course, are all part of our plans to invest significant capital dollars in renewables and battery storage for utilities between 2021 and 2025.\nMore to come in the next few months.\nWe are also proposing to build 128 megawatts of generation at our existing Weston Power plant site in North Wisconsin.\nThe new facility will use seven Reciprocating Internal Combustion Engines or as we call them, RICE units.\nIf approved, we expect to invest $170 million in this project for a targeted in-service date in 2023.\nOn the natural gas distribution side, We Energies is making its way through the approval process for two liquefied natural gas facilities, which would provide enhanced savings and reliability during our cold winters.\nPending approvals, which we anticipate by the end of this year, we would expect to bring the facilities in operation late in 2023.\nNow for a few regulatory updates.\nOn March 30, we filed a request with the Public Service Commission of Wisconsin to forego a rate case filing this year after we reached an agreement with a major customer and environmental groups.\nWe look forward to the Commission's decision in 60 to 90 days.\nAt this time, we're in the midst of rate reviews at two of our smaller utilities: North Shore Gas and Michigan Gas Utilities.\nThese proceedings are to support important investments in our distribution infrastructure.\nAs we look to the remainder of the year, assuming normal weather, we expect to reach the top end of our earnings guidance for 2021 that stands at $3.99 a share to $4.03 a share.\nWe're also reaffirming our projection of long-term earnings growth in a range of 5% to 7% a year.\nAnd as you may recall, in January, our Board of Directors declared a quarterly cash dividend of $0.6575 [Phonetic] a share.\nThat was an increase of 7.1% over the previous quarterly rate.\nWe continue to target a payout ratio of 65% to 70% of earnings.\nWe're in the middle of that range now, so I expect our dividend growth will continue to be in line with the growth in our earnings per share.\nAnd now, Xia will provide you with more details on our financials and our second quarter guidance.\nOur 2021 first quarter earnings of $1.61 per share increased $0.18 per share compared to the first quarter of 2020.\nOur favorable results for the first quarter of 2021 were driven by a number of factors.\nThese included the continued execution of our capital plan, colder winter weather conditions, stronger weather normalized sales, increased production tax credits, lower interest expense and continued emphasis on operating efficiency.\nI'll walk through the significant drivers impacting our earnings per share.\nStarting with our utility operations, we grew our earnings by $0.04 compared to the first quarter of 2020.\nFirst, colder winter weather conditions, when compared to the first quarter of last year, drove a $0.05 increase in earnings.\nAlso rate adjustments and weather normalized sales added $0.05 compared to the first quarter of 2020.\nNegative drivers included $0.04 of higher depreciation and amortization expense and a $0.02 increase in day-to-day O&M expense.\nThe increase in O&M expense was more than offset by the favorable performance of our Rabbi trust performance.\nRabbi trust investments included in the Corporate and Other segment.\nOverall, we added $0.04 quarter-over-quarter from utility operations.\nMoving on to our investment in American Transmission Company, we picked up a $0.01 related to continued capital investments.\nRecall that our investment is now earning a return on equity of 10.52%.\nWe are aware of the recent proposal to remove incentive ROE adders for RTO membership.\nThe past [Phonetic], ATC would lose the 50 basis points ROE adder.\nOn an annualized basis, it will be a $0.02 earnings drag for WEC.\nOf course, we are watching these developments closely.\nEarnings at our Energy Infrastructure segment improved $0.02 in the first quarter of 2021 compared to the first quarter of 2020, primarily from production tax credits related to wind farm acquisitions.\nThese include the Blooming Grove Wind Farm, placed in service in December 2020, and the Tatanka Ridge Wind Farm which came online in early January.\nFinally, you'll see that earnings at our Corporate and Other segment increased $0.11, driven by improved Rabbi trust investment performance, some favorable tax items result in the quarter and lower interest expense.\nIn summary, we improved on our first quarter 2020 performance by $0.18 per share.\nNow, I'd like to update you on some other financial items.\nFor the full year, we expect our effective income tax rate to be between 13% and 14%.\nExcluding the benefit of unprotected taxes flowing to customers, we project our 2021 effective tax rate would be between 19% and 20%.\nAs in past years, we expect to be a modest taxpayer in 2021.\nour projections show that we will be able to efficiently utilize our tax position with our current capital plan.\nLooking now at the cash flow statements on Page 6 of the earnings package.\nNet cash provided by operating activities decreased $295 million.\nOur increase in cash earnings in the first quarter of 2021 was more than offset by higher working capital requirements.\nThe spike in natural gas costs seen throughout the central part of the country this February, coupled with customer arrears, contributed to this increase in working capital.\nHowever, with normal collection practices under way in our major markets, we expect working capital to improve throughout the remainder of the year.\nTotal capital expenditures and asset acquisitions were $590 million in the first quarter of 2021, a $94 million increase from 2020.\nOn the financing front, with the $600 million holdco issuance in March, along with our refinancing efforts last year, the average interest rate on our holdco senior note is now 1.8% compared to 3.5% a year ago.\nThis will continue to provide a favorable interest variance throughout the year.\nFor the quarter, we are expecting a range of $0.75 to $0.77 per share.\nThis accounts for April weather and assumes normal weather for the rest of the quarter.\nAs a reminder, we earned $0.76 per share in the second quarter last year.\nExcluding $0.03 of better than normal weather and a $0.03 pickup from a FERC ROE decision, we would have earned $0.70 per share in the second quarter 2020.\nAs Gale mentioned earlier, we're guiding to the top end of our range for the full year, and as a reminder, that range is $3.99 per share to $4.03 per share.\nThis assumes normal weather for the remainder of the year.\nOverall, we're on track and focused on providing value for our customers and our stockholders.\nOperator, we're now ready to open it up for the question and answer portion of the call.\n", "role": "user" }, { "content": "q1 earnings per share $1.61.\nexpects to reach top end of its earnings guidance for 2021.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'd like to interrupt just for a minute.\nI'm Peter Feigin, President of the NBA champion, Milwaukee Bucks.\nAnd I can tell you, firsthand, in a big way, that you can't have a truly great NBA team without an incredible energy company to power you up.\nSo I'm proud to introduce a personal friend, one of the terrific minority owners of the Bucks and the Chairman of one of the best energy companies in America, Gale Klappa.\nGo Bucks, and go WEC.\nWell, wonders never cease.\nAnd I'm not sure I can top all of that, but no pun intended, let's give it a shot.\nWe have Kevin Fletcher, our President and CEO; Scott Lauber, our Chief Operating Officer; Xia Liu, our Chief Financial Officer; and Beth Straka, Senior Vice President of Corporate Communications and Investor Relations.\nXia will provide you with more details in just a few minutes.\nBut given our strong performance through the first half of this year, we're raising our annual guidance.\nThe new range is $4.02 a share to $4.05 a share, and our expectation is that we will reach the top end of that range.\nAs always, this assumes normal weather for the remainder of the year.\nNow as we look across our business lines, I'm pleased to report that every segment is performing at a high level.\nOur companies continue to deliver superior reliability and customer satisfaction.\nA solid economic recovery in Wisconsin with commercial and industrial expansion gives us confidence in our projected sales growth.\nOur balance sheet is strong.\nWe have no need to issue new equity to fund our ESG progress plan, and our plan is well on track for both our regulated and our infrastructure segments.\nAs you may know, we expect our ESG progress plan to drive average annual growth in our asset base of 7%.\nAt the same time, it's bolstering our sustainability as we invest in renewable energy and state-of-the-art technology.\nA good example of our progress is the announcement we made just a week ago about a $400 million investment in the Sapphire Sky Wind Energy Center.\nScott will provide you with more detail on this development in just a moment, but I will tell you that the offtake agreement is with one of the largest high-tech companies in the world, and we expect the project to meet or exceed all of our financial metrics.\nWe've also made great progress on our plan to build 1,800 megawatts of regulated solar, wind and battery storage.\nThese carbon-free assets will play a significant role in improving our environmental footprint.\nRecall that, back in May, we set near-term goals that are among the most ambitious in the industry: reducing carbon emissions by 60% from our electric generation fleet by 2025 and achieving an 80% reduction by the end of 2030, both from a 2005 baseline.\nSo ahead that we now expect only 8% of our regulated electricity supply to come from coal by the end of 2030.\nWe believe we can accomplish these targets with the retirement of older, less efficient units; operating refinements; and the use of existing technology as we execute our ESG progress plan.\nOf course, our long-term goal remains net-zero carbon emissions from our generating fleet by 2050.\nAnd our ongoing effort to upgrade our gas delivery networks and introduce renewable natural gas into our system will help us achieve another aggressive goal: net-zero methane emissions by 2030.\nYou can learn more about these goals and much more in our corporate responsibility report, which we published just last week.\nAnd now let's switch gears a bit and take a quick look at our regional economy.\nWe're still seeing the positive effects of a strong recovery.\nWisconsin's unemployment rate, in fact, stands today at 3.9%.\nFolks, that's two full percentage points better than the national average.\nAs I mentioned, business continues to grow with new projects across the region.\nFor example, Milwaukee Tool is expanding the operations again here in Milwaukee.\nIf you're not familiar with Milwaukee Tool, company has been a leader in the development of battery-powered, cordless tools.\nIt now has become the world's number one producer of tools for professionals in the construction trades, utility sector, as well as for auto mechanics.\nAnd now Milwaukee Tool is redeveloping a vacant downtown office tower to provide space for one,200 new employees over the next five years.\nIn addition, a number of other economic development projects are in the pipeline, and we'll be covering those with you in future calls.\nOn that note, I'll turn our call over to Scott for more detail on our sales results for the quarter, as well as an update on our infrastructure segment.\nWell, wonders never cease.\nAnd I'm not sure I can top all of that, but no pun intended, let's give it a shot.\nWe have Kevin Fletcher, our President and CEO; Scott Lauber, our Chief Operating Officer; Xia Liu, our Chief Financial Officer; and Beth Straka, Senior Vice President of Corporate Communications and Investor Relations.\nXia will provide you with more details in just a few minutes.\nBut given our strong performance through the first half of this year, we're raising our annual guidance.\nThe new range is $4.02 a share to $4.05 a share, and our expectation is that we will reach the top end of that range.\nAs always, this assumes normal weather for the remainder of the year.\nNow as we look across our business lines, I'm pleased to report that every segment is performing at a high level.\nOur companies continue to deliver superior reliability and customer satisfaction.\nA solid economic recovery in Wisconsin with commercial and industrial expansion gives us confidence in our projected sales growth.\nOur balance sheet is strong.\nWe have no need to issue new equity to fund our ESG progress plan, and our plan is well on track for both our regulated and our infrastructure segments.\nAs you may know, we expect our ESG progress plan to drive average annual growth in our asset base of 7%.\nAt the same time, it's bolstering our sustainability as we invest in renewable energy and state-of-the-art technology.\nA good example of our progress is the announcement we made just a week ago about a $400 million investment in the Sapphire Sky Wind Energy Center.\nScott will provide you with more detail on this development in just a moment, but I will tell you that the offtake agreement is with one of the largest high-tech companies in the world, and we expect the project to meet or exceed all of our financial metrics.\nWe've also made great progress on our plan to build 1,800 megawatts of regulated solar, wind and battery storage.\nThese carbon-free assets will play a significant role in improving our environmental footprint.\nRecall that, back in May, we set near-term goals that are among the most ambitious in the industry: reducing carbon emissions by 60% from our electric generation fleet by 2025 and achieving an 80% reduction by the end of 2030, both from a 2005 baseline.\nSo ahead that we now expect only 8% of our regulated electricity supply to come from coal by the end of 2030.\nWe believe we can accomplish these targets with the retirement of older, less efficient units; operating refinements; and the use of existing technology as we execute our ESG progress plan.\nOf course, our long-term goal remains net-zero carbon emissions from our generating fleet by 2050.\nAnd our ongoing effort to upgrade our gas delivery networks and introduce renewable natural gas into our system will help us achieve another aggressive goal: net-zero methane emissions by 2030.\nYou can learn more about these goals and much more in our corporate responsibility report, which we published just last week.\nAnd now let's switch gears a bit and take a quick look at our regional economy.\nWe're still seeing the positive effects of a strong recovery.\nWisconsin's unemployment rate, in fact, stands today at 3.9%.\nFolks, that's two full percentage points better than the national average.\nAs I mentioned, business continues to grow with new projects across the region.\nFor example, Milwaukee Tool is expanding the operations again here in Milwaukee.\nIf you're not familiar with Milwaukee Tool, company has been a leader in the development of battery-powered, cordless tools.\nIt now has become the world's number one producer of tools for professionals in the construction trades, utility sector, as well as for auto mechanics.\nAnd now Milwaukee Tool is redeveloping a vacant downtown office tower to provide space for one,200 new employees over the next five years.\nIn addition, a number of other economic development projects are in the pipeline, and we'll be covering those with you in future calls.\nOn that note, I'll turn our call over to Scott for more detail on our sales results for the quarter, as well as an update on our infrastructure segment.\nWell, wonders never cease.\nAnd I'm not sure I can top all of that, but no pun intended, let's give it a shot.\nWe have Kevin Fletcher, our President and CEO; Scott Lauber, our Chief Operating Officer; Xia Liu, our Chief Financial Officer; and Beth Straka, Senior Vice President of Corporate Communications and Investor Relations.\nXia will provide you with more details in just a few minutes.\nBut given our strong performance through the first half of this year, we're raising our annual guidance.\nThe new range is $4.02 a share to $4.05 a share, and our expectation is that we will reach the top end of that range.\nAs always, this assumes normal weather for the remainder of the year.\nNow as we look across our business lines, I'm pleased to report that every segment is performing at a high level.\nOur companies continue to deliver superior reliability and customer satisfaction.\nA solid economic recovery in Wisconsin with commercial and industrial expansion gives us confidence in our projected sales growth.\nOur balance sheet is strong.\nWe have no need to issue new equity to fund our ESG progress plan, and our plan is well on track for both our regulated and our infrastructure segments.\nAs you may know, we expect our ESG progress plan to drive average annual growth in our asset base of 7%.\nAt the same time, it's bolstering our sustainability as we invest in renewable energy and state-of-the-art technology.\nA good example of our progress is the announcement we made just a week ago about a $400 million investment in the Sapphire Sky Wind Energy Center.\nScott will provide you with more detail on this development in just a moment, but I will tell you that the offtake agreement is with one of the largest high-tech companies in the world, and we expect the project to meet or exceed all of our financial metrics.\nWe've also made great progress on our plan to build 1,800 megawatts of regulated solar, wind and battery storage.\nThese carbon-free assets will play a significant role in improving our environmental footprint.\nRecall that, back in May, we set near-term goals that are among the most ambitious in the industry: reducing carbon emissions by 60% from our electric generation fleet by 2025 and achieving an 80% reduction by the end of 2030, both from a 2005 baseline.\nSo ahead that we now expect only 8% of our regulated electricity supply to come from coal by the end of 2030.\nWe believe we can accomplish these targets with the retirement of older, less efficient units; operating refinements; and the use of existing technology as we execute our ESG progress plan.\nOf course, our long-term goal remains net-zero carbon emissions from our generating fleet by 2050.\nAnd our ongoing effort to upgrade our gas delivery networks and introduce renewable natural gas into our system will help us achieve another aggressive goal: net-zero methane emissions by 2030.\nYou can learn more about these goals and much more in our corporate responsibility report, which we published just last week.\nAnd now let's switch gears a bit and take a quick look at our regional economy.\nWe're still seeing the positive effects of a strong recovery.\nWisconsin's unemployment rate, in fact, stands today at 3.9%.\nFolks, that's two full percentage points better than the national average.\nAs I mentioned, business continues to grow with new projects across the region.\nFor example, Milwaukee Tool is expanding the operations again here in Milwaukee.\nIf you're not familiar with Milwaukee Tool, company has been a leader in the development of battery-powered, cordless tools.\nIt now has become the world's number one producer of tools for professionals in the construction trades, utility sector, as well as for auto mechanics.\nAnd now Milwaukee Tool is redeveloping a vacant downtown office tower to provide space for one,200 new employees over the next five years.\nIn addition, a number of other economic development projects are in the pipeline, and we'll be covering those with you in future calls.\nOn that note, I'll turn our call over to Scott for more detail on our sales results for the quarter, as well as an update on our infrastructure segment.\nWell, wonders never cease.\nAnd I'm not sure I can top all of that, but no pun intended, let's give it a shot.\nWe have Kevin Fletcher, our President and CEO; Scott Lauber, our Chief Operating Officer; Xia Liu, our Chief Financial Officer; and Beth Straka, Senior Vice President of Corporate Communications and Investor Relations.\nXia will provide you with more details in just a few minutes.\nBut given our strong performance through the first half of this year, we're raising our annual guidance.\nThe new range is $4.02 a share to $4.05 a share, and our expectation is that we will reach the top end of that range.\nAs always, this assumes normal weather for the remainder of the year.\nNow as we look across our business lines, I'm pleased to report that every segment is performing at a high level.\nOur companies continue to deliver superior reliability and customer satisfaction.\nA solid economic recovery in Wisconsin with commercial and industrial expansion gives us confidence in our projected sales growth.\nOur balance sheet is strong.\nWe have no need to issue new equity to fund our ESG progress plan, and our plan is well on track for both our regulated and our infrastructure segments.\nAs you may know, we expect our ESG progress plan to drive average annual growth in our asset base of 7%.\nAt the same time, it's bolstering our sustainability as we invest in renewable energy and state-of-the-art technology.\nA good example of our progress is the announcement we made just a week ago about a $400 million investment in the Sapphire Sky Wind Energy Center.\nScott will provide you with more detail on this development in just a moment, but I will tell you that the offtake agreement is with one of the largest high-tech companies in the world, and we expect the project to meet or exceed all of our financial metrics.\nWe've also made great progress on our plan to build 1,800 megawatts of regulated solar, wind and battery storage.\nThese carbon-free assets will play a significant role in improving our environmental footprint.\nRecall that, back in May, we set near-term goals that are among the most ambitious in the industry: reducing carbon emissions by 60% from our electric generation fleet by 2025 and achieving an 80% reduction by the end of 2030, both from a 2005 baseline.\nSo ahead that we now expect only 8% of our regulated electricity supply to come from coal by the end of 2030.\nWe believe we can accomplish these targets with the retirement of older, less efficient units; operating refinements; and the use of existing technology as we execute our ESG progress plan.\nOf course, our long-term goal remains net-zero carbon emissions from our generating fleet by 2050.\nAnd our ongoing effort to upgrade our gas delivery networks and introduce renewable natural gas into our system will help us achieve another aggressive goal: net-zero methane emissions by 2030.\nYou can learn more about these goals and much more in our corporate responsibility report, which we published just last week.\nAnd now let's switch gears a bit and take a quick look at our regional economy.\nWe're still seeing the positive effects of a strong recovery.\nWisconsin's unemployment rate, in fact, stands today at 3.9%.\nFolks, that's two full percentage points better than the national average.\nAs I mentioned, business continues to grow with new projects across the region.\nFor example, Milwaukee Tool is expanding the operations again here in Milwaukee.\nIf you're not familiar with Milwaukee Tool, company has been a leader in the development of battery-powered, cordless tools.\nIt now has become the world's number one producer of tools for professionals in the construction trades, utility sector, as well as for auto mechanics.\nAnd now Milwaukee Tool is redeveloping a vacant downtown office tower to provide space for one,200 new employees over the next five years.\nIn addition, a number of other economic development projects are in the pipeline, and we'll be covering those with you in future calls.\nOn that note, I'll turn our call over to Scott for more detail on our sales results for the quarter, as well as an update on our infrastructure segment.\nWe continue to see customer growth across our system.\nAt the end of June, our utilities were serving approximately 4,000 more electric customers and 18,000 more natural gas customers compared to a year ago.\nRetail electric and natural gas sales volumes are shown on a comparative basis, beginning on page 13 of the earnings packet.\nOverall retail deliveries of electricity, excluding the iron ore mine, were up 7.1% from the second quarter of 2020 and on a weather-normal basis were up 5.8%.\nWe are encouraged by the economic rebound we are seeing in our service territory.\nFor example, small commercial and industrial electric sales were up 10.4% from last year's second quarter and on a weather-normal basis were up 9.2%.\nMeanwhile, large commercial and industrial sales, excluding the iron ore mine, were up 14.8% from the second quarter of 2020 and on a weather-normal basis were up 13.9%.\nNatural gas deliveries in Wisconsin were down 4.9%.\nThis excludes gas used for power generation.\nAnd on a weather-normal basis, natural gas deliveries in Wisconsin grew by 2.5%.\nOverall, our growth continues to track ahead of our forecast as the economy continues to open up.\nTurning now to our WEC infrastructure segment.\nAs Gale noted, we have agreed to acquire a 90% ownership interest in the Sapphire Sky Wind Energy Center.\nThe project is being developed in McLean County, Illinois by Invenergy.\nThe site will consist of 64 wind turbines with a combined capacity of 250 megawatts.\nWe expect it will go in service late in 2022.\nThe project fits our investment criteria very well.\nWe plan to invest $412 million for the 90% ownership interest.\nWe now have eight wind projects announced or in operation in our infrastructure segment.\nThis represents approximately $2.3 billion of investment.\nWe expect to invest an additional $1.1 billion in this segment over the remainder of our five-year plan.\nOur Jayhawk Wind Farm is projected to go in service by early next year, and our Thunderhead Wind investment is now projected to go in service in the first half of 2022.\nThese time lines have been factored into our forecast.\nIn case you're wondering about the impact of inflation on these projects, to date, we have not encountered any significant inflationary pressure.\nRemember that we primarily invest in turnkey projects with developers, so we are seeing no reduction of returns.\nTouching on some recent developments in Wisconsin, I'm pleased to report that our Badger Hollow I solar project is nearing completion and is producing test energy.\nAs you may recall, we own 100 megawatts of this project in Southwest Wisconsin, and Madison Gas and Electric owns the remaining 50 megawatts.\nThis is our second large-scale solar project and part of our plans for more than triple renewable energy between 2021 and 2025 we expect the next phase of the project, Badger Hollow II, to achieve commercial operations next year.\nNow for a few regulatory updates.\nRecall that after reaching an agreement with a major customer and environmental groups, we filed a request with the Public Service Commission to forego a rate base for our Wisconsin utilities this year.\nWe expect a decision in the weeks to come.\nAnd we're pleased that the commission has approved pilot programs for electric vehicle charging in our Wisconsin service areas.\nWith these programs, we plan to install charging equipment and electric distribution infrastructure.\nThis is the first step in our effort to promote affordable charging options for electric vehicles.\nAnd we also have updates on the rate reviews at two of our smaller utilities.\nIn Illinois, earlier this year, North Shore Gas requested a rate increase, primarily due to the significant capital investments we have made since the last rate case in 2015.\nRecently, the administrative law judge on the case issued a proposed order.\nThe order recommends a $4.2 million rate increase on a 9.67% ROE and 51.6% equity component.\nWe expect the commission's final decision by mid-September.\nFinally, in Michigan, I'm pleased to advise you that we have reached a settlement with all parties to conclude our rate review for Michigan Gas Utilities.\nThis settlement stipulates a 9.85% return on equity and a revenue increase of $9.25 million with an equity layer of 51.5%.\nWe expect the commission's approval by the end of the third quarter.\nWe have no other rate cases pending at this time.\nOur 2021 second quarter earnings of $0.87 per share increased $0.11 per share compared to the second quarter of 2020.\nOur favorable results were largely driven by higher earnings from our utility operations.\nOur regulated utilities benefited from warmer-than-normal weather, recovering economy, continued execution of our capital plan and our focus on operating efficiency.\nI'll walk through the significant drivers.\nStarting with our Utility Operations.\nWe grew our earnings by $0.09 compared to the second quarter of 2020.\nFirst, continued economic recovery from the pandemic drove a $0.06 increase in earnings.\nThis reflects stronger weather-normalized sales, as well as the resumption of late payment and other charges.\nAlso, rate relief and additional capital investment added $0.04 compared to the second quarter of 2020.\nLower day-to-day O&M contributed $0.01, and all other factors resulted in a positive variance of $0.02.\nThese favorable factors were partially offset by $0.04 of higher depreciation and amortization expense.\nI'd like to point out that quarter-over-quarter, the impact of weather was flat.\nOverall, we added $0.09 quarter-over-quarter from Utility Operations.\nMoving on to our investment in American Transmission Company.\nEarnings decreased $0.02 compared to the second quarter of 2020.\nWhile we picked up $0.01 in the current quarter from continued capital investment, this was more than offset by a $0.03 benefit recognized in the second quarter of 2020 related to a FERC order.\nRecall that this order allowed ATC to increase its ROE from 10.38% to 10.52% retroactive to November 2013.\nEarnings at our Energy Infrastructure segment improved $0.01 in the second quarter of 2021 compared to the second quarter of 2020.\nThis was mainly driven by production tax credits related to wind farm acquisitions, partially offset by less-than-projected wind resources.\nFinally, we saw a $0.03 improvement in the Corporate and Other segment.\nLower interest expense contributed $0.02 quarter-over-quarter.\nWe recognized a $0.03 gain from our investment in a fund devoted to clean energy infrastructure and technology development.\nThese positive variances were partially offset by a reduction of $0.01 in rabbi trust performance and $0.01 in taxes and other.\nIn summary, we improved on our second quarter 2020 performance by $0.11.\nNow I'd like to update you on some other financial items.\nFor the full year, we expect our effective income tax rate to be between 13% and 14%.\nExcluding the benefit of unprotected taxes flowing to customers, we project our 2021 effective tax rate will be between 19% and 20%.\nAs in past years, we expect to be a modest taxpayer in 2021.\nOur projections show that we will be able to efficiently utilize our tax position with our current capital plan.\nLooking now at the cash flow statement on page six of the earnings package.\nNet cash provided by operating activities decreased $153 million.\nOur increase in cash earnings in the first six months of 2021 was more than offset by higher working capital requirements.\nRecall that the spike in natural gas costs seen throughout the central part of the country this February, coupled with higher accounts receivable balances, contributed to this increase in working capital.\nWe were able to improve our working capital position in the second quarter.\nWith normal collection practices underway in our major markets, we expect working capital to continue to improve throughout the remainder of the year.\nTotal capital expenditures and asset acquisitions were $1.1 billion for the first six months of 2021, a $93 million increase as compared with the first six months of 2020.\nThis reflects our investment focus in our regulated utility and Energy Infrastructure business.\nOn the financing front, we continue to find opportunities to lower our interest costs.\nIn fact, in June, we refinanced $300 million of debt at Wisconsin Electric, reducing the average coupon of these notes by over 1.2% and extending the maturity to 2028.\nWe are expecting a range of $0.72 to $0.74 per share for the third quarter.\nThis accounts for July weather and assumes normal weather for the rest of the quarter.\nThis also takes into account timing of our fuel recovery and the costs associated with major storms that impacted our system last week.\nAs a reminder, we earned $0.84 per share in the third quarter last year.\nThis includes an estimated $0.05 of better-than-normal weather.\nAnd as Gale mentioned earlier, we're raising our 2021 earnings guidance to a range of $4.02 to $4.05 per share with an expectation of reaching the top end of the range.\nThis assumes normal weather for the remainder of the year.\nIn addition to raising our annual guidance, we are reaffirming our projection of long-term earnings growth of 5% to 7% a year with a strong bias toward the upper half of that range.\nAnd finally, a quick reminder about our dividend.\nAs you may recall, in January, our Board of Directors raised the quarterly dividend by 7.1% to $0.6775 a share.\nWe continue to target a payout ratio of 65% to 70% of earnings.\nWe're in the middle of that range now, so I expect our dividend growth will continue to be in line with the growth in our earnings per share.\nOverall, ladies and gentlemen, we're on track, focused on providing value for our customers and our stockholders.\nAnd operator, we're ready now to open it up for the question-and-answer portion of the call.\n", "role": "user" }, { "content": "compname reports q2 earnings per share of $0.87.\nq2 earnings per share $0.87.\nraising its earnings guidance for 2021 to a range of $4.02 to $4.05 per share.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We have Kevin Fletcher, our President and CEO; Scott Lauber, our Chief Operating Officer; Xia Liu, our Chief Financial Officer; and Beth Straka, our Senior Vice President of Corporate Communications and Investor Relations.\nI'm sure you saw the announcement last week that our Board of Directors has taken the next step in our long-term succession planning.\nKevin has decided to devote more time with his grandchildren and to water-skiing barefoot on his favorite lakes.\nHe'll be retiring in 2022.\nWe're delighted that Scott will assume the role of President and Chief Executive on February 1.\nAnd finally, I've agreed to continue serving as Executive Chairman until our Annual Stockholders Meeting in 2024.\nKevin and Scott, of course, have been instrumental in shaping our progress over many years.\nAnd I look forward to working hand-in-hand with Scott as he takes on his new role.\nOur results were significantly better than expected, driven by warmer than normal weather, continued economic recovery in our region, and our focus on operating efficiency.\nOur balance sheet, our cash flows remained strong, and as we've discussed, this allows us to fund a highly executable capital plan without issuing equity.\nIn just a moment, we'll update you on the details of our new five-year ESG Progress Plan, a plan that will cover our investments in reliability and decarbonization over the period 2022 through 2026.\nAs we've reported to you, we're well on our way to achieving some of the most aggressive goals in our industry for reducing carbon emissions.\nAcross our generation fleet, we're targeting a 60% reduction by 2025 and then 80% reduction by 2030, both from a 2005 baseline.\nImportantly, we have a roadmap to reach these goals without any major advances in technology.\nSo today, we're announcing that our use of coal will continue to decline to a level that we expect will be immaterial by the end of 2030.\nBy the end of 2030, we expect our use of coal will account for less than 5% of the power we supply to customers.\nA number of you have also been asking when can we exit coal completely.\nHere is the answer.\nWe believe we'll be in a position to eliminate coal as an energy source by the year 2035.\nThe next logical question is, what does this mean for the modern coal-fired units at our Oak Creek site?\nAs you recall, these units were part of our Power the Future plan and were completed only about a decade ago.\nWell, our modern units at Oak Creek will remain a key part of our fleet for many, many years to come.\nThese Power the Future units rank as some of the most efficient in the country, among the top 5% of all coal-fired plants in heat rate performance over the past decade and they're strategically -- as we've discussed, they are strategically located to support reliability on the Midwestern transmission grid.\nFortunately, we can plan for the future of the new units at Oak Creek with fuel flexibility in mind.\nWe've tested coal firing on natural gas at the site.\nSo subject to the receipt of an environmental permit, we plan to make operating refinements over the next two years that will allow a fuel blend of up to 30% on natural gas.\nAnd then over time, we will be able to transition completely away from coal by making incremental investments in plant equipment.\nThis would include, for example, new burners and, of course, we will need additional pipeline capacity reaching into the site.\nSo we see a very bright and long future for the newer units at Oak Creek.\nAnd now, let's take a look at the capital plan that will continue to shape a decarbonizing economy.\nFor the period 2022 through 2026, we expect to invest $17.7 billion.\nOur focus remains on efficiency, sustainability and growth.\nThis ESG Progress Plan is the largest capital plan in our history, an increase of $1.6 billion or nearly 10% above our previous five-year plan.\nWe expect this plan to support compound earnings growth of 6% to 7% a year over the next five years without any need to issue new equity.\nWe'll be increasing our investment in renewables for our regulated utilities from 1,800 megawatts of capacity in our previous plan to nearly 2,400 megawatts in this brand-new plan.\nThese carbon-free assets include solar, wind and battery storage.\nWe're also dedicating more capital to hardening our electric distribution networks, so that we can maintain a superior level of reliability for our customers, and investments in our gas delivery systems and the development of renewable natural gas will support our goals for the gas distribution business as well.\nAs a reminder, we're targeting net zero methane emissions by 2030.\nSo add it all up and we have what I really believe is a premium growth plan.\nThe projects that are driving our growth are low-risk and highly executable, and they are accelerating the transition to a clean energy future.\nWe continue to see customer growth across our system.\nAt the end of September, our utilities were serving approximately 8,000 more electric customers and 15,000 more natural gas customers compared to a year ago.\nRetail electric and natural gas sales volumes are shown on a comparative basis beginning on Page 13 of the earnings packet.\nOverall, retail deliveries of electricity, excluding the iron ore mine, were up 2.4% from the third quarter of 2020 and on a weather normal basis were up 2.5%.\nWe continue to see economic rebound in our service territory.\nFor example, small commercial and industrial electric sales were up 3.5% from last year's third quarter and on a weather normal basis, they were up 4.2%.\nMeanwhile, large commercial and industrial sales, excluding the iron ore mine, were up 3.8% from the third quarter of 2020 and on a weather normal basis were up 3.5%.\nNatural gas deliveries in Wisconsin were up 1%.\nThis excludes gas used for power generation.\nAnd on a weather normal basis natural gas deliveries in Wisconsin grew by 2.5%.\nOverall, our growth continues to track ahead of our forecast as the economy continues to open up.\nTurning now to our Infrastructure segment, our new capital plan calls for the investment of $1.9 billion between 2022 and 2026.\nConsidering the three projects that are currently under development, we expect to invest an additional $1.1 billion at that timeframe.\nAs a quick reminder, we have eight wind projects, all with long-term off-takers.\nAnnounced through an operation in our Infrastructure segment, this represents approximately $2.3 billion of investments.\nAs previously discussed, our Jayhawk Wind Farm is projected to go in service by early next year and our Thunderhead Wind investment is projected to go in service in the first half of 2022.\nThese timelines have been factored into our updated capital plan.\nFirst, I'll cover some developments here in Wisconsin.\nI'm pleased to report that our Badger Hollow I Solar project is just weeks away from completion.\nYou'll recall that we own 100 megawatts of this project in Southwest Wisconsin.\nFor the next phase of the project, Badger Hollow II, we now are performing civil work and grading.\nOur target for completing that project is the end of 2022.\nThat date will depend on module supply which is uncertain as we await clarity on matters before the Department of Commerce.\nNow, for a few regulatory updates.\nWe expect a decision from the Wisconsin Commission shortly on our plans to build two liquefied natural gas storage facilities in the Southeastern part of the state.\nThis proposed investment would greatly enhance customer savings and reliability during Wisconsin's cold winters.\nPending approval, we expect the facilities to enter service in late 2023.\nThey are projected to save our We Energies customers approximately $200 million over time.\nWe also have updates on the rate reviews at two of our smaller utilities.\nThe Illinois Commerce Commission unanimously approved the final order for our rate case at North Shore Gas.\nThe order authorizes a rate increase of 4.5%, including an ROE of 9.67% and an equity ratio of 51.58%.\nNew rates went into effect on September 15.\nAnd the Michigan Public Service Commission unanimously approved a settlement in our rate case for Michigan Gas Utilities.\nThe settlement authorizes a rate increase of 6.35%, including an ROE of 9.85% and an equity ratio of 51.5%.\nNew rates will be effective January 1.\nWe have no other rate cases pending at this time.\nAnd as we look forward to the winter heating season ahead, I'm pleased to report that we're ready.\nWe have our gas contracts in place and our gas inventories are at our targeted levels.\nWe continue to deliver quality and consistent earnings.\nOur 2021 third quarter earnings of $0.92 per share increased $0.08 per share compared to the third quarter of 2020.\nOur favorable results were largely driven by higher earnings from our utility operations.\nOur regulated utilities benefited from the strong economic recovery in our region, continued execution of our capital plan and our focus on operating efficiency.\nI'll walk through the significant drivers.\nStarting with our utility operations, we grew our earnings by $0.05 compared to the third quarter of 2020.\nFirst, continued economic recovery from the pandemic and stronger weather normalized sales drove a $0.03 increase in earnings.\nAlso, rate relief and additional capital investment added $0.04 compared to the third quarter of 2020 and lower day-to-day O&M contributed $0.04.\nThese favorable factors were partially offset by $0.04 of higher depreciation and amortization expense and $0.02 of increased fuel costs related to higher natural gas prices.\nIt's worth noting that we estimate weather was $0.05 favorable compared to normal in the third quarters of both 2021 and 2020.\nOverall, we added $0.05 quarter-over-quarter from utility operations.\nMoving on to our investment in American Transmission Company, earnings increased $0.01 compared to the third quarter of 2020 driven by continued capital investment.\nEarnings at our Energy Infrastructure segment improved $0.01 in the third quarter of 2021 compared to the third quarter of 2020.\nThis was driven by production tax credits related to wind farm acquisitions.\nFinally, we saw a $0.01 improvement in the Corporate and Other segment.\nThis increase was primarily driven by lower interest expense.\nIn summary, we improved on our third quarter 2020 performance by $0.08 a share.\nNow, I'd like to update you on some other financial items.\nFor the full-year, we expect our effective income tax rate to be between 13% and 14%.\nExcluding the benefit of unprotected taxes flowing to customers, we project our 2021 effective tax rate will be between 19% and 20%.\nAs in past years, we expect to be a modest taxpayer in 2021.\nOur projections show that we will be able to efficiently utilize our tax position with our current capital plan.\nLooking now at the cash flow statement on Page 6 of the earnings package.\nNet cash provided by operating activities increased $57 million.\nOur increase in cash earnings in the first nine months of 2021 more than offset the higher working capital requirements.\nAs expected, with normal collection practices underway in all of our service territories, we made great strides in improving our working capital position in the third quarter.\nTotal capital expenditures and asset acquisitions were $1.7 billion for the first nine months of 2021, a $129 million increase as compared with the first nine months of 2020.\nThis reflects our investment focus in our regulated utilities and energy infrastructure business.\nLooking forward, as Gale outlined earlier, we're excited about our plans to invest $17.7 billion over the next five years in key infrastructure.\nThis ESG Progress Plan supports 7% annual growth in our asset base.\nPages 18 and 19 of the earnings packet provide more details of the breakdown of the plan, which I will highlight here.\nAs we continue to make our energy transition, nearly 70% of our capital plan is dedicated to sustainability, including $5.4 billion in renewable investment and $6.8 billion in grid and fleet reliability.\nAdditionally, we dedicated $2.8 billion to support our strong customer growth.\nWe also plan to invest $2.7 billion in technology and modernization of our infrastructure to further generate long-term operating efficiency.\nWith our strong economic development backdrop and our continued focus on efficiency, sustainability and growth, we see a long runway of investment ahead, even beyond the next five years.\nWe're raising our earnings guidance again for 2021 to a range of $4.05 to $4.07 per share with an expectation of reaching the top end of the range.\nThis assumes normal weather for the remainder of the year.\nThis is the second time we're raising our guidance.\nIf you recall, our original guidance was $3.99 to $4.03 per share.\nWe're on track for a solid year.\nAgain, in light of our strong performance, our guidance range now stands at $4.05 to $4.07 a share.\nWe're also tightening our projection of long-term earnings growth to a range of 6% to 7% a year.\nAnd finally, a quick reminder about our dividend.\nAs usual, I expect our Board will assess our dividend plans for next year at our scheduled meeting in early December.\nWe continue to target a payout ratio of 65% to 70% of earnings.\nWe're right in the middle of that range now, so I expect our dividend growth will continue to be in line with the growth in our earnings per share.\nOverall, we're on track to focus on delivering and providing value for our customers and our stockholders.\nAnd operator, we're now ready to open it up for the Q&A portion of the call.\n", "role": "user" }, { "content": "q3 earnings per share $0.92.\nsees fy earnings per share $4.02 to $4.05.\ncompany is raising its earnings guidance again for 2021, to a range of $4.05 to $4.07 per share.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We have Kevin Fletcher, our President and CEO; Scott Lauber, our Chief Operating Officer; Xia Liu, our Chief Financial Officer; and Beth Straka, Senior Vice President of Corporate Communications and Investor Relations.\nJohn will provide you with more detail on our financial metrics in just a few minutes.\nBut first, I'm pleased to report that we delivered a record year on virtually every meaningful measure of performance, from customer service to network reliability to earnings per share, despite the challenges posed by the Covid19 pandemic.\nOur focus on efficiency and financial discipline and an encouraging rebound in energy demand during the second half of the year resulted in the highest net income from operations, and the highest earnings per share in Company history.\nAnd throughout the difficulties of a pandemic year, we also accelerated our support for the communities we serve.\nIn total, our companies and foundations donated more than $20 million dollars to non-profits across our service area, including more than $2 million to direct Covid19 relief efforts.\nWe also made significant progress on diversity and inclusion.\nWe spent a record $303 million with diversifiers during the year, and through our Board refreshment, 46% of our Board members now are women and minorities.\nIn addition, we set new aggressive goals as we continue to improve our environmental footprint.\nIn fact, I'm pleased to report that based on preliminary data for 2020, reduced carbon dioxide emissions by 50% or (technical difficulties) 2005 levels.\nAnd we have, as you know, a well-defined plan to achieve a 55% reduction by the end of 2025.\nOver the longer term, expect to reduce carbon emissions by 70% by 2030, and as we look out to the year 2050, the target for our generation fleet is net-zero carbon.\nOur new five-year capital plan lays out a roadmap for achieving these goals, we call it our ESG progress plan.\nThe largest five-year plan in our history.\nIt calls for investment in efficiency, sustainability, and growth, and it drives average annual growth in our asset base of 7% with no need for additional equity.\nHighlights of the plan include 1,800 megawatts of wind, solar, and battery storage that would be added to our regulated asset base in Wisconsin.\nAnd we have allocated an additional $1.8 billion to our infrastructure segment, where we see a robust pipeline of high-quality renewable projects, projects that have long-term contracts with strong creditworthy customers.\nAll in all, our plan positions us to deliver among the very best risk adjusted returns our industry has to offer.\nAnd now, let's take a brief look at the regional economy.\nThere was, of course, an unusual year for everyone, but many of our commercial and industrial customers proved to be quite resilient, providing essential products and services such as food, plastics, paper, packaging, and electronic controls.\nThe latest available data show Wisconsin's unemployment rate of 5.5%.\nThat's more than a full percentage point better than the national average.\nAnd as we look to the year ahead, we see positive signs of continued growth.\nFor example, Green Bay Packaging is building a major expansion of its mill in northeastern Wisconsin, the $500 million addition, and is expected to be completed later this year.\nThe Foxconn Komatsu Mining, Haribo, and Milwaukee Tool projects that we've reported to you in the past are all moving forward as well.\nSo, we remain optimistic about the strength of the regional economy and our long-term sales growth.\nFinally, I know many of you are interested in our rate case calendar for the year ahead.\nAs you know, under normal circumstances, our Wisconsin utilities would be filing rate reviews later this spring for energy rates that would go into effect on January 1, 2022.\nOf course, we're in the middle of anything but normal times, and I can tell you that we've begun discussions with the Commission staff and we'll be talking with other major stakeholders to determine whether a one-year delay in the filing would be in everyone's best interest.\nI expect the final decision on this around the end of the first quarter.\nTurning now to sales.\nWe continue to see customer growth across our system.\nAt the end of 2020, our utilities were serving approximately 11,000 more electric and 27,000 more natural gas customers compared to a year ago.\nRetail electric and natural gas sales volumes are shown beginning on Page 17 of the earnings packet.\nOverall retail deliveries of electricity, excluding the iron ore mine, were down 2.1% compared to 2019, and on a weather normal basis, deliveries were down 2.9%.\nNatural gas deliveries in Wisconsin decreased 7.9% versus 2019.\nAnd by 2.4% on a weather normal basis.\nThis excludes gas used for power generation.\nOn the electric side, you'll note the positive trend that we've seen in residential sales has continued.\nImportantly, it has counterbalanced the weakness in small commercial and industrial sales caused by the pandemic.\nMeanwhile, large commercial industrial sales excluding the iron ore mine were down 7.1% for the full year compared to 2019, on a weather normal basis.\nHowever, these sales were only down 4.6% for the fourth quarter.\nA notable positive trend reflecting the recovery of Wisconsin's economy.\nNow, I'd like to briefly touch on our 2021 sales forecast for our Wisconsin segment.\nWe are using 2019 as a base for 2021 retail projections.\nWe're using 2019 because it represents a more typical year.\nWe are forecasting a decrease of 1.5% in weather normal retail electric deliveries, excluding the iron ore mine compared to 2019.\nThis would represent a 1.4% increase compared to 2020.\nWe expect large commercial and industrial sales to continue to improve and anticipate the same positive offsetting relationship between residential sales and small commercial industrial sales.\nFor our natural gas business, we project weather normalized retail gas deliveries to decrease by 2.4% compared to 2019, this leaves the projected sales outlook compared to 2020, relatively flat.\nWith this in mind, we remain focused on operating efficiencies and financial discipline across our business.\nWe lowered operations and maintenance cost by more than 3% in 2020 and we continue to adopt new technology and apply best practices.\nWe plan to reduce our operations and maintenance expense by an additional 2% to 3% in 2021.\nI also have an update on our infrastructure segment.\nThe blooming Grove and Tatanka Ridge projects are in-service now and came in ahead of time and on budget.\nAs a reminder, our Thunderhead Wind investment is projected to go in service by the end of the third quarter.\nWe accept -- expect [Phonetic] this segment to contribute an incremental $0.08 to earnings in 2021.\nThroughout 2020, we kept the energy flowing to our customers safely and reliably.\nOur largest utility, We Energies, was named the most reliable electric company in the Midwest for the tenth year running, and our Peoples Gas subsidiary was named the most trusted brand and a customer champion for the second year in a row by Escalent, a leading behavior and analytics firm.\nNow, I'll review where we stand on current projects in our ESG progress plan.\nAs you heard in our last call, the Two Creeks Solar Farm is now operating.\nAs we've mentioned, the very large project, in fact, just days after achieving commercial operation this past November, our share of this project accounted for more than 20% of the solar output in the entire MISO generation market.\nAlso, in Wisconsin, We Energies is making progress in the approval process for two liquefied natural gas facilities, which would provide enhanced savings and reliability during our cold winters.\nIf approved, we expect to be in construction in the fall of this year and to invest approximately $370 million in total to bring the facilities in operation in 2023.\nAnd as Gale just mentioned, our ESG progress plan includes 1,800MW of wind, solar, and battery storage.\nFilings with the Wisconsin Commission for a number of these projects will begin in the first quarter.\nAs you may recall, we were in the midst of a rate review for one of our smaller subsidiaries, North Shore Gas, which serves approximately 160,000 customers in the northern suburbs of Chicago.\nRates for North Shore Gas were last set more than five years ago before we acquired the company.\nSince then, we have consistently invested capital to serve our customers while reducing operating costs.\nThe Illinois Commerce Commission has set a schedule for concluding the case.\nMeetings are expected to begin in late April, with the final order in September.\nWe're confident that we can deliver our 2021 earnings guidance in the range of $3.99 a share to $4.03 a share.\nThis represents earnings growth of between 7% and 8% of our 2020 base of $3.73 a share.\nAnd you may have seen the announcement that our Board of Directors at its January meeting raised our quarterly cash dividend to $0.6775 a share for the first quarter of 2021.\nThat's an increase, folks, of 7.1%.\nThe new quarterly dividend is equivalent to an annual rate of $2.71 a share and this marks the 18th consecutive year that our company will reward shareholders with higher dividends.\nWe continue to target a payout ratio of 65% to 70% of earnings, right smack dab in the middle of that range now, so I expect our dividend growth will continue to be in line with the growth in our earnings per share.\nNext up, Xia will provide you with more detail on our financials and our first quarter guidance.\nOur 2020 earnings of $3.79 per share increased $0.21 per share compared to 2019.\nOur favorable 2020 results were driven by a number of factors, these included the execution of our capital plan rate adjustment at our Wisconsin utilities, ROE improvement at American Transmission Company, production tax credit in our infrastructure business, and continued emphasis on operating efficiency.\nThese factors helped us to overcome the sales impact of Covid19 and mild winter weather, and all of our utilities met their financial goals in 2020.\nI'll walk through the significant drivers impacting our earnings per share.\nStarting with our utility operations, grew [Phonetic] our earnings by $0.22 compared to 2019.\nFirst O&M expenses were favorable.\nThis includes $0.08 from lower day-to-day O&M expenses and $0.09 from lower sharing amounts in 2020 at our Wisconsin utilities.\nSecond, despite the impact of Covid19 and reduced wholesale and other margins, rate adjustments at our Wisconsin utilities continue -- continued capital investment, and fuel drove a net 21% increase in earnings.\nThird, we had $0.12 of higher depreciation and amortization expense and an estimated $0.05 decrease in margins related to mild winter weather year-over-year.\nThese factors partially offset the favorable items we discussed.\nOverall, we added $0.22 year-over-year from utility operations.\nEarnings from our investment in American Transmission Company increased $0.08 per share compared to 2019.\nRecall that $0.07 of the $0.08 were driven -- were due to ROE changes from FERC orders issued in November, 2019, and May, 2020.\n$0.04 resulted from the November 2019, order and $0.03 from the May 2020, order.\nThe penny came mainly from continued capital investment.\nEarnings at our energy infrastructure segment improved $0.05 in 2020 compared to 2019, primarily from production tax credits related to wind farm acquisitions.\nThese include the Coyote Ridge Wind Farm placed in service at the end of 2019.\nAdditional 10% ownership of the Upstream Wind Energy Center and the Blooming Grove Wind Farm came online in early December.\nFinally, you'll observe that we recorded a $0.09 charge in Corporate and Other to account for the make-whole premiums we incurred in the fourth quarter as we refinanced certain holding company debt to take advantage of lower interest rates.\nThe remaining $0.05 decrease is related to some tax and other items, partially offset by lower interest expense.\nIn summary, WEC improved on our 2019 performance by $0.21 per share.\nNow I'd like to update you on some other financial items.\nOur effective income tax rate was 15.9% for 2020, excluding the benefit of unprotected taxes flowing to customers, our rate was 20.2%.\nLooking to 2021, we expect our effective income tax rate to be between 13% and 14%.\nExcluding the benefit of unprotected taxes flowing to customers, we project our 2021 effective tax rate to be between 19% and 20%.\nAdding past years, we expect to be a modest taxpayer in 2021.\nOur projections show that we will be able to efficiently utilize our tax position with our current capital plan.\nLooking now at the cash flow statement on page 6 of the earnings packet.\nNet cash provided by operating activities decreased $149.5 million.\nOur increase in cash earnings in 2020 more than offset by higher working capital requirements, primarily related to Covid19 and by higher pension contributions.\nTotal capital expenditures and asset acquisitions were $2.9 billion in 2020, a $345 million increase from 2019.\nThis reflects our investment focus in our regulated utility and contracted renewable businesses at our energy infrastructure segment.\nIn terms of financing activities, in the fourth quarter of 2020, we opportunistically refinanced over $1 billion of holding company debt, reducing the average interest rate of these notes from 3.3% to 1.5%.\nWe continued to demonstrate our commitment to strong credit quality.\nAs expected, our FFO to debt ratio was 15.4% in 2020.\nAdjusting for the impacts of voluntary pension contributions and customer arrears related to Covid19, our FFO to debt was 16.9% in 2020.\nAt the end of 2020, our ratio of holding company debt to total debt was 28%, below our 30% target.\nIn addition, as Gale mentioned, we have no need for additional equity over the five-year forecast period.\nFinally, let's look at our guidance for the first quarter of 2021.\nLast year we earned a $1.43 per share in the first quarter.\nWe project first quarter 2021 earnings to be in the range of $1.45 per share to $1.47 per share.\nWe have taken into account mild went -- weather to-date and this forecast assumes normal weather for the rest of the footer.\nFor full year 2021, we are reaffirming our annual guidance of $3.99 to $4.03 per share.\nAll, we're on track and focused on delivering value for our customers and our stockholders.\nOperator, we're ready to open it up for a little trash-talking and the Q&A portion of our conference call today.\n", "role": "user" }, { "content": "reaffirming company's 2021 earnings guidance.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Information about any non-GAAP financial measures referenced, including a reconciliation of those measures to GAAP measures, can also be found in our SEC filings and the earnings materials available on our website.\nI'll make some brief comments about our third-quarter results, the operating environment and update you on our priorities.\nLet me start with some third-quarter highlights.\nWe earned $5.1 billion or $1.17 per common share in the third quarter.\nThese results included a $1.7 billion decrease in the allowance for credit losses as credit quality continued to improve.\nRevenue declined on lower gains from equity securities, which were elevated in the second quarter, though still strong.\nExpenses continue to decline, reflecting progress on our efficiency initiatives and included $250 million associated with the September OCC enforcement action.\nAnd for the first time since first-quarter 2020, we grew both period-end loans and deposits in the third quarter.\nWe continue to see that our customers have significant liquidity and consumers are continuing to spend.\nWhile lower than the peak in March, our consumer customers' median deposit balances continued to remain above pre-pandemic levels, up 48% for customers who received federal stimulus and 40 -- I'm sorry, up 48% for customers who received federal stimulus and 40% higher for those who did not receive federal aid.\nWeekly debit card spend during the third quarter was up every week compared to 2019 and in the week ending October 1 was up 14% compared to 2020 and 26% compared to 2019.\nAreas hardest hit by the pandemic have recovered, including travel, up 2%; entertainment, up 39%; and restaurant spending, up 20% during the week ending October 1 compared with 2019.\nConsumer credit card spending activity continued to increase, up 18% in the third quarter compared to 2019 and 24% compared to 2020.\nDuring the week ended October 1, travel-related spending, which was hardest hit during the pandemic, was up significantly from 2020 but remains the only category that is not yet fully rebounded to 2019 levels, still down 8% compared to 2019.\nCommercial banking loans were up slightly at the end of the third quarter, while line utilization was stable at historic lows.\nSupply chain difficulties and labor shortages continue to represent significant challenges for our client base.\nAnd as I said earlier, overall credit performance continued to be strong.\nNow let me update you on the progress we've made on our strategic priorities.\nFirst, building an appropriate risk and control infrastructure has been and remains Wells Fargo's top priority.\nWe reached a significant milestone with the termination of the CFPB consent order issued in September 2016 regarding improper retail sales practices.\nIts expiration reflects years of hard work by employees across Wells Fargo, intended to ensure that the conduct at the core of the CFPB order will not recur.\nAs a reminder, this is the second important regulatory milestone we achieved this year with the OCC terminating a consent order related to our BSA/AML compliance program in January.\nBut the recent OCC actions are a reminder that the significant deficiencies that existed when I arrived must remain our top priority.\nI believe we're making meaningful progress, and I remain confident in our ability to close the remaining gaps over the next several years.\nHaving said that, it continues to be the case that we are likely to have setbacks along the way.\nWe are a different bank today than we were several years ago.\nWe run the company with greater oversight, transparency, and operational disciplines.\nWe have a new leadership team.\n15 of 18 operating committee members are now new to their roles.\nI've spoken of our new leaders in many of our control functions, but we also have many new business leaders.\nThis includes new leaders in consumer banking, small business banking, auto lending, home lending, credit card, merchant services, retail services, and personal lending, digital, strategy, wealth and investment management, and commercial banking.\nOur control infrastructure is different, and we continue to invest in it.\nWe take a different approach to the consumer today.\nWe created a sales practice oversight and management function and an Office of Consumer Practices.\nOur approach to consumer remediation is dramatically different as we have meaningfully increased the amount paid to consumers and have accelerated payments to customers.\nWhile we are committed to devoting the resources necessary to our risk and regulatory work, we are also focused on improving the products and services we offer.\nWe're making investments in digital capabilities and making it easier for customers to do business with us.\nIn the third quarter, we announced our new long-term digital infrastructure strategy that will move us to a multi-cloud environment.\nThis is a critical step in our multiyear journey to be digital-first and offer easier-to-use products and services.\nWe also joined AutoFi's North American network to provide car buyers and dealers with fast and easy online sales and financing.\nAnd as I've spoken about previously, we're on track to roll out a new consumer mobile app at the beginning of next year.\nWe've also been making significant enhancements to our payments capabilities and are seeing that momentum pull through on our customers' Zelle usage, with Zelle users increasing 24%, transactions up 50%, and volumes are up 56% from a year ago.\nWe're executing on our work to simplify our products and build compelling offerings tailored to different customer segments.\nClear Access, our no-fee overdraft checking product now has over 1 million outstanding customer accounts.\nAs a reminder, this launched in September 2020.\nAnd all of our retail accounts, which receive ACH direct deposit have our Overdraft Rewind feature, which automatically reevaluates transactions from the prior business day that have incurred an overdraft.\nThis feature has helped over 1.3 million customers avoid overdraft-related fees on 2.5 million transactions in the third quarter.\nFor the emerging affluent and affluent segments, we're making substantial changes to more consistently and intentionally serve these customers, including products, service, marketing, and management routines.\nYou'll hear us talk more about how we're executing on this in the coming quarters.\nAfter successfully launching Active Cash, our new cash-back credit card in July earlier this month, we launched the Reflect Card that rewards customers for making on-time payments.\nOur new Head of Small Business, Derek Ellington, will start in just a couple of days, and we believe this is another attractive growth segment for us.\nNext month, Paul Camp will be joining Wells Fargo as the Head of our Global Treasury Management businesses.\nThis new role brings together our treasury management and global payment solutions teams into one organization, which will enable us to be more efficient and leverage our capabilities more effectively to help clients manage their funds and process payments worldwide.\nWhile we've been focused on improving the products and services we offer to our customers, we've continued to support our communities.\nWe voluntarily committed to donate all gross processing fees from PPP loans funded in 2020 and created the Open for Business Fund to support small businesses impacted by the pandemic.\nWe've now donated $305 million in support of small business recovery, including 215 CDFIs, which, in turn, is expected to help nearly 150,000 small business owners maintain more than 250,000 jobs.\nAdditionally, in the third quarter, we launched Connect to More, a resource hub for women-owned businesses and a mentoring program partnering with Nasdaq Entrepreneurial Center to empower 500 women-owned businesses.\nWe committed to invest $5 million through the NeighborhoodLIFT program to help more than 300 low- and moderate-income residents in Philadelphia with home down payment assistance.\nAnd we published our updated ESG report and goals and performance data, which includes new disclosures on our workforce by race, gender, and job category.\nAs we look forward, while there certainly are risks that remain, including the latest wave of COVID infections, the recent U.S. fiscal policy stalemate, and inflation concerns, the outlook for the economy is promising.\nConsumers' financial condition remains strong with leverage at its lowest level in 45 years and the debt burden below its long-term average.\nCompanies are also strong as well.\nWe remain on target to achieve a sustainable 10% ROTCE, subject to the same assumptions we've discussed in the past on a run-rate basis at some point next year, and we'll then discuss our plan to continue to increase returns.\nCharlie summarized how we're helping our customers and communities on Slide 2, so I'm going to start with our third-quarter financial results on Slide 3.\nNet income for the quarter was $5.1 billion or $1.17 per common share.\nOur results included a $1.7 billion decrease in the allowance for credit losses.\nThis is reflective of the continuing improvement in credit performance and the economic recovery.\nPretax pre-provision profit grew from a year ago as lower revenue, driven by a decline in net interest income, was more than offset by lower expenses.\nWe continue to execute on our efficiency initiatives, which has helped improve the expense run rate.\nAnd as Charlie highlighted, the third quarter included $250 million in operating losses associated with the September OCC enforcement action.\nNoninterest income was relatively stable from a year ago.\nWithin that, equity gains declined from the second quarter but increased $220 million from a year ago, predominantly due to our affiliated venture capital and private equity businesses.\nWe also had an increase in investment advisory and other asset-based fees from a year ago, as well as in card, deposit related and investment banking fees.\nThese increases were more than offset by declines in other areas, including lower mortgage banking revenue and lower markets revenue in corporate and investment banking.\nOur effective income tax rate in the third quarter was 22.9%.\nOur CET1 ratio declined to 11.6% in the third quarter as we repurchased $5.3 billion of common stock.\nAs a reminder, our regulatory minimum will be 9.1% in the first quarter of 2022, reflecting a lower GSIB capital surcharge.\nAdditionally, under the stress capital buffer framework, we have flexibility to increase capital distributions and if possible, we will be able to repurchase more than the $18 billion included in our capital plan over the four-quarter period, depending on market conditions and other risk factors, including COVID-related risks.\nTurning to credit quality on Slide 5.\nOur net loan charge-off ratio was 12 basis points in the quarter.\nCommercial credit performance continued to improve, and net loan charge-offs declined $42 million from the second quarter to 3 basis points.\nThe improvement was broad-based and included modest net recoveries in our energy portfolio and in commercial real estate.\nThe commercial real estate portfolio has continued to perform well.\nThe recovery in retail and hotel properties reflected increased liquidity and improved valuations.\nWhile we have not seen any widespread stress in office, we continue to watch this sector closely and believe that any impact as a result of return to office or hybrid working plans will take time to play out.\nConsumer credit performance also continued to improve with strong collateral values for homes and autos and consumer cash reserves remaining above pre-pandemic levels.\nNet loan charge-offs declined $80 million from the second quarter to 23 basis points.\nWe continue to have net recoveries in our consumer real estate portfolios, and losses in both credit card and auto declined.\nNonperforming assets declined $321 million or 4% from the second quarter, driven by lower commercial nonaccruals, with declines across all asset types.\nEnergy was the largest driver, given significant improvement in fundamentals on the back of higher commodity prices.\nOur allowance level at the end of the third quarter reflected continued strong credit performance, the continuing economic recovery, and the uncertainties that still remain.\nIf economic -- current economic trends continue, we would expect to have additional reserve releases.\nOn Slide 6, we highlight loans and deposits.\nAverage loans were relatively stable from the second quarter with a decline in residential mortgage loans, largely offset by modest growth in our -- in most of our consumer and commercial portfolios.\nTotal period end of loans grew for the first time since the first quarter of 2020 and were up $10.5 billion from the second quarter with growth in commercial and industrial loans, auto, other consumer, credit card, and commercial real estate.\nAverage deposits increased $51.9 billion or 4% from a year ago with growth in our consumer businesses and commercial banking, partially offset by continued declines in corporate and investment banking and corporate treasury, reflecting targeted actions to manage under the asset cap.\nTurning to net interest income on Slide 7.\nNet interest income grew $109 million or 1% from the second quarter and was down $470 million or 5% from a year ago.\nThe decrease from a year ago was driven by lower loan balances and the impact of lower yields on earning assets, partially offset by a decline in long-term debt and lower premium amortization on our mortgage-backed securities.\nWe had $20 billion of loans we purchased out of mortgage-backed securities or EPBOs at the end of the third quarter, down $4 billion from the second quarter.\nThese loans do contribute to net interest income, and we expect these EPBO loan balances to decline substantially by the end of 2022.\nAt the end of the third quarter, we also had $4.7 billion of PPP loans outstanding, and we expect the balances to steadily decline over the next several quarters and to be under $1 billion by the end of next year.\nWe continue to expect net interest income to be near the bottom of our initial guidance range of flat to down 4% from the annualized fourth-quarter 2020 level of $36.8 billion for the full year.\nTurning to expenses on Slide 8.\nNoninterest expense declined 13% from a year ago.\nThe decrease was driven by lower restructuring charges and operating losses and the progress we've made on our efficiency initiatives.\nDuring the first nine months of this year, these initiatives have helped to drive a 16% decline in professional and outside services expense by reducing our spend on consultants and contractors, an 8% reduction in occupancy costs by reducing the number of locations, including branches and offices.\nOccupancy costs have also declined from lower COVID-19 related costs and a 5% decline in salaries expense by eliminating management layers and increasing expansion controls across the organization and optimizing branch staffing.\nNow let me provide some specific examples of progress we're making on some of the initiatives.\nWe are continuing to work on reducing the underlying costs to run our Consumer Banking business.\nThe pandemic accelerated customer migration to digital, which continue with mobile log-ons up 14% in the third quarter from a year ago.\nWhile teller transactions were flat from a year ago, they were over 30% lower than pre-pandemic levels as transactions have migrated ATMs and mobile.\nOver the past year, we've reduced our number of branches by 433 or 8% and lowered headcount and branch banking by 23%.\nWe continue to focus on generating efficiencies in our branches and have a number of initiatives designed to further reduce expenses, including reducing cash handling time and simplifying certain branch processes.\nWealth and investment management has had strong increases in revenue-related compensation.\nHowever, by executing on efficiency initiatives, nonrevenue-related expenses in the third quarter declined 6% from a year ago, and non-advisor headcount was down 10% from a year ago.\nWe have aligned our wealth management business under eight divisional leaders, creating better coordination and efficiency.\nWe have also implemented a more efficient client service model across all distribution channels and have reduced total square footage by rationalizing our real estate footprint.\nCorporate and investment banking has continued to make progress on various efficiency initiatives.\nThese efforts include reducing headcount supporting products, regions, or sectors with low levels of market activity and opportunity, optimizing operations and support teams, vendor optimization and insourcing, and reducing spend on contractors and consultants.\nWe're also working on initiatives in centralized functions, including operations, where we have realized savings from location optimization, lower third-party spending by eliminating consulting arrangements, and consolidating vendors.\nThe operations group has also reduced spend and layers with savings coming from eliminating manager roles.\nAutomation efforts and strategy enhancements have driven process improvements while reducing costs in many areas, including fraud management and card collections.\nWe've also been working on additional opportunities through technology enablement that have longer lead times, but should result in benefits that we expect will reduce operations-related expenses over time.\nWith three quarters of actual results already, our current outlook for 2021 expenses, excluding restructuring charges and the cost of business exits, is approximately $53.5 billion.\nNote that we had $193 million of restructuring charges and cost of business exits during the first nine months of the year.\nThis outlook includes an expectation of higher operating losses and higher revenue-related expenses than we assumed earlier in the year.\nOur expense outlook also assumes a full year of expenses related to Wells Fargo Asset Management and our Corporate Trust Services business, and we expect these sales to close during the fourth quarter.\nWe will update you on the expense impact of these initiatives after they close.\nAs mentioned, the outlook accounts for the fact that we expect full-year operating losses to be approximately $250 million higher than our assumptions at the beginning of the year.\nThis includes approximately $1 billion of operating losses incurred during the first nine months of the year, and our outlook assumes $250 million of operating losses in the fourth quarter.\nJust a reminder that operating losses can be lumpy and unpredictable, especially as we continue to address the significant work needed to satisfy our regulatory requirements.\nOur current outlook also assumes revenue-related compensation will be approximately $1 billion this year, which is higher than the $500 million we assumed at the beginning of the year.\nStrong equity markets have driven revenue-related expenses, which is a good thing as the associated revenue more than offsets any increase in expenses.\nNow turning to our business segments, starting with consumer banking and lending on Slide 9.\nConsumer and small business banking revenue increased 2% from a year ago, primarily due to an increase in consumer activity, including higher debit card transactions and lower COVID-related fee waivers.\nHome Lending revenue declined 20% from a year ago, primarily due to a decline in mortgage banking income, driven by lower gain-on-sale margins, origination volumes, and servicing fees.\nNet interest income also declined, driven by lower loan balances.\nThese declines were partially offset by higher gains from the resecuritization of loans we purchased from mortgage-backed securities last year.\nCredit card revenue was up 4% from a year ago, driven by increased spending and lower customer accommodations and fee waivers in response to the pandemic.\nAuto revenue increased 10% from a year ago on higher loan balances.\nTurning to some key business drivers on Slide 10.\nOur mortgage originations declined 2% from the second quarter with correspondent originations growing 2%, which was more than offset by a 5% decline in retail.\nWe currently expect our fourth-quarter originations to decline modestly, given the recent increase in mortgage rates and the typical seasonal trends in the purchase market.\nDespite strong consumer demand for autos, inventory shortages are putting downward pressure on industry sales and driving higher prices.\nThe competitive environment has remained relatively stable, and we've had our second consecutive quarter of record originations with volume up 70% from a year ago.\nTurning to debit card.\nTransactions were relatively stable from the second quarter and up 11% from a year ago, with increases across nearly all categories.\nWe had strong growth in new credit card accounts up 63% from the second quarter, driven by the launch of our new Active Cash Card.\nCredit card point-of-sale purchase volume was up 24% from a year ago and 4% from the second quarter.\nWhile payment rates remain high, average balances grew 3% from the second quarter, the first-time balances have grown since the fourth quarter of 2020.\nTurning to commercial banking results on Slide 11.\nMiddle-market banking revenue declined 3% from a year ago, primarily due to lower loan balances and lower interest rates, which were partially offset by higher deposit balances and deposit-related fees.\nAsset-based lending and leasing revenue declined 12% from a year ago, driven by lower loan balances and lower lease income.\nNoninterest expense declined 14% from a year ago, primarily driven by lower salaries and consulting expense due to efficiency initiatives, as well as lower lease expense.\nAfter declining for four consecutive quarters, average loans stabilized in the third quarter, line utilizations remained low and loan demand continued to be impacted by low client inventory levels and strong client cash positions.\nHowever, there was some increase in demand late in the quarter and period-end balances increased $1.6 billion or 1% from the second quarter.\nTurning to corporate and investment banking on Slide 12.\nIn banking, total revenue increased 12% from a year ago.\nThis growth was driven by higher advisory and equity origination fees and an increase in loan balances, partially offset by lower deposit balances predominantly due to actions taken to manage under the asset cap.\nCommercial real estate revenue grew 10% from a year ago, driven by higher commercial servicing income, loan balances and capital markets results in stronger commercial gain-on-sale volumes and margins and higher underwriting fees.\nMarkets revenue declined 15% from a year ago, driven by lower trading activity across most asset classes, primarily due to market conditions.\nNoninterest expense declined 10% from a year ago, primarily driven by reduced operations expense due to efficiency initiatives.\nWealth and investment management revenue on Slide 13 grew 10% from a year ago.\nA decline in net interest income due to lower interest rates was more than offset by higher asset-based fees primarily due to higher market valuations.\nRevenue-related compensation drove the increase in noninterest expense from a year ago.\nI highlighted earlier the progress we've made on efficiency initiatives to reduce nonrevenue-related expenses, including salaries and occupancy expense.\nClient assets increased 13% from a year ago, primarily driven by higher market valuations.\nAverage deposits were up 4% from a year ago, and average loans increased 5% from a year ago, driven by continued momentum in securities-based lending.\nAnd Slide 14 highlights our corporate results.\nRevenue declined from a year ago, driven by lower net interest income, primarily due to the sale of our student loan portfolio and lower noninterest income due to lower gains on the sale of securities in our investment portfolio.\nThe decline in revenue from the second quarter was primarily driven by lower equity gains from our affiliated venture capital and private equity businesses, and expenses included the $250 million operating loss associated with the OCC enforcement action in September.\n", "role": "user" }, { "content": "compname reports net income of $1.17 per share.\ncompname reports third quarter 2021 net income of $5.1 billion, or $1.17 per diluted share.\nquarterly nii down 5%, primarily due to lower loan balances reflecting soft demand, elevated prepayments, impact of lower yields on earning assets.\nthird quarter 2021 results included $1.7 billion, or $0.30 per share, decrease in the allowance for credit losses.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm joined on the call today by Michael Happe, president and chief executive officer; and Bryan Hughes, senior vice president and chief financial officer.\nAdditionally, we have posted our first-ever quarterly earnings supplement, a compilation of slides that should serve as an efficient way to understand our second-quarter results and provide context related to our company and industry trends.\nThese factors are identified in our SEC filings, which I encourage you to read.\nAs always, we genuinely appreciate your interest in Winnebago Industries and for taking the time to join us.\nAs we continue to navigate the pandemic, we very much wish great health for each of you.\nNow we have stated it often, but these are interesting, dynamic and exciting times for our company.\nThen I will offer some closing thoughts, and we will conclude with a Q&A session.\nWe are very pleased to share that Winnebago Industries delivered another quarter of outstanding financial and operational results.\nOn a year-over-year basis, we grew our top-line net sales by 34%, expanded gross margins 590 basis points, and increased operating income by 237%.\nThese outcomes are especially a reflection of the extraordinary Winnebago Industries team who continue to deliver time after time while leading with our values in all they do.\nOur teammates are truly our greatest asset, and we are very focused together as one enterprise organization on creating tremendous value for our end customers, channel partners, communities, and shareholders.\nIn addition to our employees and their impressive agility, Winnebago Industries continued growth and successful execution is attributable to three other key drivers: number one, our leading portfolio of premium outdoor brands, Winnebago, Grand Design, Newmar and Chris-Craft; second, Winnebago Industries' ongoing commitment to operate with excellence and deliver exceptional quality, innovation and service in everything we do; and lastly, a win-win partnership mentality with our valued dealer network to create and sustain strong consumer demand for our leading portfolio of outdoor products.\nWhile we have undoubtedly been active via acquisitions in the last four-plus years, fiscal-year 2021 quarter 2 represents a truly organic year-over-year comparison in total performance.\nThe second quarter of fiscal-year 2020 was the first full quarter in which Newmar's luxury Motorhome line was included in our world-class portfolio.\nOne year later, we continue to nurture the tremendous appeal of Newmar's growing product lineup and its relentless focus on craftsmanship, quality, and customer care.\nOur collective enterprise results in the second quarter of fiscal-year 2021 validate a strong, complete, full-line RV strategy is now in place here at our company, and premium organic portfolio of RV brands are positioned to compete vigorously in the years ahead.\nNow, there is a distinct strategic cause-and-effect linkage between our premium brands, our golden threads of quality, innovation, and service, and the strong financial results that are being shared with all of you today.\nDifferentiation and strong value can drive sustained market and financial performance.\nThat is and will always be our goal.\nAdditionally, our team's ability to navigate constantly challenging environments related to component cost and availability is on display through our numbers as well.\nWe took and will take actions to ensure our pricing reflects both the surging demand for our premium brands, but also the input cost inflation that is expected in the coming quarters.\nOur ability to sell products at attractive margins and continued low levels of discounting seen across the RV industry contributed to our profitability performance in the quarter and continues to reinforce our brand strength with dealers and end consumers.\nAnd as importantly, our enterprisewide commitment to operational excellence, productivity, continuous improvement, strategic sourcing, etc.\n, was also a significant driver of our performance and resulted in strong second-quarter profitability.\nAs a result, our consolidated second-quarter gross margin of 18.6% represents an increase of 590 basis points versus last year.\nWe are passionate about driving operational leverage within the business and maximizing the return from our current assets.\nOur manufacturing processes are running daily at peak levels as the supply chain allows.\nAnd executing against an increasingly robust order backlog to replenish, as quickly as possible, inventories for our dealer partners.\nThe shift we made in the back half of fiscal-year 2020 to fully build to confirm dealer order production in our Winnebago-branded RV businesses continues to serve us well in terms of profitability and working capital management.\nWhile demand-driven supply chain challenges regularly impact our production, particularly in Class A Motorhomes, we will constantly work with our supply partners to manage any future disruptions as best we can.\nOur Q2 results demonstrate that supply network is assisting an incredible year-over-year production volume increase.\nAnd for that, we are appreciative, maintaining gratefulness in context.\nBut we also continue to be restrained from hitting full manufacturing potential given almost daily component availability challenges.\nQuarter 2 lost net sales due to sourcing constraints was easily eight figures across the portfolio.\nThat revenue opportunity remains inherent in our potential as we transition into quarter 3.\nThe third major driver of our fiscal-year 2021 second-quarter performance was sustained strong consumer demand for our products, both as wholesale appetite from our dealers, but especially at retail with end consumers.\nWe are not seeing any significant decline in retail momentum and outdoor product demand as we turn into the spring 2021 selling season.\nSSI results are often a lagging incomplete barometer of the retail health in the industry.\nAnd our company's retail numbers in the first two to three weeks of March have actually shown sustained strength and even an uptick in certain categories.\nThe RV and marine industry have succeeded in comping effectively over a somewhat normal pre-pandemic period in early calendar 2020.\nIn the next three months of 2021, March through May, which is our quarter 3, we'll see strong retail and wholesale comparisons versus a period of intense marketplace disruption a year ago.\nThroughout the pandemic, we have proven our resilience and ability to execute during difficult macroeconomic and large-scale health crisis conditions just as Winnebago Industries has continued to expand our reach during other challenging periods in our history.\nCurrently, we are experiencing a flattening of seasonality of wholesale and at retail.\nOur calendar 2021 January and February retail sales were similar to our November and December performance, underscoring that even through the typically slower winter months, consumers are excited about our brands and intent on securing the product they need to have extraordinary experiences with family and friends this summer.\nThe strong demand undercurrent we are seeing presently has meaningful implications on our business now, as well as over the long term.\nWelcoming new entrants to the outdoor lifestyle allows Winnebago Industries the opportunity to capture significant customer lifetime value that our portfolio provides.\nFirst-time buyers of both Motorhomes and Towables tend to gravitate toward value models.\nBy delivering our golden threads of quality, innovation, and service, as well as the breadth of premium products for families to grow into over time, we are cultivating a broad growing pipeline of Winnebago Industries consumers as they upgrade, on average, every three- to five-year-olds when staying within the lifestyle.\nAs we continue to persevere and grow our business, we have also made it a priority to enhance and advance our corporate responsibility efforts and ensure that our company has the resources, infrastructure, and commitment to be a valued partner to the communities in which Winnebago Industries stakeholders live, work and play.\nSecond-quarter consolidated revenues were a record $839.9 million, which is an increase of 34% compared to $626.8 million for the fiscal 2020 period driven, as Mike noted, by strong consumer demand for Winnebago Industries' great brands.\nAs Newmar operations were fully included in our fiscal 2020 second quarter, we will no longer be speaking to reported versus organic sales as it relates to Newmar for our quarterly results.\nAs a reminder, 100% of Newmar is reported in the result of our Motorhome segment.\nWe achieved another period of very strong profitability in the second quarter of fiscal 2021.\nGross profit margin increased 590 basis points to 18.6%, while adjusted EBITDA margin increased 570 basis points to 12.9% compared to 7.2% for the fiscal 2020 period.\nSimilar to our fiscal 2021 Q1 performance, this significant margin expansion was driven by favorable pricing, including lower discounts and allowances; productivity initiatives; operating leverage approximating 200 to 250 basis points, and segment mix.\nReported earnings per diluted share were a record $2.04 compared to reported earnings per diluted share of $0.51 in the same period last year.\nAdjusted earnings per diluted share were likewise a record at $2.12 in the second quarter for an increase of 216% compared to the same quarter in fiscal 2020.\nAdjusted EBITDA was $108 million for the quarter, compared to $45.4 million last year, which is an increase of 138%.\nThe increases in both adjusted earnings per diluted share and adjusted EBITDA were driven by strong unit growth, pricing actions, and productivity initiatives, most notably in the Motorhome segment.\nNow, I'll turn to our segment performance, starting with Towables.\nRevenues for the Towable segment were $439.3 million for the second quarter, up 55% over the prior year, driven by elevated consumer demand across the Towables portfolio.\nWinnebago Industries unit share of the North American towable market continues to grow as share on a trailing three-month basis through January 2021 was 12.4% or an increase of 80 basis points over the same period last year.\nSegment adjusted EBITDA was $62.4 million, up 79.5% over the prior-year period.\nAdjusted EBITDA margin of 14.2% increased 190 basis points primarily due to favorable pricing and operating leverage.\nNext, let's turn to our Motorhome segment.\nIn the second quarter, revenues for the Motorhome segment were $382.6 million, up 17.5% from the prior year, driven by increased unit sales in our Class B and Class C products.\nCompared to the same period last year, second-quarter Class C unit sales were up 24.5%, while Class B products were up a very robust 81%.\nClass B market share continues to be strong, as evidenced by our rolling three-month retail unit market share of 45.7% through January of 2021.\nSimilar to last quarter, our Newmar business continues to be challenged by supply issues that are more pronounced relative to our other RV businesses due to the more specialized supplier base that serves this high-end business unit.\nWe estimate the revenue impact to be in the tens of millions of dollars through Q2 year-to-date.\nSegment adjusted EBITDA was $51 million, up 241% from the prior year.\nAdjusted EBITDA margin increased 870 basis points over the prior year to 13.3%, driven by our ongoing focus on operational efficiency, including the transition to a build to dealer order business model in the Winnebago-branded Motorhome business, as well as several other operating improvements and lean initiatives that our business have pursued over the past several years, in addition to pricing actions to ensure our pricing is commensurate with market dynamics and also operating leverage.\nWhile we continue to anticipate inflationary pressures and remain conscious of competition that may impact our net pricing equation, as well as continued supply chain challenges, we are encouraged by another quarter of sustained improvements to our margin in this segment.\nAs we have stated previously, we continue to expect to achieve a level of sustained profitability that is notably above the 4% to 5% EBITDA yield we've delivered in this segment for the past several years.\nWe are pleased to see this meaningful improvement and progress against our strategic focus on restoring leadership in our Motorhome segment.\nNow, turning to the balance sheet.\nContinuing the trend from Q1, our leverage ratio, net debt-to-adjusted EBITDA continued to decline and is now 1.0 times, which is toward the lower end of our targeted range of 0.9 to 1.5 times, driven by both strong EBITDA generation and lower net debt due to the increasing cash balance of now $333 million.\nTotal liquidity, including our untapped ABL, is now in excess of $500 million.\nCash flow from operations was a healthy $66.9 million for the first half of fiscal 2021.\nWorking capital remained slightly elevated due to the inconsistent supply chain delivery but we continue to expect further improvements in this area in the coming quarters.\nOur effective tax rate increased to 23.4% for the first six months ended February 27, 2021, from 20.1% for the same period last year primarily due to consistent year-over-year credits over higher current-year pre-tax income and favorable R&D discrete items in fiscal 2020.\nFor the full year, we currently expect our tax rate to approximate 23.5% to 24%, including all discrete -- or I'm sorry, excluding all discrete items from year-to-date results, and those that may occur in the remainder of the year.\nOur capital allocation priorities remain consistent with those communicated in the past, investing in our businesses to drive organic growth, executing strategic expansion to our portfolio through M&A, maintaining a strong liquidity position, managing our leverage ratio within our targeted range, and returning cash to shareholders.\nDuring the second quarter, we paid a dividend of $0.12 per share on January 27, 2021, and our board of directors just approved a quarterly cash dividend of $0.12 per share payable on April 27, 2021.\nThat concludes my review of our quarterly financials.\nBefore we open the call to questions, I want to touch efficiently on three topics: one, our estimates for RV industry retail and wholesale performance in fiscal-year 2021; two, our thoughts on the probable length of the RV field inventory replenishment cycle and steps we are taking to expand capacity; and three, recent progress at Winnebago Industries on important corporate responsibility priorities.\nIn our fiscal 2021, which is September of 2020 through August of 2021, we believe RV industry retail will grow in the mid- to upper single digits, while industry wholesale shipments in that same period will grow approximately 40% to 45%.\nQuarter 3, March through May for our company, industry retail should be especially strong given the comparisons versus 2020.\nBut quarter 4 for our organization, June through August, industry retail will see a more challenging comparison environment due to record-breaking bounce-back RV retail last summer.\nIt is always our intention over the long-term for Winnebago Industries' retail pace to exceed that of the industry.\nPlease note that our fiscal industry wholesale shipment projection considers and aligns with the RV Industry Association calendar year 2021 industry midpoint forecast of approximately 533,000 units, or plus 24%, a forecast which we support.\nOur most recent field inventory reports early here in quarter 3, continue to show low field inventory levels in Winnebago Industries' RV and marine businesses.\nDepending on the brand or the product category, field inventory is anywhere between 20% lower than a year ago to 60% lower.\nWhile many of the dealers we visit with regularly have a desire to run their operations at a higher turn level in the future than that of the pre-pandemic days, they are many, many, many months from reaching that targeted turn rate.\nWe anticipate that unless there is unexpected severe disruption to our own or the industry's retail performance due to macroeconomic or health developments, that it will take through our entire fiscal-year 2022 to have most of our businesses in a more normal retail to wholesale replenishment status.\nTo support this drive to replenish field inventory, we are actively pursuing and executing several capacity expansion projects within our company, which will position our organization well for future market share gain opportunities.\nSome investments are organic and do not require the addition or expansion of square footage or overhead, while other projects will necessitate a physical increase in infrastructure.\nEach RV and marine business unit here in Winnebago Industries has active capacity expansion efforts under way.\nWe will not share details for competitive reasons.\nPhysical assembly line extensions, standing up new lines in existing buildings, adding vertical manufacturing space and capacity, constructing new assembly buildings, shifting product lines and mix within our existing lines and facility, along with online productivity and lean initiatives that reduce waste and improve output rates, each of these are active today across our portfolio.\nMultiple eight figures of capital is being invested currently and will likely continue well into fiscal-year 2022, and our financial results should gradually show the benefit of these investments each quarter.\nEarlier this month, Winnebago Industries announced we are expanding our long-standing partnership with the National Park Foundation, funding a new initiative to create more equitable outdoor spaces by connecting women and outdoor enthusiasts of color with meaningful career opportunities in national parks.\nInitiatives like these are not only demonstrative of our enterprise brand tag line, Be Great, Outdoors, but enable us to support our communities in meaningful ways that enhance the long-term sustainability of our business.\nIn addition to pursuing external social initiatives, we also are focused internally on responsible governance.\nJust last week, we announced the appointment of two new members to our board of directors.\nJacqueline Woods and Kevin Bryant bring deep professional active experiences and differentiated valued skill sets that will help Winnebago Industries continue along its strong transformational path of growth and innovation.\nBoth Jacqueline and Kevin have extensive experience in building inclusive high-performing teams that are market-focused.\nWe look forward to their input and guidance as Winnebago Industries continues to strategically progress into a more competitive, diverse, and profitable outdoor lifestyle company.\nLooking forward to the second half of fiscal 2021, Winnebago Industries remains committed to advancing our core values and our operations, and our communities, executing on our strategy, capitalizing on opportunities created by favorable market dynamics, and innovating to sustain the unique appeal of our products with consumers.\nI will now turn the line back over to the operator to facilitate the taking of questions.\n", "role": "user" }, { "content": "compname posts q2 earnings per share of $2.04.\nq2 adjusted earnings per share $2.12.\nq2 earnings per share $2.04.\nq2 revenue $839.9 million versus refinitiv ibes estimate of $801.1 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I am joined on the call today by Michael Happe, president and chief executive officer; and Bryan Hughes, senior vice president and chief financial officer.\nThese factors are identified in our SEC filings, which I encourage you to read.\nAs always, we deeply appreciate your interest in Winnebago Industries and taking the time to discuss our fiscal 2021 third-quarter results.\nI will begin with an overview of our performance before turning it over to Bryan Hughes, who will discuss our financial results in more detail.\nIn those challenging and uncertain early weeks of the pandemic in spring of 2020, Winnebago Industries suspended our manufacturing operations while we work with our team and suppliers to develop the safety protocols necessary to keep our people safe.\nIt is also remarkable that as we sit here today, our scientists, healthcare professionals, public health officials and the broader pharmaceutical industry collaborated to bring effective and safe vaccines to market in record-breaking time, helping us to slow down the spread of the virus to levels with which we can live carefully through today.\nOur gratitude is immense to all those involved.\nWe believe the pandemic not only accelerated some existing purchase intent within the recreational vehicle and marine markets these last 15 months, but we are equally convinced there has been, is and will be a meaningful expansion of interest and engagement in the outdoors that will benefit our business and industries for many years, even through when avoidable cyclical periods that have been and will be a part of the outdoor economy for decades.\nToday, more families than ever are seeking ways to enjoy the outdoor lifestyle.\nWith 10.1 million households having camped for the very first time in 2020 and another estimated 4.3 million households undergoing their own rookie camping experience as well in 2021, our team is helping to meet increased demand for our products and brands while delivering record financial performance.\nMore new families, more first-time buyers and more diverse customers, getting their taste of what exploring this great country via the open roads and expansive waterways is all about.\nNow some will look for signs of fallout of first-time buyers and challenging comparative periods in the short term to record retail demand a year ago.\nBut others like us, see a net positive new wave of engaged enthusiasts, especially millennials and younger generations, who are actively now shifting their available time and income to invest in a lifestyle that is rewarding and accommodating to countless use cases personally and professionally when using our products.\nToday's fresh memories for youth, first-time explorers and even veteran outdoor participants will be the foundation for our industry to grow from in the decades ahead.\nWe are long and bullish on America's outdoor recreation economy and the place in that ecosystem Winnebago Industries will hold in the future.\nI'm incredibly proud of the progress we have made in the past year, and it is all due to our team, which we serve as leaders here at the company.\nOur results for the third quarter of fiscal-year 2021 continue to build on the momentum we have generated throughout the fiscal year.\nIn the third quarter, Winnebago Industries grew net sales to a record $960.7 million, representing a 139% growth year over year and an organic ex-Newmar growth of 53% over our pandemic fiscal third quarter in 2019.\nOur two-year performance demonstrates not only the exceptional growth in consumer demand for pursuing the outdoor lifestyle, but also that Winnebago Industries has continued to diligently execute to meet that demand while growing market share at the same time.\nAs of April 2021, our RV fiscal year-to-date market share is now 12.5%, up 40 basis points from the same period last year.\nWinnebago Industries top-line performance in the third quarter also represented 14% sequential growth over our fiscal 2021 second quarter.\nAnd while we do not talk about sequential growth, typically for seasonal reasons, given the unique nature of our comparable periods because of the pandemic's impact on a year ago's Q3 results, it is helpful in demonstrating our sustained revenue growth throughout the year and speaks to the stickiness of consumer demand.\nThough catalyzed undoubtedly by the onset of the pandemic, demand for our products has remained strong as the vaccine rollout and gradual reopening across North America has picked up.\nOur team has stepped up production output as a result.\nThe golden threads of quality, service and innovation extend to everything we do, and were a significant driver of our strong profitability in the third quarter.\nThe craftsmanship and quality of our premium products at every price point and across each of our Winnebago, Grand Design, Newmar, and Chris-Craft brands enables us to continue to grow our market share, even at historically low levels of discounting.\nSimilarly, the superior service and support we provide our consumers through deep partnerships with our dealers, affords us the ability to execute carefully consider pricing actions to reflect the surging demand for our products, but also offset the real input cost inflation that is present across our industries.\nOur enterprisewide build-to-order production approach also continues to serve us well as we remain disciplined, considering ongoing supply chain challenges.\nOur consolidated working capital and overall profitability remain improved.\nAt Winnebago Industries, we often talk about the importance of our dealer network relationships and the strength of those partnerships as a critical differentiator.\nOur dealers are committed to our premium brands, and they have not sacrificed their dedication to customer satisfaction at any time through this pandemic.\nThe dealers have done an exceptional job of managing through lower inventory levels than desired and rising sales and service demand.\nThey continue to express their confidence in both the future retail demand environment and in Winnebago Industries as an OEM through increased levels of backlog orders.\nWe are also committed consequently to working closely with our supplier partners to meet that order appetite as quickly as possible.\nBut as always, safely, and delivering high levels of product quality always.\nOur record sales in dollars and units in fiscal 2021 third quarter show that we are sequentially determined to invest in finding ways to increase output.\nWe continue to experience demand-driven supply chain challenges that restrain our operations from reaching full production capacity and have been facing various ways of inflation pressure as well in the last six months.\nThe impact of these supply based inconsistencies is evident in some of the segment results.\nBut our team is working closely with our supply chain partners to manage through these conditions with flexibility, nimbleness and process discipline as much as possible.\nWe are grateful for our supplier relationships and all they are doing to feed our assembly lines daily.\nWe provided this as a means of disclosing additional context for the strong results we are reporting for our third quarter ended May 29, 2021.\nAs a reminder, the prior year third quarter was significantly impacted by the roughly six-week shutdown period that we imposed on our operations in response to the COVID pandemic and are imperative to keep our employees and other stakeholders safe.\nAs a result, comparisons against this prior year are less meaningful in providing context for this year's performance.\nWith this in mind, our third-quarter consolidated revenues, gross margins, EBITDA margins, and earnings per share were all significantly ahead of the prior-year results.\nOur strong sales generated substantial operating leverage and improved yield, and also reflected the strong demand driven by interest in our products.\nIn short, we had record results in sales and EPS, and our great term -- our great team, excuse me, deserves a lot of credit for executing a terrific third quarter.\nDue to the significant disruption in Q3 of last year, I will discuss our performance compared to 2019, where helpful, two years ago, and also sequentially, meaning compared to our second-quarter results released last quarter to provide additional context.\nSales increased by 81.6% as compared to two years ago for third-quarter 2019, representing strong organic growth of our brands and also benefiting from the acquisition of Newmar.\nSales increased by 14% in Q3 as compared to Q2, representing the continued efforts by our supply chain and our team to generate increased output to meet the very strong demand that our dealers and end customers are exhibiting for our products.\nThis is also demonstrated by the record backlog related to dealer orders, up an additional 18.2% versus Q2.\nWhile we continue to address the ongoing constraints presented by the supply chain, we are pleased to see the sequential progression in our output and shipments to our dealer partners.\nGross margins of 17.7% increased 130 points versus the 16.4% of third quarter two years ago, driven by cost savings initiatives, product mix and productivity improvements.\nGross margins declined modestly in Q3 compared to Q2; 17.7% in Q3, as compared to 18.6% in Q3 -- Q2, excuse me, driven by labor productivity impact from some of the supply chain inconsistencies, timing of investments in the business and higher material costs.\nMargins of 17.7% in Q3 were well above our historical run rate and reflect primarily, the improvement in the motorhome segment.\nNet income increased to $71.3 million in Q3, which is up 97% or almost double what was delivered two years ago.\nNet income increased 3%, compared to the $69.1 million in Q2.\nReported diluted earnings per share of $2.05 in Q3 compares to a reported diluted earnings per share of $0.37 in the prior-year period and sequentially compares to a reported diluted earnings per share of $2.04 in Q2.\nAdjusted diluted earnings per share of $2.16 in Q3 compares to $2.12 in Q2.\nDiluted earnings per share was $1.14 Q3, two years ago.\nIn summary, Q3 was up significantly across all metrics when compared to our Q3 two years ago and showed a sequential improvement in sales, profit and in EPS, driven by continued sales growth in a very dynamic demand landscape and supply chain environment.\nNow I'll turn to our segment performance starting with towables.\nRevenues for the towable segment were $555.7 million for the third quarter and increased 26.5% sequentially versus the second quarter, driven by elevated output and supported by strong consumer demand for our Grand Design and Winnebago-branded products.\nWinnebago Industries' unit share of the North American towable market on a trailing three-month basis through April 2021, was 11.4%, reflecting an increase of 90 basis points over the same period last year.\nSegment adjusted EBITDA was $80.1 million, up 28.5% sequentially or compared to the second quarter.\nAdjusted EBITDA margin was a strong 14.4%, increasing from 14.2% in Q2, as continued leverage and pricing, combined with lower discounts and allowances, helped to offset rising costs driven by inflation.\nBacklog increased to a record $1.5 billion, an increase of 17% versus the second quarter, reflecting continued strong consumer demand, combined with extremely low levels of dealer inventory.\nNext, let's turn to our motorhome segment.\nIn the third quarter, revenues for the motorhome segment were $385.3 million, up 1% sequentially compared to the second quarter.\nAs Mike mentioned, our motorhome products are in high demand, but results were limited by our inability to keep pace with the very strong demand due to certain supply chain challenges across many of our motorhome models.\nSegment adjusted EBITDA was $37.5 million, compared to a loss of $10.8 million in the same period last year.\nEBITDA in Q2 was $51 million.\nEBITDA margins of 9.7% remained very strong relative to the 4% to 5% recorded historically, and is down from a record Q2 due to a different product mix, lower productivity due to the supply chain inconsistencies and also investments in the business, including the very successful dealer meeting held by the Newmar business.\nThe Newmar EBITDA margin of 9.7% was well ahead of EBITDA in Q3 of 2019 at 0.2%, reflecting the significant improvements from our cost savings, productivity and product mix.\nBacklog in the motorhome segment increased to a record $2.2 billion, an increase of 323.3% over the prior year and an increase of 21.2% versus Q2 as dealers continue to experience significant reductions in inventories due to extremely high levels of consumer demand.\nWhile we are experiencing inflationary pressures and remain conscious of competitive dynamics that may impact our net pricing equation, as well as continued supply chain inefficiencies caused by certain chassis or component constraints, we continue to expect to achieve a level of sustained profitability that is notably above the 4% to 5% EBITDA margin we've delivered in this segment historically.\nWhile we are pleased to see this meaningful improvement we have more work ahead of us in the areas of productivity and labor efficiency, asset utilization and the positioning and health of our product line.\nNow turning to the balance sheet.\nDriven by consistent levels of gross debt, growing levels of cash and consistent growth in adjusted EBITDA, our leverage ratio or net debt to adjusted EBITDA, is now 0.5 times.\nWe have strong financial flexibility to invest in the business, pursue value-added M&A opportunities and support shareholder returns.\nOur liquidity, including our currently untapped ABL, is just short of $600 million.\nCash flow from operations was $148 million in the first nine months of fiscal 2021, a decrease of $14.5 million from the same period last year.\nOn a year-to-date basis, we're benefiting from our improved profitability and working capital improvements driven by our made-to-order model that were more than offset by changes in working capital required to support increased production and rapid sales growth, as well as additional working capital from supply chain challenges.\nOn a quarterly basis, cash flow from operations was $81 million in Q3, which is an increase of $11.4 million versus the $69.6 million in Q2.\nOur effective tax rate in our fiscal third quarter decreased to 22.8%, compared to 25.3% in the same period last year.\nFor the full year, we currently expect our tax rate to approximate 23% to 24%, excluding all discrete items from year-to-date results and those that may occur in the remainder of the year.\nOur capital allocation priorities are focused on investing in organic growth opportunities for our businesses, executing strategic expansion to our portfolio through M&A, maintaining our leverage ratio within our targeted zone, maintaining a strong liquidity position and returning cash to shareholders.\nDuring the third quarter, we paid a dividend of $0.12 per share on May 19, 2021, and, and our Board of Directors just approved a quarterly cash dividend of $0.12 per share payable on June 30, 2021, to common stockholders of record at the close of business on June 16, 2021.\nThat concludes my review of our quarterly financials.\nMike, back to you.\nWe continue to meet the social challenges of the day with grit, determination, compassion and an intense focus on the safety and well-being of all members of our team.\nI am incredibly happy to report that COVID-related impacts to our labor force are at their lowest level since the pandemic started.\nAs we begin to take steps into a brighter, less socially distanced future, we are proud to carry out our mission of providing families and friends with access to beautiful outdoor spaces.\nIn doing so, we will continue to support our employees by serving them in communities where they live, work and play and optimizing our ESG performance across our organization.\nTo that end, we announced two exciting new community initiatives in the recent third quarter.\nFirst is our participation in the United Nations Global Compact, a corporate sustainability initiative, designed to advance universal principles on human rights, labor, environment and anticorruption.\nWe joined over 12,000-plus global signatories, including several others in the outdoor recreation industry in supporting United Nation Global Compact's 10 principles and integrating these principles into our company's strategy.\nAdditionally, the Winnebago Industries Foundation has partnered with Habitat for Humanity, a global housing nonprofit to support their community-based neighborhood revitalization efforts.\nThe partnership includes a significant financial donation in support of Habitat's RV Care-A-Vanner program.\nThese organizations' missions are clearly aligned with Winnebago Industries values and enable more communities to enjoy the outdoor safely and equitably.\nWinnebago Industries remains committed to advancing our core values in our operations and our communities, executing on our strategy, capitalizing on opportunities created by favorable market dynamics and innovating to sustain the unique appeal of our products with consumers.\nYou will continue to hear more about our corporate responsibility momentum within our enterprise in the future and the incremental resources we will allocate.\nIt is not only who we are, but it is how we do what we do.\nAs Winnebago Industries enters the final quarter of fiscal 2021, it is safe to say that we are in exciting and yet unique time still.\nField inventories in the RV and marine markets remain at almost historically low levels when using inventory turns as the metric.\nRetail demand and interest remains very strong for our products as we enter the summer months, even as the outdoor industry potentially faces unprecedented retail comp periods versus a year ago.\nWhile there are a few reports of some consumer retail order cancellations attributed to product delivery lead times or price increases in recent months, the high majority of retail orders are indeed intact, and we believe dealers will honor a high percentage of their backlog orders for the foreseeable future.\nRetail financing remains available and affordable, with lenders staying disciplined in most cases on approval criteria.\nAnd, lastly, and certainly importantly, all stakeholders are managing to the best of their ability, the implication of rising material input costs, tight labor markets and component availability challenges.\nRegardless of the above topics, we are pleased with our results and are convinced that our teams at Winnebago Industries are managing these dynamics as well, if not better than most of our peers.\nWe will maintain our focus on executing our proven strategy to build a differentiated, premier outdoor lifestyle company and drive long-term value for end customers, dealers, employees and shareholders.\nOur market share progression validates that we are improving our overall competitiveness every quarter.\nOur financial results are demonstrating consistent, credible, sustained traction on improving profitability, creating very strong cash flow and managing our assets effectively, while preserving financial stability and liquidity for both strategic growth opportunities in the future, but also any uncertain times ahead.\nWe are continuing to invest in our business to ensure we are best positioned to meet the persistent elevated demand we anticipate in quarters and years to come, driven by the secular and ongoing growth in outdoor lifestyle products and consumer priorities for leisure and family activities, and our own ability to grow faster than the market.\nWe have mentioned our need to add capacity across the Winnebago Industries' enterprise in previous earnings calls.\nThese plans were foreseen in our previous year's long-range plan exercises and were validated again during our most recent long-range plan.\nIn the immediate future over the next 12 to 18 months, we will add capacity in many ways, building new facilities, as well as reengineering existing business processes operational flow or building redesigns.\nCapacity is being added inorganically via new spaces and more square feet at Grand Design, Chris-Craft, and Newmar, and organically through continuous improvement initiatives on the Winnebago brand and on every campus in the company.\nThese investments should be a clear sign of our confidence in the future, both in terms of the vitality of the end markets, but also our market share prospects led by the development of many yet-to-be-announced, innovative new products in our pipeline.\nNow before we open the call to questions, I want to touch quickly on expectations for the RV industry as we enter the last quarter of our 2021 fiscal year.\nWe believe industry wholesale shipments will grow approximately 50% annually in our 2021 fiscal year, and we are aligned with the RVIA forecast of approximately 34% more shipments for the industry for the full 2021 calendar year.\nAnd, finally, I will take a moment to reiterate my immense appreciation to the world-class Winnebago Industries team, without whom, we would not be sharing such outstanding results today.\nOur team truly believes in our core value system and takes pride in creating the world's finest outdoor lifestyle products.\nBryan, Steve and I are honored to be a part of such a dedicated and talented group as we continue to serve our employees and the communities in which they live, work and play, along with the customers who count on our brands as their conduits to extraordinary experiences in the outdoors.\nI'll now turn the line back over to the operator for the Q&A session.\n", "role": "user" }, { "content": "compname posts q3 earnings per share $2.05.\nq3 earnings per share $2.05.\nq3 revenue $960.7 million versus refinitiv ibes estimate of $839.4 million.\nq3 adjusted earnings per share $2.16.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm joined on the call today by Michael Happe, president and chief executive officer; and Bryan Hughes, vice president and chief financial officer.\nThese factors are identified in our SEC filings, which I encourage you to read.\nWe express our hope that each of you and your families are safe and healthy, currently and into the future.\nI would like to begin with an overview of the progress made by our team in continuing to transform our company during this unprecedented fiscal year 2020.\nWe will specifically highlight the macro results of our strong fiscal 2020 fourth quarter and review the strategic drivers critical to that success.\nOur final segment will offer some closing thoughts on the state of the outdoor industry, early trends we are seeing in our fiscal 2021 first quarter, which we are already more than halfway through, and our core enterprise strategies for the future.\nWe will conclude the call, as always, with a question-and-answer session.\nNow it is difficult to overstate just how unique the back half of our fiscal 2020 year was from the March through August.\nWe witnessed the incredible health, societal and economic consequences of the worst global pandemic in more than 100 years.\nCritical matters of social injustice rose to the forefront during the summer of 2020, and the depth of our country's political discord seems as magnified as ever.\n2020 also witnessed and continues to experience an engagement by Americans in the great outdoors at recently unseen levels.\nOur consumers combined the imperative of the safety of their families with our strong desire to be immersed in the experiences they could control and consequently flocked to the outdoor recreation lifestyle like never before.\nThe outdoor industry, the recreational vehicles industry, the marine industry and Winnebago Industries continues to see record interest in outdoor participation as calendar year 2020 progresses.\nI strongly believe that the prevailing theme of fiscal 2020 was that despite all of the chaos we experienced, our 5,500-plus strong Winnebago Industries employees were steadfast in their commitment to safely achieving our strategic goals and also delivering on our golden threads of quality, innovation and service in all that we do.\nThis team experienced some difficult days in -- as we navigated the worst of the pandemic's impact on our business, and they continue to adhere to the stringent safety protocols we utilize every day.\nIt is our employees' ongoing commitment to working collaboratively, safely and efficiently that drives our business forward.\nThey, too, are true heroes as the pandemic drags on, and their efforts remain a constant force against this unfortunate virus.\nIn fiscal 2020 and especially in our fourth quarter, we made meaningful progress on delivering on our strategic growth initiatives and creating increased value for key stakeholders of our business.\nWhile the acute impact of this year's third quarter impeded our ability to deliver the full-year financial performance, reflective of the momentum we had generated in the first half of the year, the underlying fundamentals of the business remain strong, driven by ongoing and tremendous consumer and dealer demand, which has returned in full force, evidenced by our significant fourth-quarter results.\nThroughout the fiscal year, we continued to expand our portfolio, organically and now inorganically, and gain market share behind our four premium outdoor brands.\nWe successfully completed the acquisition of the Newmar luxury RV business in November of 2019, which added yet another outstanding brand to our Winnebago Industries family and furthered our progress to restore leadership in the Motorhome RV segment through their ever-increasing market share in the Class A Motorized category.\nWinnebago Industries also drove organic market share in fiscal year 2020, led once again by the surging Grand Design RV brand and its expanding and highly desired travel trailer and fifth wheel lineups.\nOur leading offering of Winnebago-branded Class B vans added almost nine points of market share in fiscal 2020, and heralded some new product launches by our Winnebago Towables team also enabled a significant increase in future orders in that business.\nAs the pandemic hit our company with unforeseen speed in the middle of March, we, ourselves, took swift and appropriate actions to protect our employees and key stakeholders, while strengthening our solid financial position and ensuring liquidity and flexibility in the face of uncertainty.\nWhile much of our operations were suspended for six weeks in the spring of 2020, we wasted no time reimagining some daily operating processes to ensure a safe return to full operating status in May, which allowed us to react appropriately to begin meeting increased and soon to be record levels of consumer demand in the summer of 2020.\nWe kept our foot on the accelerator in terms of new product development, worked to create strategic and mutually beneficial relationships with key suppliers and pivoted our portfolio to a committed and confirmed order production system.\nThese actions and many more set us up to safely and profitably deliver for our end consumers and dealers in the fourth quarter even as a record backlog of new orders accumulated across both our RV and Marine businesses.\nThroughout our fiscal year, Winnebago Industries continued to make progress in realizing our vision to be a leading provider of outdoor lifestyle solutions and in creating value for our shareholders and communities.\nIn fiscal 2020, Winnebago Industries returned $15 million to shareholders through our increase in sustained dividends.\nAs Bryan Hughes will touch on further, our capital allocation priorities are focused on managing our flexibility and maintaining our solid financial position as we continue to really invest in a disciplined manner in the face of an uncertain economic environment.\nWe feel confident but remain constantly diligent in the strength of our balance sheet and are pleased with our ability of having delivered positive operating cash flow throughout the fiscal year.\nWe also maintained our commitment to publishing our first annual corporate social responsibility report for the 2019 calendar year, with the 2020 edition just around the corner later this fall.\nThese reports highlight our every effort to address the environmental, social and governance issues that impact our employees, our customers and our world and most directly affect the long-term success and sustainability of our business.\nIt is also indicative of our commitment to developing goals and tracking our progress toward enhanced sustainability.\nAdditionally, in light of the pandemic and the financial hardship it has put on so many in our communities, Winnebago Industries made a record 7-figure donation to the Winnebago Industries Foundation in fiscal 2020, supporting national partners in its three impact areas: outdoors, access and community as well as some local organizations in our Winnebago Industries hometowns, like those supporting the pandemic first responders and healthcare providers in the communities in which our employees live, work and play.\nTurning now to our consolidated financial results.\nOur fiscal fourth quarter was a strong finish to the year, reflecting the appeal and the market position of our portfolio of leading outdoor lifestyle brands.\nThe strides we have made in safety and operational excellence and the value of our collaborative relationships with our supplier partners and our dealer network.\nConsolidated revenues for Winnebago Industries were the $737.8 million for the fourth quarter of fiscal 2020, an increase of approximately 39% year over year and a robust 15.3% organic increase, excluding the impact of Newmar.\nWe saw exceptional demand across our product portfolio as consumers invested in safe outdoor lifestyle solutions once the stay-at-home restrictions began to lift, with standout performance by Grand Design in our Towables segment and Class B sales in our Motorhome segment.\nBehind the strength of our Winnebago Grand Design and Newmar brands, and we saw our RV market share gains continue, achieving 11.3% market share on a trailing 12-month basis, which is a full 1.3 percentage points above last year, of which 0.8 percentage points or almost 2/3 is organic.\nRemember, this company had less than 3% total market share at the end of 2015.\nThis continuation of market share gains is especially encouraging since first-time RV buyers make up a larger portion of our purchases these days.\nFirst-time buyers generally gravitate toward more entry-level models where Winnebago Industries portfolio skews toward more premium offerings.\nYet, our market share gains would now reflect that we appear to be competing just fine for these new consumers.\nFull-year operating cash flow was $270.4 million, an increase of approximately 102%, reflecting disciplined working capital management and our strong sales momentum throughout the year, despite the acute COVID impact in our fiscal third quarter.\nWe have continued to be very measured with our cash and have maintained our focus on curtailing expenses and enhancing our liquidity.\nOur cash balance rose to $293 million at quarter end.\nWhile really our outlook for continued strong consumer and dealer demand trends are positive, we are closely monitoring the evolution of the pandemic and its economic impacts.\nThe successful cash management actions that we deployed in the third quarter underscores this high variability of our cost structure and our ability to manage through challenging periods should we face further macro level disruption.\nI am also very pleased that Winnebago Industries' overall quarterly adjusted EBITDA margin expanded over 70 basis points in the fourth quarter compared to the same period last year as we continued our focus on excellence in operations and delivered our profitable growth safely.\nWe reimagined our operating processes to support a safe return to running at high speed throughout our fourth quarter and continuing into fiscal year 2021.\nNow let us turn to the segments in more detail.\nIn the Towables segment, fourth-quarter revenues of $414 million were up approximately 35% from the prior year period, primarily driven by strong demand for safe outdoor lifestyle experiences and the strength of our premium Towable portfolio.\nThe increasing appeal of Grand Design's products and their tireless focus on quality, innovation and service has allowed us to again outpace the industry.\nOur adjusted EBITDA margin was 14.8% in the quarter for the Towable segment, up 110 basis points compared to the same period last year as a result of fixed cost leverage and profitability initiatives.\nBacklog increased to a record $747.9 million, an increase of approximately 219% over the prior year period as dealers at the end of August had largely depleted much of their inventories to meet high levels of the consumer demand in the fourth quarter.\nOur multi-branded Towables portfolio has continued to be resilient and successful in gaining share.\nAnd we still see vast opportunity for growth as demand trends remain positive, overall market size expands and our dealers will look to restore lot inventory levels, especially with our preferred brands.\nOur performance emphasizes that our Winnebago brand and our Grand Design Towables lineups remain strong and reflects the continued appeal of both brands with consumers.\nTurning to the Motorhome segment, the addition of Newmar's luxury brand to our Motorhome platform is allowing Winnebago Industries overall to compete more effectively in the Class A and Super C categories and more broadly supporting our priority to restore our Motorhome business to a leadership position.\nAs demand trends continue and new customers come into the RV lifestyle, our Motorhome segment is headed in the right direction to be also more balanced and competitive than ever and well positioned to capture value going forward.\nFourth-quarter Motorhome segment revenues are $301.8 million were up approximately 50% from the prior year period, driven by those same strong demand trends for safe outdoor family experiences.\nExcluding Newmar, organic revenues were $175.5 million, down 12.6% from the same period last year.\nYou may recall that fourth quarter of fiscal year 2019 saw strong Class B and Class C unit sales as we benefited from more normal chassis availability a year ago.\nIn fourth quarter of fiscal 2020, our strengthening Class B sales more than offset, by the impact of the COVID-19, our Class A and Class C sales that did not recover as quickly after the shutdown in Q3.\nYet Winnebago, our brand, increased its Class C diesel sales in August and throughout our fiscal year.\nAdjusted EBITDA margin for the Motorhome segment increased to 6.4% in the quarter, 100 basis points over the fourth quarter in 2019 because of lower input costs.\nOur Motorhome backlog increased to some record $1.1 billion at the end of this August, an increase of approximately 536% from the prior year due to depleted dealer inventory, strong consumer demand and the influx of Newmar orders inorganically.\nOur fourth-quarter backlog included approximately 7,000 units of Winnebago-branded Motorhome units alone as dealers see increasing promise in the improving lineup of Motorhome products within that brand.\nWe have also continue to work closely with our suppliers to ensure that we are supporting them and partnering with them in carefully managing the supply chain with more advanced notice on lead times and overall closer communication.\nLikewise, we also continue to validate the incredible amount of orders from our dealer partners and prioritize what they need most to continue to sustain impressive retail momentum in the months ahead.\nIn fiscal year 2021, we have continued to ensure that we are strategically sourcing from our supplier partners in sustainably, replenishing dealer stocks as possible.\nFinally, I will touch on our Marine segment.\nLike our RV businesses, Chris-Craft's strong premium brand and market position has propelled it to growth in the fourth quarter as more consumers flock to experiencing the outdoors by boat as well.\nThe planning process for our capacity expansion at the facility in Sarasota is being considered again as we look to fuel this brand as an integral part of our broader outdoor lifestyle solutions platform.\nSummer of 2020 saw record retail for our Chris-Craft brand, the introduction of further new models, a decline in field inventory with its dealer partners and a material increase in backlog orders, stretching deep into spring of calendar 2021.\nFourth-quarter consolidated revenues were $737.8 million.\nRevenues, excluding Newmar, were $611.5 million, reflecting an increase of 15.3% compared to the fiscal 2019 fourth quarter, driven by the strong rebound in consumer demand in the Towable segment and Class B Motorized products.\nGross profit was $122.5 million in the fourth quarter, an increase of approximately 47% year over year, reflecting strong growth in the Towable segment and the contribution from Newmar.\nGross profit margin of 16.6% was up 90 basis points compared to the same period of last year due to lower Motorhome segment input costs and Towable segment fixed cost leverage, partially offset by segment mix as a result of the acquisition of Newmar.\nOperating income was $68.4 million for the quarter, an increase of approximately 53% compared to the fourth quarter last year.\nFiscal 2020 fourth-quarter net income was $42.5 million, an increase of approximately 33%, compared to $31.9 million in the fourth quarter of last year, driven by the growth in operating income, partially offset by increased interest expense.\nThe increase in interest expense is related to the convertible bond issued to finance the acquisition of Newmar, and separately, the write-off of certain debt issuance costs associated with the termination of the company's Term Loan B, which, as previously announced, was refinanced by a bond issuance during the fourth quarter.\nOur earnings per diluted share was $1.25.\nAdjusted earnings per diluted share was $1.45, representing an increase of 45%, compared to adjusted earnings per diluted share of $1 even in the same period last year.\nConsolidated adjusted EBITDA was $76.5 million for the quarter, compared to $50.8 million last year, an increase of approximately 51%.\nNow turning to the full-year fiscal 2020 results.\nAnd as Mike mentioned earlier, the COVID-19 pandemic and the related shutdown of our operations in the third quarter, combined with the momentary disruption to consumer purchasing patterns, had a significant impact on our results for fiscal 2020.\nConsolidated fiscal 2020 revenues of $2.4 billion increased approximately 19% from $2 billion in fiscal 2019, positively impacted by the acquisition of Newmar, which closed in Q1 of fiscal 2020, but negatively impacted by the COVID-19 pandemic and related suspension of manufacturing operations.\nGross profit margin decreased 220 basis points, primarily due to the mix impact of adding Newmar as well as the related purchase accounting impacts and further impacted by COVID-19 and associated deleverage during fiscal third quarter.\nOperating income for the year was $113.8 million, compared to $155.3 million in fiscal 2019, and net income was $61.4 million.\nFull-year earnings per diluted share were $1.84, a decrease of approximately 48% compared to fiscal 2019.\nAdjusted earnings per diluted share was $2.58 for fiscal 2020, compared to adjusted earnings per diluted share of $3.45 in the same period last year.\nFiscal 2020 consolidated adjusted earnings per diluted share excludes costs totaling $25 million or $0.74 of per diluted share after tax related to the noncash portion of interest expense on the convertible bond, Newmar acquisition-related costs, debt issuance cost write-off due to termination of the Term loan B and restructuring costs.\nRecall also that reported and adjusted earnings per diluted share was also impacted by the 2 million shares issued as consideration in the Newmar acquisition.\nFiscal 2020 consolidated adjusted EBITDA was $168.1 million, a decrease of 6.4% from $179.7 million in fiscal 2019.\nNow, before turning to the individual segments, I wanted to mention that amortization of intangibles for the fourth quarter was $3.6 million.\nWe currently expect amortization of approximately $3.6 million in each quarter of our fiscal 2021.\nNow turning to the individual segments, beginning with the Towable segment.\nTowable segment revenues for the fourth quarter were $414 million, up approximately 35% from $307 million in fiscal 2019, primarily driven by strong consumer demand for outdoor experiences.\nNotably, Grand Design's resilience and popularity with consumers has again enabled the brand to gain market share.\nAs of just August, Grand Design's market share was 8.7% of the Towables market on a trailing 12-month basis, representing an increase of 1.5 percentage points over the prior year.\nSegment adjusted EBITDA for the fourth quarter was $61.3 million, up approximately 46% year over year and adjusted EBITDA margin of 14.8% increased 110 basis points, primarily due to fixed cost leverage and profitability initiative.\nFor the full-year fiscal 2020, revenues for the Towable segment were $1.2 billion, up 2.5% from fiscal 2019, reflecting strong results for three quarters of our fiscal year, partially offset by the severe impact of the suspension of manufacturing and consumer disruption due to the COVID-19 pandemic in the third quarter.\nSegment adjusted EBITDA for the full year was $148.3 million, down approximately 9% from fiscal 2019.\nAdjusted EBITDA margin of 12.1% decreased 160 basis points for the full year, driven again by the COVID-related impacts during our fiscal third quarter.\nNext, let's turn to our Motorhome segment.\nIn the fourth quarter, revenues for the Motorhome segment were $301.8 million, up approximately 50% from the prior year, driven by the addition of Newmar.\nExcluding Newmar, segment revenues decreased 12.6% compared to the prior year as a result of strong Class B sales, offset by a decline in Class A and Class C sales due to a slower ramp-up of this business following the COVID-19 pandemic.\nSegment adjusted EBITDA was $19.5 million, up approximately 81% over the prior year due to improved profitability in the Winnebago-branded business and the addition of Newmar, partially offset by class mix.\nAdjusted EBITDA margin was 6.4%, an increase of 100 basis points over the prior year, primarily due to lower input costs, driven by an improvement in our LIFO reserve of $5 million that was recognized in the quarter.\nThis reduction in the LIFO reserve was driven by the initiatives that produced a dramatic reduction in inventory in the Winnebago Motorhome business, largely recognized in Q3 and Q4.\nFor the full-year fiscal 2020, revenues for the Motorhome segment were $1.1 billion, up approximately 50% compared to fiscal 2019.\nRevenues, excluding Newmar, were $668.4 million, down 5.4% from fiscal 2019 as a result of manufacturing and distribution disruption due to this COVID-19 pandemic.\nSegment adjusted EBITDA for the full year was $32.9 million, up 20% over fiscal 2019, driven by the addition of Newmar.\nAdjusted EBITDA margin of 3.1% was down 80 basis points for the full year due to the impact of COVID-19 during our fiscal 2020 third quarter, partially offset by the addition of Newmar.\nTurning to the balance sheet.\nAs of the end of the fiscal year, the company had outstanding debt of $512.6 million, comprised of $600 million of gross debt, net of convertible note discount of $74.3 million and our net of debt issuance costs of $13.1 million.\nWorking capital was $413.2 million.\nOur current net debt to adjusted EBITDA ratio was 1.7 times.\nAt the end of June, we took an opportunity to restructure the Term loan B portion of our outstanding debt.\nThe action took advantage of favorable financing rates in the debt markets to add further flexibility to our overall debt position by allowing us to extend maturity dates without any maintenance covenant restrictions.\nI'll touch more on this a bit later.\nAnnual fiscal year 2020 cash flow from operations was $270.4 million, an increase of $136.7 million from the same period of fiscal 2019.\nOur disciplined approach to preserving cash was critical in our ability to navigate the COVID-related temporary shutdown in Q3.\nWe have also made dramatic improvements during the year to the inventory position of the Motorhome business, and this was the primary contributor to the extremely strong cash flow generated this year as compared to last year.\nAnd finally, we continue to maintain a very healthy liquidity position.\nAs Mike mentioned earlier, our cash balance increased to approximately $293 million at the end of the fiscal year, and we currently have nothing drawn on our $193 million ABL.\nThe effective income tax rate for the full year was 20.5%, compared to 19.5% for fiscal 2019.\nOn August 19, 2020, the company's board of directors approved a quarterly cash dividend of $0.12 per share payable on September 30, 2020, to common stockholders of record at the close of the business on September 16, 2020.\nThis represents a 9% increase from the prior dividend of $0.11 per share.\nAs Mike mentioned earlier, Winnebago Industries returned a total of $15 million to shareholders during the fiscal year 2020.\nThe acquisition of Newmar in November introduced $300 million of convertible debt.\nIn late June, during our fiscal Q4, we refinanced our Term loan B and issued some senior secured notes, also valued at $300 million.\nThere are a couple of important considerations that are deserving of some additional comments.\nThe first is that the convertible debt instrument, which matures in 2025, is not prepayable.\nThe secured notes mature in 2028 and prepaying during the first three years is cost prohibitive.\nSecond, the convertible note will have a dilutive accounting impact on outstanding shares once the average share price during a reporting period exceeds the conversion price of $63.73.\nSince we structured the convertible instrument with our call spread overlay, economic dilution to our shareholders does not materialize until the share price exceeds $96.20.\nAs such, if our reported earnings per share for a reporting period reflects the dilution required by the accounting rules, our adjusted earnings per share will remove this dilution up until the average share price exceeds $96.20.\nAnd finally, as it relates to our capital allocation priorities, and we continue to prioritize reaching our target leverage ratio of 0.9 to 1.5.\nGiven the nature of our debt instruments, we will achieve this through the utilization of two levers: through the accumulation of cash and the resulting some lower net debt and increasing adjusted EBITDA over the coming quarters, particularly once we lap fiscal '20 Q3 results.\nThat concludes my review of our quarterly financials.\nMike, back to you.\nThe environment we are operating under in our industry and our world more broadly is materially different than the one we imagined when new leadership first presented our enterprise strategies and transformation goals for Winnebago Industries in 2017.\nHowever, I am also pleased to say that despite our annual fiscal 2020 financial results being significantly impacted by COVID-19, the relative performance of our diverse and balanced portfolio during these unprecedented times is a reflection of the progress we've made on our enterprise strategies.\nWe remain a company moving forward positively, culturally, strategically, financially and now also from a corporate responsibility perspective.\nOur transformation efforts have undoubtedly positioned Winnebago Industries to be more competitive in the future in the markets we serve and weather potentially challenging times should they now arise, leveraging our highly variable fixed cost structure and strengthened financial position.\nAs we look ahead to fiscal 2021, we are encouraged by some ongoing demand trends that we are experiencing.\nPeople are rethinking their recreational priorities and turning to the outdoors as a primary venue for leisure and travel and a safer alternative for gathering with loved ones.\nThe recent fall 2020 KOA Camping Report confirmed that indeed customers new and experienced have flocked to the outdoors and are recreating in record numbers.\nThey are broadly confident that many of these consumers will continue to do so in calendar year 2021 as well.\nWe do not see retail momentum for RVs and boats slowing anytime soon.\nAnd with dealer inventory levels exceedingly low, the need for wholesale shipments to restore a full line offering and selection on lots across America is and we will remain high.\nRecently, the Recreational Vehicle Industry Association issued their wholesale shipment forecast for calendar 2020 and calendar 2021.\nThe 424,000 unit forecast for calendar 2020 or roughly 4.5% overall growth is reasonable in our minds for the 2020 period.\nFurther, the record number of 507,000 units forecasted for wholesale shipments in calendar 2021 also appears reasonable in our view even considering well-documented and real ongoing supply chain challenges.\nUnderpinning these shipment assumptions is a belief that there remains enough consumer interest in the outdoor industry to drive low to mid-single-digit percentage retail increases in calendar year 2021 as well.\nThat is saying something considering the crowd retail in the summer and fall of 2020.\nAnd I can communicate that our September and October RV retail at Winnebago Industries continues to grow at rates similar to what we saw in our fiscal 2020 fourth quarter.\nWith this backdrop, we look forward to growing our position and share in the market as our customers and end consumers continue to view our brands as a trusted and safe way to have extraordinary experiences as they travel, live, work and play in the outdoors.\nBarring any unexpected setbacks related to this COVID-19, macroeconomic strife or hangover from a contentious general election cycle later this fall, we are optimistic that our company's current momentum will continue into our fiscal Q1 and beyond.\nOur expectation is that we will be working hard with our suppliers and dealers to efficiently work through our backlog in an intentional urgent but disciplined manner and replenish a portion of the dealer pipeline with quality inventory to meet ongoing consumer demand.\nWe are selectively investing in additional capacity, assembly and our vertical integration capabilities in fiscal 2021 throughout various businesses, and we'll continue to invest and introduce new products and models to drive preference to our brands.\nNow as many on the call are aware, supply chain issues do exist in both the RV and marine industries.\nAs evidenced by our fourth-quarter performance, we are confident that this multifaceted supply chain challenge will also continue to be managed in a fashion by our team that allows us to compete vigorously for retail and lot space in the market.\nThe supply chain issues are real, but our enterprise strategic sourcing team is working very closely with our purchasing resources within each business unit to chart a mutually agreeable path forward with our supplier partners.\nCandidly, we view this as a competitive and strategic differentiation opportunity versus solely a headwind.\nIn recent meetings with our board of directors, we have achieved alignment on our enterprise strategies for Winnebago Industries for fiscal year 2021, and we have created an organic long-range strategic and financial plan for the next three fiscal years.\nThis is a plan our senior leadership and our board of directors are excited about.\nGiven the continued dynamic nature of the ongoing pandemic and about possible further uncontrollable factors in fiscal year 2021, we will not be releasing our next generation of long-term goals publicly quite yet.\nInternally, though, we are aligned, but we will wait for a stronger sense of certainty externally before sharing any of our BHAGs.\nIn light of our increasing cash flow, we also continue carefully any possible business development opportunities.\nThese are disciplined assessments -- are always carefully considered with other means of managing our capital assets, and our commitment to drive our net leverage ratio to our desired range remains a priority.\nWe have established five core enterprise strategies for fiscal year 2021 and beyond here at Winnebago Industries: number one, we will strengthen an inclusive high-performance culture; number two, we will build exceptional outdoor lifestyle brands; number three, we will create a lifetime of customer intimacy; number four, we will drive operational excellence and portfolio synergy; number five, we will utilize technology and information as business catalysts.\nGoing forward, we remain committed to managing our business in a disciplined fashion, so we are best positioned to build on this momentum, capture the numerous opportunities we believe lie ahead and deliver further value to the customers, communities and shareholders we serve.\nI will now turn the line back over to the operator to take questions.\n", "role": "user" }, { "content": "compname reports fourth quarter earnings per share $1.25.\nq4 adjusted earnings per share $1.45.\nq4 earnings per share $1.25.\nq4 revenue $737.8 million versus refinitiv ibes estimate of $722.9 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: On the call today, we have Brian Casey, our President and Chief Executive Officer; and Terry Forbes, our Chief Financial Officer.\nOur last call took place in the early days of the global pandemic, just three months ago.\nDuring this past quarter, we've gained more experience regarding the impact COVID-19 is having on the economy, the asset management industry and our Company.\nThe health and safety of our employees and their families is a top priority, which means that nearly all of them are working remotely.\nThey've gone above and beyond everyday to make sure our clients are supported with everything they need.\nThis quarter set records once again as the markets rallied from the first quarter slump with the S&P 500, posting its strongest quarterly gains since 1998.\nThe divergence in performance between the major indices is one of the widest we've seen in decades.\nThe strong rally in equities, despite weak economic data, was led by the smallest companies, and those with no earnings.\nThe value style category remained challenged as both growth and tech surged ahead.\nAnother factor affecting performance is that the S&P 500's five largest stocks, comprising about 20% of the overall index have business models that could take advantage of the constraints of the lockdown including working from home, and they exerted an outsized influence on the S&P 500's returns.\nThe impact of the Top 5 stocks on the Russell 1000 Growth Index was even more pronounced, accounting for about 40% of index performance.\nThe path to recovery remains decidedly murky as COVID-19 continues to spread.\nInfection trends are worsening in key states like Texas, Florida and California, and a second wave of closures as forecast as we work our way through earnings season.\nThat said, companies with high quality franchises and strong balance sheets are well positioned to weather the economic storm, and should be in demand by investors.\nOur U.S. value equity products turned in somewhat mixed performance.\nOur U.S. value strategies all outperformed during the first quarter's downturn, and our small-cap and large-cap select strategies kept pace during this quarter's upturn.\nSMidCap and large cap lagged due to the sharp nature of the multiple expansion, which oddly benefited from the non-earners, the lowest valuation quintiles and businesses that are structurally and secularly challenged.\nLarge cap value stayed ahead of its Russell 1000 benchmark year-to-date and for the trailing year and its peer rankings remains strong.\nAmong its eVestment database institutional peers, large-cap value is top quartile for the trailing three- and seven-year periods, and 26% percentile for the trailing 10-year period and it's in the top third for the trailing one-year period.\nLargeCap Select finished the quarter ahead of the Russell 1000 value benchmark, and commands a top 20% ranking in the eVestment LargeCap Value manager universe for the trailing three-year time period.\nOur SMidCap strategy lagged the Russell 2500 Value Index for the quarter, but it's over 350 basis points ahead so far this year, which places it in the 29th percentile year-to-date, the 22nd percentile for trailing one year and the 25th percentile for the trailing three-year period.\nOur portfolio managers have worked hard to compile this track record and we continue to see growing institutional interest in SMidCap.\nAs I said earlier, SmallCap kept pace with the market rally.\nAdding to its relative outperformance against the Russell 2000 Value on a year-to-date basis.\nSmallCap maintained its attractive peer rankings with a 36 percentile placement year-to-date, a top quartile ranking for the trailing three-year period and 18th percentile for the trailing five-year period.\nFor even longer time periods SmallCap Value places in the 12th percentile for the trailing seven-year period and then 8th percentile for the trailing 10-year period.\nWhile the absolute returns year-to-date remain negative, we are pleased with the relative performance of our U.S. value strategies versus the Russell value benchmarks during the unprecedented first quarter sell off and the subsequent sharp rally in the second quarter.\nProtecting client capital during periods of volatility is appreciated by both clients and prospects.\nAnd we appreciate that new and replacement searches will provide ample opportunities to grow assets over time.\nLet's turn now to our Multi-Asset group, which manages an array of strategies aligned across the risk and return spectrum.\nOur largest Multi-Asset Strategy, income opportunity, gain ground in peer rankings and relative performance.\nOur process is based on asset allocation and stock selection using fundamental analysis to achieve the twin objectives of attractive returns and lower volatility.\nThat the team's first quarter tactical allocation changes helped income opportunity as the market stabilized, our portfolio managers rotated between asset classes as valuations shifted, such as switching from agency mortgage-backed securities and into corporate bonds and equities.\nIts longer-term rankings remains strong.\n28th percentile for the trailing five year period and 12 percentile for the trailing 10-year period.\nAmong its institutional peers, income opportunity has now top quartile year-to-date and 23rd percentile for the trailing one-year period.\nOur other Multi-Asset products continue to build solid track records and gain traction with investors by posting solid track records.\nTotal return outperformed its benchmark by over 400 basis points and ranks in the 2nd percentile year-to-date among institutional peers while our high income strategy outperformed its benchmark by over 600 basis points.\nOur global convertibles and alternative income strategies performed exceptionally well.\nStrategic global convertibles long only strategy outperformed the Thomson Reuters convertible global focus Index by over 400 basis points, while our absolute return strategy, alternative income rose in absolute terms, nearly 600 basis points this quarter.\nAmong institutional peers, strategic global convertibles has a top-decile ranking for trailing one year and it's 13 percentile for the trailing three-year time period.\nAs an asset class, convertible securities remain attractively valued as new issue supply on pace for a record year has kept a lid on valuations while providing abundant opportunities for our managers.\nIn emerging markets, high levels of uncertainty and volatility prevailed as the world wrestles with the impact of COVID-19.\nThe performance dispersion in U.S. equities, driven by the largest index holdings is less apparent in emerging markets, but EM returns are heavily influenced by the China, Hong Kong region, which accounted for about one third of the quarter's returns and it was the only area to post positive returns year-to-date.\nOur emerging market strategy is under way this region, and performance for the quarter and most trailing periods lagged as relative overweights in other regions did not keep pace.\nShifting to Wealth Management, our teams in Dallas and Houston have been actively contacting clients to assist them through the markets uncertainty.\nWe are integrating new colleagues as we build out a team aiming to capture the next generation of wealth.\nDespite the current economic uncertainties, our clients trust our ability to remain focused on a goals-based approach to keep them on target to achieve their long-term needs.\nClient retention was stable, and we created new strategies to take advantage of the current market dislocation.\nBy embracing and increasingly holistic approach to interacting with clients, assets have remained sticky.\nClient referrals were on the rise, which we anticipate will translate to new business in the second half of the year.\nOur taxable select equity strategy was created to deliver a high quality, low turnover, tax efficient portfolio with thoughtful downside risk controls.\nOur downside capture during the first quarter was less than 80%.\nAnd we are well ahead of the benchmark year-to-date, even after the second quarter's sharp rise.\nWe have harvested both gains and losses this year in an attempt to minimize tax bills for our clients.\nIt's a strategy that resonates well not only with clients, but also with prospects, many of whom share the belief that taxes will rise in the years ahead.\nWe've devoted a lot of our energy and capital over the past few years to create a stronger Wealth Management foundation to better serve our existing customers and appeal to new ones.\nFinancial planning is a core capability with the state planning expertise, tax efficient portfolio management, private banking and private equity rounding out our solution set.\nAs we complete our digital platform this year, these services should with prospective clients, tired of the impersonal of big banks and brokerage firms.\nDespite the challenges of meeting new people in COVID-19 environment, we are finding new and better ways to connect with prospects.\nWe're excited about the future of our wealth business and the prospects for growth in the years ahead.\nIn our institutional and intermediary sales group, we had inflows of nearly $430 million, offset by $1.4 billion and outflows, mostly in emerging markets were some large institutional clients withdrew funds.\nSmallCap was our most successful strategy generating positive flows during the quarter as new clients came on board and existing clients added funds.\nGross sales across the institutional and intermediary channels increased to $430 million from $388 million in the prior quarter with positive net flows and SmallCap, SMidCap and AllCap.\nInflows were offset primarily by large outflows from our emerging markets equity strategies.\nIntermediary sales suffered from the pandemic, which prevented face-to-face meetings with advisors.\nThe team secured a key new platform approval for SmallCap, which will enable us to call new advisors and add to sales in the fourth quarter.\nOn the sales side, our strengthened team is focused on adding prospects, primarily in our U.S. equities and multi-asset strategies, where search activity is increasing, and our relative performance is strong.\nSeveral of our strategies have recently been approved at top consulting firms and our pipeline is stronger than it has been in years.\nSeveral large searches are on the horizon, and we have an exciting opportunity overseas.\nFinally, our newly launched SmallCap Y share class and soon to be launched, SMidCap ultra ultra share class will allow us to better compete in new institutional channels, including 401-K plans.\nWell before COVID--19 struck, the asset management industry was experiencing significant disruptions and the pandemics impact now and for this foreseeable future exerts even more pressure on companies to evolve to meet the challenge.\nThese dramatic events have tested organizations, including ours, and will result in lasting change.\nFortunately for us, Westwood has been preparing itself for some time, making major investments in technology to reduce costs and gain efficiencies.\nAs I mentioned last quarter, we decided to outsource trading.\nAnd in early July, we went live with Northern Trust as our outsource trading partner.\nOutsource trading represents a growing trend within the asset management industry as from seek to maximize operational efficiencies and performance.\nOur clients will get better execution, more competitive transaction costs and more detailed transaction cost analysis will benefit from internal efficiencies, as well as more flexible and scalable front-and middle-office solutions.\nAnd we expect to save over 1 million a year in internal cost.\nMany challenges confront us in current environment.\nAccordingly, with the full support of our Board we have crafted a strategic plan to restructure certain business areas to reduce operating expenses, while continuing to invest in our long-term growth initiatives.\nAs part of this plan, our Westwood International Advisors office in Toronto will cease operations toward 3Q-end.\nReviews of other business units and products not deem commercially viable in the long run are likely to lead to additional actions that will be covered in the 2Q10 call.\nWe believe this plan will enable us to better manage our business in this environment, as well as pursue an array of future profitable growth initiatives.\nDespite the near-term challenges, the good news is that our strong balance sheet enables us to continue to execute a numerous initiatives already under way to strengthen our business foundation.\nOur U.S. value and multi-asset strategies are delivering alpha and we believe the market will appreciate the benefits of actively managed high conviction products in this economic environment.\nMulti-Asset solutions are in demand for investors looking for more efficient asymmetric outcome oriented solutions.\nCapturing upside in greater magnitude than downside never seems to go out of style.\nThis quarter, Co. launched a new model implementation approaches to our high income and total return strategies; alongside, the new credit opportunities fund we launched last quarter in our older strategies remain well positioned to perform and deliver alpha.\nOur sensible fees platform provides clients with an innovative pricing option that enhances the attractiveness of our offerings by aligning management fees directly with positive client outcomes.\nToday, uncertainty remains the only certainty.\nExpects industrywide disruptions to continue.\nFirmly believes that the steps it jas taken to reinvent ourselves have placed Co. in a strong position to survive and grow.\nMarket disruption presents challenges, that's for sure, but they also present fresh opportunities for those able to take advantage of them.\nIn this vein, Co. has had productive discussions lately with firms that had admire the infrastructure.\nWe've been building to support a much larger business as firms explore their options and contemplate their futures.\nWe are confident that Westwood will be high on their wish list.\nWe're a great place to work.\nWe have the systems and technology in place to improve their business models and a public stock on which they can have a direct and meaningful impact in the years ahead.\nThis is the perfect time to acquire high quality businesses.\nAnd we're excited about the opportunities we are seeing.\nFinally, let me repeat that the health and safety of our employees and their families is our first priority, oll our employees grew well working remotely and their work efficiently.\nWe understand that we have a business to run and we're working very hard to balance and Company's needs with those of our employees, as well as those of our clients and investors.\nToday, we reported total revenues of $15.9 million for the second quarter of 2020 compared to $16.7 million in the first quarter of 2020 and $21.7 million in the prior year's second quarter.\nThe decreases from the first quarter and the prior year's second quarter were principally as a result of lower average assets under management.\nSecond quarter net loss was $2.6 million, or $0.33 per share compared to net income of $1.1 million, or $0.13 per share in the first quarter.\nThe decrease primarily related to lower revenues, foreign currency transaction losses, and higher income taxes, partially offset by lower operating expenses.\nEconomic earnings, a non-GAAP metric was $0.2 million, or $0.03 per share in the current quarter versus $4.2 million, or $0.50 per share in the first quarter.\nSecond quarter net loss of $2.6 million, or $0.33 per share compared to net income of $1.9 million, or $0.22 per share in the prior year second quarter.\nThe decrease primarily related to lower revenues, partially offset by lower operating expenses, particularly employee compensation and benefits.\nEconomic earnings for the quarter was $0.2 million, or $0.03 per share compared to $4.8 million or $0.56 per share in the second quarter of 2019.\nFirmwide assets under management totaled $11.9 billion at quarter end and consisted of Institutional assets of $6.2 billion or 52% of the total, Wealth Management assets of $4 billion, or 34% of the total and mutual fund assets of $1.7 billion, or 14% of the total.\nOver the year, we experienced market depreciation of $1.6 billion and net outflows of $1.8 billion.\nOur financial position continues to be very solid with cash and short-term investments at quarter end, totaling $74.2 million and a debt-free balance sheet.\nIn the second quarter we repurchased 47,697 shares of our common stock for aggregate purchase price of $8.1 million.\nWe currently have authority to repurchase an additional $10 million [Phonetic] of our outstanding share.\nThat brings our prepared comments to a close.\n", "role": "user" }, { "content": "q2 loss per share $0.33.\nq2 revenue $15.9 million versus $21.7 million.\nq2 non-gaap earnings per share $0.03.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: On the call today, we have Brian Casey, our President and Chief Executive Officer; and Terry Forbes, our Chief Financial Officer.\nI hope you all are healthy and persevering in these challenging times.\nAs we announced last quarter, we have now ceased operations of Westwood International Advisors in Toronto, and almost all of its remaining cash, over $37 million has been repatriated to the United States, adding to our financial flexibility.\nWe also wrote off some historical goodwill.\nThe accounting effects of our actions were primarily noncash and nonrecurring.\nWhile the investment performance produced by Westwood International Advisors proved disappointing, it ultimately led to its demise.\nThe financial impact of owning WIA for Westwood shareholders was positive for most of its eight years of operation.\nWe still believe that emerging market equities is an asset class with high potential for alpha generation, lower pressure from passive indexing and attractive fees.\nInstitutional and retail investors are attracted to its growth profile and accordingly, search activity is robust.\nWestwood has the operational expertise to manage emerging markets equities with a new team, and we continue to research available opportunities.\nDespite September's market drop, equity markets climbed again even as we head into the final stages of the presidential election.\nThe divergence in performance between the indices remains wide.\nMega caps are dominating the LargeCaps, which are outperforming SmallCaps and growth is outperforming value across all market caps.\nWhile the SmallCap space remained challenged and is down for the year, the larger cap dominated S&P 500 is in positive territory year-to-date after posting its best quarter since 2010.\nFor sure, the path forward is uncertain, and volatility has begun to pick up in tandem with the election rhetoric we're hearing from both sides of the aisle.\nIncidences of COVID are proving equally volatile, with some parts of the country experiencing declines, while others are seeing spikes.\nOverall, recovery and reopening efforts continue to progress and along with them, earnings estimates are rising from their troughs.\nOur U.S. equity value products once again turned in a mix performance.\nOur SMid cap strategy kept pace with the markets move higher, while our LargeCap and LargeCap select products were more challenged by the rotation as lower quality stocks rallied along with growth during the third quarter.\nDespite falling behind in an up quarter, LargeCap value remains ahead of the benchmark Russell 1000 value index on a year-to-date basis and over most trailing year periods.\nAmongst its evestment database institutional peers, LargeCap value remains in the top quartile for the trailing three and seven year time periods.\nLarge-cap Select fell behind in the quarter but is ahead year-to-date and overall trailing time period since inception in 2014.\nLarge-cap Select commands a top quartile ranking in the evestment LargeCap value manager universe over the trailing three year time period and boasts a top decile ranking since inception in 2014.\nOur SMid cap strategy strongly outperformed the Russell 2500 value index, and our portfolio managers continue to build a terrific record with solid stock selection.\nSMid cap is one of our best-performing strategies year-to-date and over 500 basis points ahead of the index, which puts it in the 29th percentile among small and mid-cap value managers in the evestment database and in the 23rd percentile over trailing three years.\nOur SmallCap strategy underperformed the Russell 2000 value index by less than 100 basis points as non-earning, low-quality securities rallied, but it remains ahead year-to-date and over multiple trailing time periods.\nAmong its institutional peers, SmallCap is in the top half year-to-date and ranks in the top quartile over trailing five years and top decile over the last 10 years.\nThe curious headwind of companies rallying despite being nonearning may begin to fade as levels of financial stress have risen and as the economic stimulus measures introduced earlier this year begin to phase out.\nThis scenario is likely to create additional headwinds for these companies.\nAnd once again, the market should recognize the higher quality nature of our portfolio.\nLet's turn now to our multi-asset group, which manages an array of strategies across the risk and return spectrum.\nOur suite of multi-asset products remains uniquely positioned to benefit from the crosscurrents affecting asset classes while taking advantage of market inefficiencies by finding mispriced securities.\nWith heightened volatility, not just for equities, but within credit asset classes, too, having more targeted ownership of securities within a multi-asset vehicle can help clients preserve their return potential while lowering volatility and limited exposure to key macro risks.\nWe're convinced that dispersion returns as asset classes, industries, and companies react to unfolding economic, social, and political developments will provide ample investment opportunities for our skilled investment teams in the period ahead.\nOur largest multi-asset strategy, income opportunity, outperformed its benchmark by 61 basis point of 40% S&P 500, 60% Bloomberg Barclays aggregate index this quarter.\nOur process is based on asset allocation and stock selection using fundamental analysis to achieve the twin objectives of attractive returns and lower volatility.\nOur other multiasset products similarly added to their solid track records with strong absolute and relative results.\nLiquidity in the convertibles market has improved over the last couple of quarters, and returns have improved substantially from their lows last March.\nIn this environment, our global convertibles and alternative income strategies have performed exceptionally well.\nIt's top quartile for the trailing one year period and 27th percentile for the trailing five year period.\nTotal return outperformed its benchmark, 60% S&P 500, 40% Bloomberg Barclays government corporate aggregate index by nearly 200 basis points this quarter.\nHigh income also outperformed its benchmark, 20% S&P 500, 80% Bloomberg Barclays government corporate aggregate index by over 300 basis points.\nOur newest strategy, credit opportunities, is posting strong returns as the team identifies mispricings in various asset classes and leverages Westwood's strong fundamental research.\nA wash-out event may well occur as some businesses fail to weather the consumer storm, and this often leads to periods of dislocation and illiquidity, which our investment team can profitably mine to discover mispriced quality candidates to add to the fund's portfolio.\nShifting to wealth management.\nOur teams in Dallas and Houston continue to actively engage with clients to assist them through the market's uncertainties.\nI'm constantly impressed by the ability of our distribution team to conduct virtual and physical meetings despite the constraints of COVID.\nOur new colleagues are integrating well, and last quarter's launch of our online portal has expanded beyond the initial beta test group with a new release planned for rollout over the next several weeks.\nA stronger online portal will allow us to enhance our digital client engagements even more by supplementing our traditional hands on advice and support.\nDespite current uncertainties, our clients trust us to remain focused on a goals-based approach to achieve their long-term goals.\nDeploying an increasingly holistic approach to interacting with our clients, assets have remained sticky and client retention is stable.\nThis past quarter, our teams brought in new business of about $88 million, offset by client withdrawals to make delayed tax payments.\nWe also experienced some outflows from closed strategies and pension distributions.\nClient referrals are on the rise, and we've seen a definite uptick since Labor Day, with a particular focus from folks wanting estate-planning advice.\nClient conversations like these typically take several months to result in fund conversion, and we're looking forward to new business inflows later this year and into early 2021.\nOur select equity strategies with over $700 million in assets posted strong returns for the quarter.\nThe select equity strategy posted an absolute return of nearly 9%.\nDownside capture at below 80%, measured on a daily returns basis for both strategies was strong and the additional alpha gain from tax loss harvesting helped the tax sensitive version outperform the Russell 3000 index on a year-to-date basis.\nThe new strategies we created for our high net worth clients to exploit market dislocations, dividend select, and high alpha, have each performed very well in picking up assets.\nThere have certainly been challenges to meeting clients and prospects in this environment, but we continue to find new and better ways to connect.\nWe recently held an online event to discuss the upcoming election with more than 150 participants, and we are pushing that recording via YouTube to over 2,300 clients, prospects, and third party advisors.\nWe're excited about the future of our wealth business and the prospects for growth in the years ahead.\nIn institutional and intermediary sales, we had inflows of approximately $326 million and about $847 million in outflows, which are mostly the result of closing our emerging markets and MLP strategies, along with client rebalancing in global converts and LargeCap.\nSmall-cap was our most successful strategy for the quarter and year-to-date.\nLarge-cap, while negative for the quarter, has positive inflows from selected clients and income opportunities stabilized with net outflows below $5 million for the quarter.\nIncome opportunity flows appear to have stabilized and are gaining momentum across the RIA channel.\nIntermediary sales improved after suffering industrywide from the pandemic, and sales for the third quarter rose versus the second quarter and are now running ahead of 2019 and pre-pandemic levels.\nWe're pleased to see our mutual funds move into net positive territory, with strength coming from our SmallCap and income opportunity strategies.\nWe discussed a key new platform approval for SmallCap on last quarter's call and details have now been finalized, and we are on track to launch as a focused manager with the platform advisors next month.\nAs we look forward, we believe that continued strong performance in our U.S. value and multiasset strategies should lead to an increase in consultant searches and additional wins in the mutual fund and model delivery space.\nOur pipeline is growing with attractive opportunities in our SmallCaps, SMid cap, and income opportunity strategies.\nOur investment teams have remained disciplined in their process and execution, which has allowed our distribution teams to focus their talents on presenting our strategies to the marketplace.\nWe are focused on managing the expense side of our business, and we're pleased to report that our first full quarter of outsourced trading was very successful.\nOur clients are getting better execution and more competitive transaction costs, while our portfolio managers have access to a bigger trading desk to obtain market data and more frequent updates.\nWe have initiated many internal efficiencies in our front and middle office areas, which are expected to generate over $1 million a year in reduced expenses.\nWell before the pandemic upended the status quo, the asset management industry was undergoing significant disruptions, and its impact is exerting even more pressure on companies to evolve to meet the challenge.\nThese extraordinary circumstances have tested organizations, and ours is no exception, and they will result in a lasting change.\nWe truly believe that the steps we started taking well before the pandemic have placed us in a strong position, not just to survive, but to thrive and grow.\nSuccess in the asset management industry requires a well thought out plan, followed by focused execution in four key areas: number one, alpha generation is critical to all buyers, institutional and retail.\nWestwood value strategies have delivered excess return in every one of our strategies over multiple time periods.\nNumber two, distribution is a team sport.\nGone are the days of salespeople randomly knocking on doors and sending newsletters to stale contact lists.\nSales alpha is delivered via a combination of excellence in brand awareness, thought leadership, digital engagement, and product management delivered by experienced sales professionals using technology to optimize productivity.\nWe now have the largest and most experienced distribution team in our history.\nNumber three, wealth management has evolved from simply being about products to comprehensive solutions.\nFor decades, all that was required was a competitive financial product, a client meeting once or twice a year and a paper statement in the mail at the end of the month.\nWhile many firms still operate this way, winners are pivoting to a solutions-based model delivered digitally.\nWestwood has been working for several years to build a broader platform of solutions.\nWe have grown our financial planning resources, added depth and estate planning, built tax sensitive investment strategies, and added private equity and private banking to our array of solutions.\nThese services are quickly moving to table stakes for wealth management.\nAnd in our view, firms that haven't made the shift will not survive.\nNumber four, financial technology will accelerate growth for firms that embrace its transformative powers.\nWe are using technology to improve our efficiency and screening investment ideas, building company models, and populating our sales team with data to help them better target potential buyers.\nWe are rolling out our enhanced digital portal to wealth clients, and we're building additional platforms with Invest Cloud that will be announced in the coming months.\nIndustry disruptions have been building for some time, and the added shock of the pandemic presents a perfect storm of challenges.\nFortunately, Westwood has been making major investments in technology to reduce costs, gain efficiencies, and prepare for industry disruptions.\nWe have been careful to nurture a strong balance sheet, which allows us the flexibility to pursue an array of future growth initiatives.\nFrankly, the disruptions confronting our industry will present rewarding opportunities for firms like ours that have kept their powder dry.\nIn the months and years ahead, we're planning to capitalize on the infrastructure we've been building to support a much larger business.\nWe remain committed to supporting our employees and clients as they navigate the challenges presented by the spread of the virus.\nOur team members continue to make extraordinary efforts each and every day, and I'm very grateful for all they do on behalf of our clients.\nToday, we reported total revenues of $15.5 million for the third quarter of 2020 compared to $15.9 million in the second quarter of 2020 and $19.9 million in the third quarter of the prior year.\nRevenues were somewhat lower than the second quarter due to closing emerging markets strategies, which slightly reduced our average fee rate.\nRevenues were lower than last year's third quarter, principally as a result of lower average assets under management.\nThe third quarter net loss of $10.3 million or $1.31 per share exceeded the net loss of $2.6 million or $0.33 per share in the second quarter.\nThe loss primarily related to several onetime items, including a $4.2 million noncash reclassification of foreign currency translation adjustments from accumulated other comprehensive loss to net loss with no impact on stockholders' equity following the closure of Westwood International Advisors, as well as $1.1 million in incremental Canadian withholding taxes net of federal tax deduction, paid to repatriate more than $37 million from Westwood International Advisors to the U.S., as well as a $3.4 million noncash write-off of historical advisory goodwill to reflect lower market capitalization and advisory net outflows.\nThese onetime items were partially offset by lower operating expenses and lower foreign currency transaction losses.\nNon-GAAP economic loss was $1.7 million or $0.22 per share in the current quarter versus economic earnings of $0.2 million or $0.03 per share in the second quarter.\nThird quarter net loss of $10.3 million or $1.31 per share compared unfavorably to net income of $1.1 million or $0.13 per share in the prior year's third quarter, primarily due to the onetime items previously noted, partially offset by lower operating expenses, particularly employee compensation and benefits.\nEconomic loss for the quarter was $1.7 million or $0.22 per share compared with economic earnings of $3.9 million or $0.46 per share in the third quarter of 2019.\nFirmwide assets under management totaled $12 billion at quarter end and consisted of institutional assets of $6 billion or 51% of the total, wealth management assets of $4.1 billion or 34% of the total and mutual fund assets of $1.8 billion or 15% of the total.\nOver the year, we experienced market depreciation of $0.9 billion and net outflows of $2.4 billion.\nOur financial position continues to be very solid with cash and short-term investments at quarter end totaling $77.6 million and a debt-free balance sheet.\nThat brings our prepared comments to a close.\n", "role": "user" }, { "content": "compname posts q3 adj loss per share $0.22.\nq3 revenue $15.5 million versus $19.9 million.\nq3 non-gaap loss per share $0.22.\nqtrly loss per share $1.31.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: On the call today, we have Brian Casey, our President and Chief Executive Officer; and Terry Forbes, our Chief Financial Officer.\nAs always, we will start with comments on the market environment and investment teams and finish with comments on our business.\nVolatility continued in the third quarter as markets worldwide fell in August, only to rally once more in September.\nSmall caps outpaced large caps and growth stocks rallied over value stocks, as market sentiment changed, and we saw a strong risk-on rally beginning in October.\nMarkets were buoyed by rising optimism on economic and trade developments and finished with a string of new all-time highs for most major equity indices.\nSimilarly, fixed income markets also finished the year in positive territory.\nThe Federal Reserve again supported markets with a third rate cut, and comments from Chairman Powell suggest this level is likely to persist in 2020.\nInterest rates recovered much of their decline from the prior quarter, and the yield curve returned to normal.\nAn initial Phase 1 trade deal was struck between the US and China, which helped fuel confidence and an improving 2020 economic environment, both here and abroad.\nGDP growth remained steadily positive, supported by strong trends in consumer spending, low unemployment and low inflation.\nSentiment indicators such as the ISM's PMI for manufacturing also continued to improve, building on recent positive readings.\nTrends outside the US began to show some potential early signs of stabilization and improvement as well.\nWith 2020 presidential election rhetoric heating up and rising geopolitical tensions, investors will continue to grapple with high levels of uncertainty around the world.\nAs we look into 2020, Wall Street analysts are estimating another year of corporate earnings growth, though questions remain regarding trade and other geopolitical risks.\nThe tight labor market remains supportive of consumer spending, which should help keep GDP growth nicely positive.\nAs the economic cycle continues to progress, the preference for high-quality cash-generating businesses will likely increase, while those companies with high leverage or lower cash generation will fall out of favor.\nThis dispersion should create a favorable environment for active managers who can assess both absolute and relative risk in their clients' portfolios.\nTurning to investment performance within our US Value Equity products, our domestic equity products fell behind during the fourth quarter's risk-on rally due to their focus on high quality and value.\nBut they remained well ahead of their benchmarks for the full year.\nLargeCap Value and LargeCap Select finished the year ahead of the benchmark by approximately 170 basis points and 130 basis points, respectively.\nInstitutional peer rankings for our LargeCap Value and LargeCap Select strategies are strong over multiple periods and their respective peer universes.\nOur LargeCap Value strategy is in the top quartile over the trailing three, five and seven-year periods, and since its inception, is in the seventh percentile.\nLargeCap Select is in the second percentile since its inception in 2014 and has ranked in the fourth percentile over the trailing five-year periods.\nSmallCap delivered another strong year of outperformance, finishing over 600 basis points ahead of the Russell 2000 Value benchmark.\nOur Institutional strategy also has attractive peer rankings with top 20 performance for the trailing one and five-year periods and top decile rankings for annualized seven and 10-year periods, and since exception in 2004.\nOur SMidCap strategy finished the fourth quarter ahead of its Russell 2500 Value benchmark and 700 basis points better for the year.\nThe trailing three-year returns are ahead of the benchmark, and SMidCap has improved its peer rankings with a top quartile institutional ranking for 2019 and a 26 percentile ranking over the trailing three years in the eVestment universe.\nThese performance numbers are a great accomplishment for our portfolio management teams and our entire group of research analysts who provide investment ideas for the US Value strategies.\nWe are excited about the opportunity in the years ahead for our US equity strategies.\nWithin our Multi-Asset group, our product lineup holds an array of strategies aligned across the risk and return spectrum that are tailored for a client-specific risk profile and investment objective.\nIncome Opportunity put together a great year with compelling idea generation from our research analysts.\nThe fund benefited from the new leadership team of Adrian Helfert and David Clott, who made positive asset allocation decisions and timely duration extension calls ahead of the drop in interest rates.\nIt also ranked in the top 10% for the trailing three, seven and 10 years as of year-end.\nStrong security selection, coupled with timely asset allocation adjustments, produced attractive results for our Multi-Asset strategies.\nOur Global Convertible strategy was ahead of its benchmark, the Thomson Reuters Convertible Global Focus Index, for the fourth quarter and the full year.\nAmong its institutional peers, our strategy ranked in the 13th percentile for the quarter.\nOur Alternative Income strategy, also known as Market Neutral, continued to build on its excellent start by finishing the year with strong absolute returns.\nAmong institutional peers and the eVestment database, the strategy finished 2019 with a top-decile ranking for the trailing one, five, seven and 10-year periods.\nIn emerging markets, most markets posted strong rallies over the fourth quarter to cap off one of their best years since the global financial crisis of 2009.\nEmerging markets outperformed US domestic markets in the fourth quarter, though investor focus shifted toward high-beta, high-volatility, cyclical securities, which are not traditionally favored by our investment process.\nOur Emerging Markets and EM Plus strategies underperformed for the fourth quarter in this environment.\nBut our Emerging Markets strategy remained ahead of the benchmark, MSCI Emerging Markets Index, for the full year.\nEM SMid markets trailed the broader EM universe with a lower exposure to China's rally at year-end.\nOur EM SMidCap strategy underperformed the MSCI Emerging Markets SMID Cap Index in the fourth quarter, but finished the full year more than 400 basis points ahead of its benchmark.\nThe valuation case for emerging markets remains positive, particularly relative to developed markets, following the EM asset classes' underperformance of recent years.\nDespite the challenges of a global trade war, growth concerns and geopolitical instability that precipitated uncertainty and volatility through most of last year, the developments in trade negotiations and growth indicators that helped fuel an end-of-year market rally also provide reasons for optimism in the coming year.\nAs long-term investors who invested through past crises', we remain disciplined to our process, avoiding the lure of the herd mentality and positioning for the long-term growth story that is yet to come.\nShifting now to Wealth Management, our teams in Dallas and Houston produced great results in 2019.\nClient retention was high at 96%.\nAnd in total, our Wealth Management group had over $400 million in new inflows for the year.\nWe've begun to gain traction in our full suite of financial services with high-net-worth clients, which allows us to provide a range of services tailored toward managing and simplifying the increased financial complexity of their lives.\nNearly half of our new business in 2019 was from new relationships, which included several new large clients, and importantly, a younger age demographic.\nWestwood Private Bank has been open for over a quarter.\nThrough our partnership with the bank, we have broadened our offering for high-net-worth clients, improving our ability to retain clients in our Westwood branded ecosystem.\nThe concept of providing banking services integrated with existing financial planning, trust and investment management services, including the ability to lend against an existing portfolio, combined with bill paying and concierge private banking services, is resonating extremely well with our clients.\nIn institutional and intermediary sales, our institutional and retail business had fourth quarter inflows of approximately $400 million that were offset by outflows of $800 million, producing net outflows of $400 million.\nOutflows were primarily in the Income Opportunity strategy, which despite excellent performance, had a large capital gain distribution, which caused several investors to sell out of the fund ahead of the December distribution.\nWe're going back to many of these clients and hopes they will return to the fund this year.\nAnd we feel Income Opportunity is poised for a return to positive flows in retail with its strong performance over multiple-year periods.\nOur Alternative Income strategy, also known as Market Neutral, had net inflows of over $100 million and was our largest gainer for the fourth quarter, as our partner Aviva Investors allocated additional assets to the strategy.\nOur SmallCap franchise continues to gain momentum with searches on the institutional and retail front.\nSmallCap was our most successful strategy in terms of net inflows for 2019 and our SmallCap mutual fund and separately managed account vehicles are expected to be approved by one of the major wirehouses this month.\nSMidCap's recent improvement in performance has resulted in new searches in the quarter, and we can now move into offense with this strategy.\nIn fact, we're making progress on SMid with one of the largest consulting firm's OCIO platform and hope to see additional flows this year.\nPerformance was strong across several of our strategies in 2019, and we are optimistic in our ability to grow assets.\nWe made significant investments in our distribution infrastructure over the last two years, including people and technology, to support growth in the years ahead.\nSome highlights include the following: the completion of the build-out of our institutional and intermediary sales teams and the establishment of dedicated client relationship managers and client portfolio managers; the creation of well-defined territories and top quartile activity levels with over 900 meetings held during the quarter; the pursuit of additional platform approvals to make our funds more widely available to investors.\nWe were pleased to hear that our SmallCap mutual fund was added to the Schwab OneSource Select List.\nThis is an exclusive group of funds that are selected based on performance, risk and expense levels.\nPossible addition of our strategies on a large turnkey asset management program, or TAMP, based in the Midwest.\nWe've submitted the RFPs and expect to be available by the end of the first quarter.\nThe redesign of our sales force technology to provide better data and feedback for our sales professionals.\nA reduction in pricing for many of our strategies, along with the introduction of Sensible Fees, to expand our brand awareness and improve our discoverability.\nThe enhancement of our digital marketing initiatives with new content and a focus on our quality value approach for our domestic value equity strategies.\nThe conscious alignment of our investment teams, vehicles, pricing, product definitions, risk guidelines and messaging in order to increase our commercial competitiveness going forward.\nWith increased sales activity and key consultant approvals, our pipeline is healthy and spread across several different strategies.\nWe've seen a nearly three-fold increase in pipeline value from the end of 2018 to the end of 2019, as a result of our focused sales efforts and investment performance.\nThere are several late-stage institutional opportunities we are participating in, and expect decisions in the first half of 2020.\nWe are hopeful and feel that net flows have the potential to be positive this year, with particular strength coming from SmallCap, SMidCap and eventually several of our Multi-Asset strategies, including Income Opportunity.\nClients are looking for differentiated results, and we have demonstrated an ability to deliver a differentiated client experience, as evidenced by our high active share equity strategies with strong track records.\nThe asset management industry is experiencing disruption on several fronts.\nRecent financial results have been disappointing, and the industry continues to experience rising data, technology, compliance and distribution costs.\nThe major technologies investments we've made in recent years have resulted in operational efficiencies.\nEqually important, the value of our investment in our partner, InvestCloud, has increased by more than 50% in the past year.\nFurther, as part of our cost-sharing agreement with InvestCloud for the implementation of our new portfolio accounting system, we anticipate potentially receiving payments related to this partnership over the next two years.\nWe expect industrywide disruption to continue.\nAnd the steps we've taken to reinvent ourselves have placed us in a position to survive and grow.\nWe have taken meaningful steps to reduce our cost structure by reducing personnel and cutting underperforming and commercially unviable funds.\nWe've partnered with a firm in India to reduce our marketing costs and utilizing a freelance writer to replace a former employee.\nWe are looking at our mutual fund and use its platforms for potential cost savings later this year, and fine-tuning our InvestCloud technology to create an information superhighway to further improve efficiency.\nWhile disappointed with our financial performance over the last year, we have made several investments and executed on numerous initiatives to strengthen our foundation for the future, namely: we partnered with InvestCloud to build, test and install a cutting-edge portfolio accounting system that has increased our efficiency and reduced our operating cost; we produced excellent investment performance for US Value and Multi-Asset strategies by delivering alpha generation with high active share; we created a partnership with Charis Bank, forming Westwood Private Bank with the new space delivered on schedule and under budget; we partnered with Blackstone to give our clients access to Blackstone private equity opportunities at attractive investment minimums; we enhanced our financial planning and estate planning capabilities with new hires in Dallas and Houston; we became a signatory to the UN PRI and improved our firmwide ESG rating; we addressed industry fee challenges by introducing a flexible and innovative fee construct known as Sensible Fees to meaningfully improve investor alignment; we expanded our Multi-Asset capabilities to include multiple strategies that allow us to demonstrate skill and judgment across a broad spectrum of risk; we received SEC approval to utilize Sensible Fees in three of our public mutual funds; we launched SMA accounts on several platforms and have increased platform availability for our mutual funds; we achieved a 70% year-over-year increase in social media impressions and website sessions; we built an institutional, intermediary and marketing team of over 30 people to grow future sales and build our brand; and finally, we're pleased to be recognized by Pensions & Investments Best Places to Work for the sixth consecutive year.\nWhile much of this has not yet lifted our financial results, we remain confident that we are on a great path to a solid future state.\nWe believe the industry will continue to face major headwinds and will further consolidate in the years ahead.\nWe believe that Westwood is viewed as a great home for teams that want to hard-working entrepreneurial culture, superior technology, broad distribution and a public currency [Phonetic] they can impact with their hard work and results.\nWe are seeing more inorganic opportunities than at any time in our history.\nWith over $100 million in cash and investments, we are ideally positioned to execute on an accretive acquisition.\nWe are fortunate to have many opportunities to choose from, and we'll remain disciplined with our shareholder capital.\nToday, we reported total revenues of $18.6 million for the fourth quarter of 2019, compared to $26.1 million in the prior year's fourth quarter and $19.9 million in the third quarter of 2019.\nThe decrease from the prior year was due to lower average assets under management due to net outflows, partially offset by market appreciation.\nThe decrease from the prior quarter was due to lower other revenues.\nFourth quarter net income of $2.5 million or $0.30 per share compared to $5.4 million or $0.64 per share in the prior year's fourth quarter.\nThe decrease primarily related to lower revenues and higher foreign currency transaction losses, partially offset by lower incentive compensation costs and unrealized gains on private investments.\nEconomic earnings, a non-GAAP metric, was $5.4 million for the current quarter or $0.64 per share compared to $9.5 million or $1.12 per share in the fourth quarter of 2018.\nFourth quarter net income of $2.5 million was higher than the third quarter 2019 net income of $1.1 million.\nThe current quarter benefited from unrealized gains on private investments, partially offset by higher foreign currency transaction losses.\nEconomic earnings of $5.4 million was also higher than $3.9 million in the third quarter.\nFor fiscal 2019, total revenues of $84.1 million compared to $122.3 million in 2018.\nThe decrease was due to a $32.3 million decrease in asset-based advisory fees, a $3.5 million decrease in trust fees reflecting lower average AUM, and a $2.2 million decrease in performance-based advisory fees earned in 2019.\nFiscal 2019 net income was $5.9 million or $0.70 per share compared to $26.8 million or $3.13 per share in the prior year.\nThe current year decreased primarily due to lower revenues and foreign currency transaction losses, partially offset by lower incentive compensation expenses and unrealized gains on private investments.\nEconomic earnings, a non-GAAP metric, was $18.2 million or $2.15 per share compared to $43.9 million or $5.14 per share in 2018.\nFirmwide assets under management totaled $15.2 billion at quarter-end and consisted of institutional assets of $8.7 billion or 57% of the total, private wealth assets of $4.4 billion or 29% of the total, and mutual fund assets of $2.1 billion or 14% of the total.\nOver the year, we experienced net outflows of $4.4 billion and market appreciation of $3 billion.\nOur financial position continues to be strong with cash and short-term investments at quarter-end totaling $100.1 million and a debt-free balance sheet.\nToday, our Board of Directors approved a quarterly cash dividend of $0.43 per share, payable on April 1, 2020 to stockholders of record on March 6, 2020.\nThis represents an annualized dividend yield of 6% as of the closing price on February 4.\nThat brings our prepared comments to a close.\n", "role": "user" }, { "content": "compname reports q4 earnings per share $0.30.\nq4 revenue $18.6 million versus $26.1 million.\nq4 earnings per share $0.30.\nq4 non-gaap earnings per share $0.64.\naum at december 31, 2019 totaled $15.2 billion, versus $16.6 billion at december 31, 2018.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Our actual results could differ materially from these statements due to many factors discussed in our latest 10-Q and other periodic reports.\nWe believe these measures are important indicators of our operations as they exclude items that may not be indicative of results from our ongoing business operations.\nWe also think the adjusted measures will provide you a better baseline for analyzing trends in our ongoing business operations.\nListeners are directed to the supplemental information package posted on the Investor Relations section of our website for the reconciliation of non-GAAP items to the most directly comparable GAAP measures.\nAt this time, all participants are in a listen-only mode.\nAs a reminder, we ask that participants ask no more than two questions.\nWhile lessened, disruptions from pandemic do in fact remain along with volatile industry dynamics and numerous global supply chain constraints.\nHaving said that, our impressive results throughout this entire period and again in Q2 demonstrate the strong execution of our global teams and the resiliency of our business model.\nNow, turning to our second quarter highlights on slide four.\nWe delivered very strong revenue growth of 32% year over year, which also represents growth above 2019 levels, driven by robust and sustained consumer demand and the execution of our pricing actions.\nNext, our decisive response plan to address volatile industry dynamics and broad supply constraints delivered ongoing earnings per share of $6.64, a $4.57 improvement year over year.\nOngoing EBIT margin of 11.4%, a year-over-year improvement of 640 basis points overcoming 400 basis points of cost inflation.\nAdditionally, we generated positive free cash flow of $769 million, led by strong earnings and the successful completion of a partial tender offer of our Whirlpool China business and the divestiture of our Turkish subsidiary.\nThese global results were driven by substantial EBIT growth and margin expansion across every region.\nThe execution of these actions and the sustained consumer demand delivered very strong Q2 results and give us the confidence to significantly raise our guidance to approximately $26 per share.\nTurning to slide five, we show the drivers of our second quarter EBIT margin.\nPrice and mix delivered 600 basis points of margin expansion driven by reduced promotions and the further implementation of a previously announced cost-based pricing actions.\nAdditionally, structural cost takeout actions, higher volumes, and ongoing cost productivity initiatives delivered 550 basis points of net cost margin improvement.\nThese margin benefits were partially offset by a raw material inflation, particularly steel and resins, which resulted in an unfavorable impact of 400 basis points.\nLastly, increased investment in marketing and technology and the continued impact from currency in Latin America impacted margin by a combined 100 basis points.\nOverall, we are very pleased to be delivering even above our long-term EBIT margin commitment and are confident this positive momentum will continue to drive outstanding results throughout 2021 and beyond.\nTurning to slide seven, I'll review our second quarter regional results.\nIn North America, we delivered 22% revenue growth driven by sustained strong consumer demand in the region.\nAdditionally, we delivered another quarter of very strong EBIT margin driven by volume growth and the disciplined execution of our go-to-market actions, and the previously announced cost-based price increases that were fully in place as we exited the quarter.\nDemand for our products remains high as we continue to produce in a constrained environment that we now expect to persist throughout 2021.\nLastly, the region's outstanding results demonstrate the fundamental strength and agility of our business model.\nTurning to slide eight, I'll review our second quarter results for our Europe, Middle East, and Africa region.\nDouble-digit growth in all key countries drove a fourth consecutive quarter of revenue growth above 10% in the region.\nAdditionally, the region delivered year-over-year EBIT improvement of $97 million led by increased revenue and strong cost take-out overcoming inflationary pressures.\nThese results demonstrate the progress we are making toward our long-term goals.\nTurning to slide nine, I'll review our second quarter results for our Latin America region.\nNet sales increased 76% led by strong demand across Brazil and Mexico, and the continued growth of our direct-to-consumer business.\nThe region delivered very strong EBIT margins of 9.7% with continued robust demand and the execution of cost-based price actions, offsetting inflation and currency devaluation.\nTurning to slide 10, I'll review our second quarter results for our Asia region.\nIn Asia, revenue decline of 1% reflects the successful partial tender offer for our Whirlpool China business which was completed in May.\nAdditionally, as COVID cases surged in India, we were yet again faced with shutdowns significantly impacting the industry.\nHowever, in June, as we exited the quarter, we began to see demand recover.\nDespite this disruption, the region delivered year-over-year EBIT growth of $23 million led by pricing and cost productivity actions.\nTurning to slide 12, Marc and I will discuss our revised full-year 2021 guidance.\nWhile the macroeconomic environment remains uncertain and volatile, we are confident that sustained strong consumer demand and our previously announced cost-based pricing actions will offset the impact of global supply constraints and rising input costs.\nWe are raising our guidance and are expecting to drive net sales growth of, approximately, 16% and EBIT margin of 10.5% plus.\nAdditionally, we now expect to deliver $1.7 billion in free cash flow or 7.5% of net sales, driven by higher earnings and the completed divestitures.\nExcluding the impact of divestitures, we expect to deliver on our long-term goal of free cash flow at 6% of net sales.\nFinally, we are significantly raising our earnings per share guidance to approximately $26, a year-over-year increase of over 40%.\nTurning to slide 13, we show the drivers of our revised EBIT margin guidance.\nWe continue to expect 600 basis points of margin expansion driven by price and mix as we demonstrate the disciplined execution of our go-to-market strategy and capture the benefits of our previously announced cost-based pricing actions.\nWe have increased our expectation for net cost to 175 basis points as we realize further efficiencies from higher revenues and strong cost takeout initiatives.\nAs we closely monitor cost inflation globally, particularly in steel and resins, we continue to expect our business to be negatively impacted by about $1 billion due to peak increases to materialize in the third quarter.\nIncreased investments in marketing and technology and unfavorable currency, primarily in Latin America, are expected to impact the margin by 125 basis points.\nOverall, based on our track record, we are confident in our ability to continue to navigate this uncertain environment, and delivered 0.5%-plus EBIT margin, representing our fourth consecutive year of margin expansion.\nTurning to slide 14 we show our updated industry and regional EBIT guidance for the year.\nWe have increased our North America industry expectation to 10% plus to reflect the continued demand strength.\nWe continue to expect to see demand strength driven from broader home nesting trends and an under-supplied housing market.\nAdditionally, we have updated the EBIT guidance of our North America region to reflect the benefits of increased cost efficiencies, which are more than offsetting increased cost from logistics, labor, and operational inefficiencies of producing in a heavily constrained environment.\nThis brings our EBIT guidance for North America to approximately 17%.\nLastly, we continue to expect to deliver strong growth and significant EBIT expansion across our international regions with each region contributing to our global EBIT margin of 10.5% plus.\nTurning to slide 15, we will discuss the drivers of our updated 2021 free cash flow.\nWe now expect to drive free cash flow of approximately $1.7 billion, an increase of $450 million.\nDriven by expectations for stronger top line growth and improved EBIT margins, we increased our cash earnings guidance by $250 million.\nNext, we have reflected the benefit from the divestitures completed in the quarter.\nThis represents free cash flow generation of 7.5% of sales delivering above our long-term goal of 6%.\nTurning to slide 16, we provide an update on our capital allocation priorities for 2021.\nWe continue to expect to invest over $1 billion in capital expenditures and research and development, highlighting our commitment to driving innovation and growth in the future.\nThis includes industry-leading externally recognized innovation, such as our newly launched 2-in-1 Removable Agitator in our top-load laundry machine in North America and the launch of new products in EMEA, such as our new built-in refrigerator, which is recognized as the quietest built-in fridge in the marketplace.\nNext, with a clear focus on returning strong levels of cash to shareholders and a signal of our confidence in the business, we expect to increase our rate of share repurchases in the second half of 2021 to at or above $300 million.\nLastly, we repaid a $300 million maturing bond and issued our inaugural sustainability bond, focusing on actions to drive positive environmental and social impacts.\nThis milestone further advances our global sustainability strategy and reflects our core philosophy that sound corporate citizenship and environmental performance are good for business and underscores our leadership position in our industry as we continue our constant pursuit of improving life at home.\nAnd let me just recap what you heard over the past few minutes.\nQ2 again impressively demonstrated our ability to operate in a very volatile environment and delivered very strong operating results.\nSustained healthy market demand and strong operational execution give us the confidence to increase our guidance for revenue, EBIT, earnings per share, and free cash flow.\nNext, we remain unwavering in our commitment to drive strong shareholder value and return cash to shareholders.\nLastly, as we look beyond 2021, we firmly believe we have demonstrated that our business is structurally improved and well positioned to again build on our record results.\n", "role": "user" }, { "content": "whirlpool delivers impressive q2 results and significantly raises full-year guidance.\nqtrly ongoing (non-gaap) earnings per diluted share of $6.64.\nsees fy21 net sales growth at about 16% from about 13%.\nqtrly net sales growth of about 32%.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Our actual results could differ materially from these statements due to many factors discussed in our latest 10-K, 10-Q and other periodic reports.\nWe believe these measures are important indicators of our operations, as they exclude items that may not be indicative of results from our ongoing business operations.\nWe also think the adjusted measures will provide you a better baseline for analyzing trends in our ongoing business operations.\nListeners are directed to the supplemental information package posted on the Investor Relations section of our website for the reconciliation of non-GAAP items to the most directly comparable GAAP measures.\nAt this time, all participants are in a listen-only mode.\nAs a reminder, we'd ask that participants ask no more than two questions.\nToday, in addition to our third quarter results, I will be sharing our new long-term value creation goals.\nDespite operating in a supply constraint and inflationary environment, we continue to consistently demonstrate strong results at or above our previous long-term targets.\nWe want to take the opportunity to share our insights and expectations for our business moving forward.\nNow, turning to our third quarter highlights on Slide 5.\nWe anticipate that in the third quarter we would face both a constrained supply chain alongside elevated inflation.\nThe exceptional execution of the actions we put in place and the sustained robust consumer demand delivered yet another quarter of very strong results.\nWe delivered revenue growth of 4% year-over-year, which represents growth of 8% compared to 2019.\nNext, the decisive actions we took early this year delivered strong double-digit margins of 11.1%, which largely offset the expected cost inflation of 650 basis points.\nAdditionally, we generated positive adjusted free cash flow of $1.3 billion, a $1.1 billion increase compared to a year ago.\nCash generation was led by strong earnings in the successful completion of divestitures in the first half of the year.\nLastly, we opportunistically executed $441 million in share buybacks in the third quarter, and added to our previous investments in Elica India by acquiring the majority interest in the company.\nOur ability to successfully deliver strong results in a difficult operating environment gives us the confidence to increase our guidance to approximately $26.25 per share.\nTurning to Slide 6, we show the drivers of our third quarter EBIT margin.\nRaw material inflation, particularly steel and resins resulted in an unfavorable impact of 650 basis points.\nThis was fully offset by our combined price mix and net cost actions.\nPrice and mix delivered 600 basis points of margin expansion led by the execution of the previously announced cost base price increases.\nAdditionally, ongoing cost productivity initiatives delivered 50 basis points of net cost margin improvement.\nOur ongoing cost initiatives more than offset increased logistics, labor and other supply chain premiums we and many companies are facing.\nLastly, increased investments in marketing and technology and the continued impact from currency in Latin America impacted margins by a combined 75 basis points.\nOverall, we are very pleased to be delivering above our previous long-term EBIT margin commitments and are confident this positive momentum will continue to drive very strong results throughout 2021 and beyond.\nNow, turning to Slide 7, I will discuss our revised full-year 2021 guidance.\nWe remain confident in both the actions we have put in place to protect margins and in the strong execution capabilities we continue to demonstrate.\nWe expect to drive strong net sales growth of approximately 13%, and EBIT margins of 10.8%.\nAdditionally, we continue to expect to deliver $1.7 billion in adjusted free cash flow, or 7.7% of net sales.\nFinally, we are raising our ongoing earnings per share guidance to approximately $26.25, a year-over-year increase of over 40%.\nTurning to Slide 8, we show the drivers of our increased ongoing EBIT margin guidance.\nWe continue to expect 600 basis points of margin expansion driven by price mix.\nWe have increased our expectation for net cost takeout to 200 basis points as we realized further efficiencies and continue to focus on cost productivity.\nWithin our net cost results, we are fully offsetting the inefficiencies across the supply chain, notably in distribution and labor.\nWhile our expectations remain unchanged, we continuously monitor cost inflation globally, largely in steel and resins.\nAnd still expect our business to be negatively impacted by about $1 billion, with the peak increase already realized in the third quarter.\nInflation is fully offset by our price mix actions.\nWe continue to expect increased investments in marketing and technology, and unfavorable currency primarily in Latin America to impact margins by 125 basis points.\nOverall, we are confident in our ability to continue to navigate in this environment and deliver 10.8% EBIT margin, representing our fourth consecutive year of margin expansion.\nTurning to Slide 9, we provide an update on our capital allocation priorities for 2021.\nOur commitment to fund innovation and growth remains unchanged, as we expect to invest over $1 billion in capital expenditures and research and development.\nNext, with a clear focus on returning significant levels of cash to shareholders, we expect to repurchase over $940 million of shares in 2021, which includes over $300 million in the fourth quarter.\nIncluding dividends, we expect to return a total of over $1.2 billion to shareholders this year.\nTurning to Slide 11, I'll review our third quarter regional results.\nIn North America, we delivered 5% revenue growth with sustained and robust consumer demand in the region.\nAdditionally, we delivered another quarter of strong EBIT margin driven by disciplined execution of cost-based price increases.\nDemand for our products remains high, as we operate in a constrained environment, which we expect to persist into 2022.\nLastly, the region's outstanding results demonstrate the fundamental strength and agility of our business model.\nTurning to Slide 12, I'll review our third quarter results for our Europe, Middle East and Africa region.\nThe region delivered stable revenue year-over-year, which represents growth of over 15%, compared to 2019.\nCost-based price increases partially offset the impact of inflation in the quarter.\nWe remain confident in the actions we have in place.\nOur long-term turnaround plan for the region remains on track.\nTurning to Slide 13, I'll review our third quarter results for our Latin America region.\nNet sales increased by 17%, led by cost-based price increases and strong demand across Mexico.\nThe region delivered very strong EBIT margins of 8.7%, despite supply constraints, inflation and continued negative impact from currency.\nTurning to Slide 14, I'll review our third quarter results for our Asia region.\nThe region's revenue decline was entirely driven by the Whirlpool China divestiture.\nExcluding this, the region grew by 3% year-over-year or 10% compared to 2019.\nAs expected, the region continued to recover from COVID-related shutdowns experienced in the first half of the year.\nThe region delivered very strong EBIT margins of 8.6%, driven by cost-based price actions and positive impact from our Whirlpool China divestiture.\nLastly, our increased investments in Elica PB India enhances our built-in cooking product offerings, strengthens our distribution network and is expected to be margin accretive to the region.\nAnd before I look forward, I will take a moment to look back.\nWe are a 110-year-old Company with a legacy of success and a vision anchored on improving life at home.\nFrom our introduction of a first electric wringer washer and first stand mix in the early 1900 to our launch of the first French door build-in refrigerator, and our leadership in connected appliances today.\nWe relentlessly reinvent ourselves with consumer at the heart of everything we do.\nThese new long-term value creation goals build on our strong foundation, but reflect the fact that we are very different Whirlpool than 10 years ago, operating in a very different world.\nToday, we are operating in a supply constraint and inflationary environment, which is negatively impacting most industries across the world.\nYet, we're on track of year of record performance.\nIn 2020, the world was impacted by the COVID-19 pandemic.\nAnd before that, numerous other unforeseen global challenges.\nWe have faced many significantly challenging environment and yet, we're on track for our fourth consecutive year of record results.\nWe have an agile and resilient business model, which enables us to succeed in any operating environment.\nOur increased value creation goals demonstrate our confidence in our long-term success and that supported by strong underlying drivers such as positive outlook on housing, strong replacement demand, and evolving consumer habits.\nAdditionally, our demonstrated value creating go-to-market approach, lower cost base and compelling innovation pipeline positioned us for continued success.\nOur new long-term value creation goals reflect our confidence in the different Whirlpool in this different world.\nNow, turning to Slide 17, you will see that we have exceeded our existing targets.\nWe first introduced this target in 2017, with a clear focus on value creation and a balanced approach to grow profitably.\nWe've been consistently delivering at or above all of these targets.\nWhile we're pleased with our progress, we're not done yet.\nI'm turning to Slide 18, I will review our new long-term value creation goals.\nWe now expect revenue to grow at a rate of 5% to 6%, almost doubling our previous goal of approximately 3%.\nNext, we are increasing our EBIT margin expectation from approximately 10% to a range of 11% to 12%.\nThis is a level of performance that our business is absolutely capable of achieving.\nAdditionally, we expect to continue to convert cash at a high level and have increased our adjusted free cash flow as a percentage of net sales from 6% plus to a range of 7% to 8%.\nLastly, we expect to deliver return on invested capital of 15% to 16%, an increase from our previous target of 12% to 14%.\nWe are confident in our future success and achieving these goals will continue to drive significant shareholder return.\nNow, turning to Slide 19, I will discuss why we expect revenue growth of 5% to 6%.\nDemand in our industry is segmented by three primary purchase drivers: housing, replacement and discretionary.\nWe're entering a period with strong growth catalyst across all three categories.\nFirst, let's begin with new housing construction.\nHousing remained well below historical and structurally needed levels for over a decade.\nThis is compounded by pent-up demand for millennials that we're only now beginning to see.\nLastly, interest rates remain at historically low levels.\nSecond, let me discuss replacement.\nWe're entering a period in which the natural replacement cycle will move from a headwind to a tailwind.\nThis is driven by elevated usage rates and a larger install base of appliances, which will need to be replaced.\nAlso, with our install base of connected appliances, we have clear data on how our consumers are using our products, and they're using them more.\nFor example, consumers are using our connected wall ovens and free standing ranges twice as often as before COVID.\nEven more important, as hybrid work model is becoming more widespread, we do expect appliance usage levels to remain significantly higher than pre-COVID, ultimately driving shorter replacement cycles.\nThird, let's review discretionary purchases.\nCOVID has brought a fundamental reorientation of consumer toward home, which will not just go away.\nIn addition, consumer remains healthy with increased disposable income and more equity in their home, which ultimately drives higher investments in the home.\nTo recap, with strong positive demand trends across all three segments.\nNext, turning to Slide 20, I will discuss additional revenue catalyst.\nDuring this pandemic, we all witnessed a significant increase in all e-commerce activities, which we do not expect to revert back to pre-COVID levels.\nOver the past years, we've built our own Whirlpool direct-to-consumer business that represents today approximately $1 billion.\nOur multi-year investment in our strategic digital transformation has been and will continue to deliver growth rate of over 25%.\nLastly, we continue to enter and expand upon new ecosystems, which present significant new revenue opportunities.\nThis was demonstrated when we entered the consumables detergent segment business with the launch of our ultra concentrated Swash detergent.\nWe offer an end-to-end experience where the consumer can fill his or her detergent for a bulk dispenser in the unit, be alter when replacement is needed and order through our app for convenient at home delivery.\nThis is one of many applications where we have earned the right to win.\nMoving to Slide 21, I would like to address why we're positioned to capitalize on these opportunities and grow profitably.\nAs we exited the Great Recession of 2009 to 2011, we took many difficult actions enabling the low fixed cost position we have to date.\nWe removed over $1 billion in costs by reducing our fixed asset base by over 30% in just the last five years.\nNext, we have a proven value creating approach to promotions and our relentless focus on cost and complexity reduction.\nAll of these are evidenced by our continued demonstration of financial success.\nAnd we're not done yet.\nFor example, today, we are absorbing significant costs associated with operating in an inflationary environment.\nLastly, we will continue to prioritize investments to drive innovation and growth.\nNow, turning to Slide 22, I will review our adjusted free cash flow and return on invested capital expectations.\nLarge acquisition-related items are behind us.\nAdditionally, a seasonally balanced approach and disciplined working capital management position us to drive higher cash conversion.\nNext, we will opportunistically seek bolt-on acquisition targets at our earnings per share accretive soon after acquisition.\nAnd with our significant reduced asset base, we are positioned to continue to deliver strong return on our investments.\nNow, turning to Slide 23, let me recap what you heard over the past few minutes.\nQ3 again impressively demonstrated our ability to operate in a very challenging environment and delivered a very strong operating results.\nSustained healthy market demand and strong operational execution gives us the confidence to increase our ongoing earnings per share to approximately $26.25, while delivering adjusted free cash flow of $1.7 billion.\nNext, we are unwavering on our commitment to drive strong shareholder value as we expected to deliver record ongoing earnings per share and return over $1.2 billion to shareholders in 2021.\nAs we look beyond 2021, we firmly believe we have demonstrated that our business is structurally different and well positioned to again build on our record results.\nLastly, our new long-term value creation goals reflect the fact that we're a different Whirlpool operating in a different world.\nAnd in early 2022, we plan to hold an Investor Day, at which time we look forward to discussing our view of our business in greater depth.\n", "role": "user" }, { "content": "expect full-year 2021 net sales growth of about 13 percent.\nincreased fy earnings per diluted share guidance to about $27.80 on a gaap basis and about $26.25 on an ongoing basis.\nfy cash provided by operating activities, adjusted free cash flow guidance remain unchanged.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Our actual results could differ materially from these statements due to many factors discussed in our latest 10-K and other periodic reports.\nWe believe these measures are important indicators of our operations as they exclude items that may not be indicative of results from our ongoing business operations.\nWe also think the adjusted measures will provide you a better baseline for analyzing trends in our ongoing business operations.\nIn difficult times like the ones we're living through today, it is important that we remain true to our guiding principles.\nWhirlpool's 110 year history is rooted in our value-driven commitment to our shareholders, employees, consumers and communities in which we operate.\nIn 2020, we faced unprecedented challenges due to the ongoing COVID-19 pandemic.\nYes, we remained firm in our commitment to all of our stakeholders.\nThe health and well-being of our employees was and it remains our top priority.\nWe increased safety measures at all manufacturing plants and provided additional resources to care for families and those who fell ill.\nWe established business continuity plan to ensure our consumers received our products to improve life at home with their families.\nAnd we continue to support our global communities by procuring medical supplies, making donations and engineering critical equipment for front-line workers.\nIn parallel, we made significant advancement toward our sustainability target, resulting in ratings improvements and external recognition.\nMost notably, we received a low-risk rating from Sustainalytics, a year-over-year improvement driven by our outstanding energy and water efficiency programs and our strong global product safety systems.\nAnd we were named to the Dow Jones Sustainability North America Index in recognition of our long-standing sustainable business practices.\n2020 marked our 14th time on the list in the last 15 years.\nI'm very proud of the way our employees have managed through this pandemic.\nIt is ultimately the agility of our organization and the resilience of our employees that allowed us to deliver record results in 2020.\nNow turning to our fourth quarter 2020 highlights on Slide 4.\nWe delivered strong organic net sales growth of over 10% driven by solid industry demand across the globe.\nAdditionally, we delivered ongoing EBIT margin of over 11%, a second consecutive quarter of double-digit margins and a year-over-year expansion of 410 basis points.\nLastly, we successfully executed our go-to-market initiatives and drove strong cost takeout across the globe, leading to positive EBIT and EBIT margin expansion in all regions.\nNow turning to Slide 5.\nWe will discuss our full-year highlights.\nWe took immediate and decisive action as we announced and executed our $500 million plus cost takeout program.\nFurther, we realigned our go-to-market strategy to effectively operate within a supply constrained environment.\nAnd structural and sustained positive demand trends and the exceptional execution of our COVID-19 response strategy resulted in record ongoing earnings per share of $18.55, a 16% improvement compared to the prior year, above our previous guidance.\nRecord ongoing EBIT margin of 9.1%, a 220 basis point improvement and a 25% increase in total EBIT compared to the prior year.\nAnd record free cash flow of approximately $1.25 billion with positive free cash flow in North America, Latin America and Europe.\nDespite significant macroeconomic uncertainty, we strengthened our balance sheet and drove significant shareholder value.\nWe reduced our gross debt leverage to 2.3 times making progress toward our long-term target of 2 times.\nWe delivered a return on invested capital of approximately 11%, representing the fourth consecutive year of improvement as we realize the benefit of continued EBIT margin expansion at an optimized asset base in our Europe region.\nLastly, we returned strong levels of cash to shareholders through share repurchases and increased our dividends for eighth consecutive year.\nOverall, results we delivered in 2020 reflect the structural improvements we have made, not just in 2020, but also those made during the years before.\nWe are a fundamentally different company with an improved margin and cash flow profile.\n2020 could have been a setback for us.\nInstead, we were able to significantly accelerate our progress toward our long-term financial goals.\nTurning to Slide 6.\nWe show the drivers of our fourth quarter and full year EBIT margin.\nIn the fourth quarter price-mix delivered 375 basis points of margin expansion, driven by reduced promotional investment and mix benefit as consumers invest in their homes.\nAdditionally, we delivered on our cost takeout program positively impacting margin by 125 basis points.\nFurther, reduced steel and resin cost resulted in a favorable impact of 125 basis points.\nThese margin benefits were partially offset by continued marketing and technology investments and the unfavorable impact of currency.\nFor full year, very strong margin expansion from price mix and our cost takeout program were partially offset by increased brand investments and currency.\nOverall, we're very pleased to be delivering on our long-term EBIT margin commitment and are confident this positive momentum will continue to drive very strong results in '21.\nTurning to Slide 8, I will review our fourth quarter regional results.\nIn North America, we delivered 4% revenue growth driven by continued strong demand in the region.\nAdditionally, we delivered record EBIT driven by the flawless execution of our cost takeout and go-to-market actions.\nLastly, we continue to optimize our supply chain operations, driving weekly improvements in our production yield.\nDelivering top line growth and a record EBIT performance, the region's outstanding results again demonstrate the fundamental strength of our business model.\nTurning to Slide 9, I'll review our fourth quarter results for our Europe, Middle East and Africa region.\nShare growth in Italy and the U.K. along with strong demand in the region drove another quarter of double-digit revenue growth.\nAdditionally, the region delivered year-over-year EBIT improvement of $29 million led by increased demand and strong cost takeout.\nWe overcame the challenges presented by COVID-19 and restored profitability to the region in line with our commitment at the start of the year.\nOur 2020 results demonstrate the effectiveness of our strategic actions and the progress we have made to-date.\nTurning to Slide 10, I'll review our fourth quarter results for our Latin America region.\nNet sales increased 5% with organic net sales growth of 28% led by strong demand in Brazil.\nThe region delivered very strong EBIT margins of 12% with continued strong demand and disciplined execution of go-to-market actions, offsetting significant currency devaluation.\nOverall, the region's 2020 performance serves as a proof point of the viability of our long-term financial goals highlighting our ability to deliver double-digit margins in a strong demand environment.\nTurning to Slide 11, I'll review our fourth quarter results for our Asia region.\nIn India, we delivered strong year-over-year net sales growth, driven by demand recovery.\nIn China, we delivered Whirlpool branded share growth in addition to EBIT improvement led by cost productivity actions.\nOverall, we are pleased to see a rebound in Asia and look forward to building on this momentum in 2021.\nTurning to Slide 13, Marc and I will discuss our full-year 2021 guidance.\nNeedless to say some uncertainty remains as we continue to operate in a COVID environment.\nHowever, we do believe increased disposable income, investments in the home and a favorable housing shift are here to stay and will drive strong demand.\nBased on our internal model for industry and broad economy we expect global industry growth of 4%.\nAs we have demonstrated in 2020, we are uniquely positioned to capture the structural shift and further advance our strategic priorities.\nIt is with confidence that we provide our '21 guidance, which reflects our fourth consecutive year of record earnings per share and significant top line growth.\nWe expect to drive net sales growth of approximately 6% as we capitalize on strong demand and share gains in all regions.\nAdditionally, we expect to deliver above 9% ongoing EBIT margin and deliver free cash flow of $1 billion or more.\nTurning to Slide 14, we show the drivers of our 9% plus ongoing EBIT margin guidance.\nWe expect price mix to deliver approximately 100 basis points of margin expansion through three key initiatives, one, disciplined execution of our go-to-market actions, two, recently announced cost-base price increase in Brazil, Russia, and India and, three, new product launches.\nJust to give you a few examples of our legacy for innovation, in 2020, we rolled out our new global dishwasher architecture featuring the largest capacity third rack dishwasher.\nIn Europe, we launched a Red Dot award-winning built-in induction cooktop.\nIn the United States, we entered the consumables detergent business with the launch our ultra concentrated Swash detergent.\nNext, we expect net cost to positively impact margin by 150 basis points.\nAs ongoing cost productivity efforts coupled with the carryover benefit from our 2020 cost takeout program more than offset elevated freight and labor cost.\nWe expect raw material inflation to negatively impact margin by 150 basis points, led by higher steel and resin cost.\nFurther, as we continue to invest in the future, we expect increased marketing and technology investments to drive a negative margin impact of 50 basis points, while unfavorable currency, primarily Latin America, expected to impact margin by approximately 50 basis points.\nIn total, we expect these actions to deliver 9% plus ongoing EBIT margin, an EBIT improvement of over $100 million compared to the prior year.\nTurning to Slide 15, we show our regional guidance for the year.\nStarting with industry demand, we expect a robust demand environment for North America, supported by continued strength from consumer nesting trends and increased discretionary spending.\nAdditionally, the impact from positive U.S. housing starts, which began to strengthen in late 2019 and strong existing home sales will translate to higher appliance demand.\nIn EMEA, we expect a continued recovery in the first half of the year to support strong growth, while in Latin America, we expect modest growth of 2% to 4% as the benefits from government stimulus in Brazil are lessened.\nAsia industry is expected to accelerate by 6% to 8% as the region rebounds from prolonged shutdowns in 2020.\nRegarding our EBIT guidance, we expect very strong margins of 15% or more in North America.\nWe expect the impact of favorable go-to-market initiatives and disciplined cost actions to offset cost inflation.\nIn EMEA, we expect the strategic actions laid out during our 2019 Investor Day to drive EBIT margin expansion of over 250 basis points and a full-year EBIT margin of over 2.5%.\nIn Latin America, we expect to deliver EBIT margins of 7% or higher.\nA steady demand improvements and positive price mix are offset by continued currency devaluation in Argentina and Brazil.\nLastly, we expect to achieve EBIT margins of 2% or higher in Asia, driven by demand recovery.\nTurning to slide 16, we will discuss the drivers of our 2021 free cash flow.\nWe expect another year of very strong cash earnings of approximately $2 billion, driven by sustained EBIT margins.\nWe plan to increase capital investments to historical levels to support the launch of innovative products around the globe.\nAdditionally, we will continue to invest in world-class manufacturing and our digital transformation journey.\nFurther, as we ended 2020 with record low inventory levels, we are planning for a moderate inventory built.\nWe anticipate restructuring cash outlays of approximately $225 million primarily due to the impact of COVID-19-related restructuring actions executed in 2020 and the exit of our Naples, Italy operations.\nOverall, we expect to drive free cash flow of $1 billion or more as we focus on continuing to deliver record EBIT margin levels and prioritizing our capital investments.\nTurning to slide 17, we provide an update on our capital allocation priorities for 2021.\nWe remain fully committed to funding the business driving innovation and growth, while continuing to strengthen our balance sheet and return cash to shareholders.\nWe expect to invest over $1 billion in capital expenditures and research and development, highlighting our commitment to driving innovation and growth in the future.\nWe have reinstated our share repurchase program that had been temporarily suspended during the height of the pandemic.\nWith a clear focus on returning increased levels of cash to shareholders, we expect to repurchase shares at moderate levels.\nLastly, we have a clear line of sight to delivering on our long-term goal of gross debt to EBITDA up 2 times.\nWe are extremely pleased to see that despite the enormous challenges of operating in a global pandemic, our teams were able to deliver on our long term value creation targets.\nIn North America, we delivered nearly 16% EBIT margins for the full year, significantly above our long-term margin goal for the region of 13% plus.\nWe restored the European region to profitability.\nIn Latin America, we capitalize on strong industry demand, demonstrating the long-term margin potential in the region.\nAnd finally, we delivered record free cash flow of $1.25 billion or 6.4% of sales, above our long-term goal of 6% of sales.\nFurther, we demonstrated an unwavering commitment to our environmental, social and governance priorities, resulting in significant advancements to our targets.\nBuilding on the momentum of our 2020 performance and the operational excellence of our global team, we are confident that we are well-positioned to deliver another record year in '21.\n", "role": "user" }, { "content": "oration delivering on long-term value creation targets with very strong fourth-quarter and full-year results.\nsees full-year 2021 net sales increase of about 6 percent.\nsees 2021 free cash flow of $1 billion or more.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm joined today by Albert Chao, our President and Chief Executive Officer; and Steve Bender, our Executive Vice President and Chief Financial Officer; and other members of our management team.\nThe conference call agenda will begin with Albert, who will open with a few comments regarding Westlake's performance and a current perspective on the industry.\nFinally, Albert will add a few concluding comments, and we'll then open the call up to questions.\nAny reference to Westlake Partners is to our master limited partnership, Westlake Chemical Partners LP, and similar references to OpCo refer to our subsidiary, Westlake Chemical OpCo LP, which owns certain olefins facilities.\nActual results could differ materially based on many factors, including the cyclical nature of the industries in which we compete, availability, cost and volatility of raw materials, energy and utilities; governmental regulatory actions, changes in trade policy and political unrest; global economic conditions, including the impact of the coronavirus; industry operating rates; impacts of extreme weather events; the supply demand balance for Westlake's products; competitive products and pricing pressures; access to capital markets; technological developments and other risk factors as discussed in our SEC filings.\nWe appreciate you joining us to discuss our first quarter 2021 results.\nOur operating income increased 154% in the first quarter of 2021 versus the first quarter of 2020, which was before the impact of the pandemic.\nBefore Steve goes through the financial results, Let me provide some insight into the quarter.\nThe first quarter of 2021 saw strong pricing for many of our products driven by robust global demand.\nThe strength in demand for polyethylene and PVC resulting from the global economic rebound in 2020 was driven by an increase in worldwide packaging consumption and construction activities.\nThe 30% year-over-year increase in U.S. housing permits and associated housing starts shows the strength in residential construction activity that benefited our downstream building products business.\nIn our Vinyls segment, with tight inventory conditions, strong demand for vinyls and production outages caused by the severe winter storm, we saw PVC resin prices steadily increased in the first quarter.\nThe polyethylene industry also experienced tight inventory conditions due to the strong global packaging demand and domestic production outages caused by the severe winter storm.\nThese conditions drove pricing and integrated margins in our Olefins segment.\nI would now like to turn our call over to Steve to provide more detail on our financial and operating results for the first quarter.\nI will start with discussing our consolidated financial results and then go into a more detailed review of our Vinyls and Olefins segment results.\nWestlake continue to benefit from the strong global supply demand dynamics and a robust return of global economic activity driving demand for most of our products.\nFor the first quarter of 2021, we reported net income of $242 million or $1.87 per share compared to net income of $145 million for the first quarter 2020, which included a $62 million tax benefit from the CARES Act.\nThese results are inclusive of the previously mentioned severe winter storm impact of approximately $100 million or $0.61 per share in the first quarter.\nThe $97 million first quarter year-over-year increased net income is a result of higher sales prices and integrated margins for polyethylene and PVC and higher earnings resulting from the strong demand in our downstream building products business.\nPartially offsetting these increases were lost sales and lower production volumes, elevated maintenance cost, higher feedstock and natural gas fuel cost, all related to the severe winter storm as well as lower sales prices for caustic soda.\nWhile we work quickly to get our facilities back online, our estimates for a loss margin from sales and repair expense are approximately $120 million.\nWe incurred approximately $100 million in the first quarter of 2021 results or approximately $0.61 per share, with the remaining $20 million falling into the second quarter.\nOf this estimated first quarter impact of $100 million, approximately 75% was related to our Vinyls segment, with the balance affecting our Olefins segment.\nFirst quarter 2021 net income increased by $129 million from fourth quarter 2020 net income of $113 million.\nThe increase in net income was largely attributable to higher sales prices for polyethylene and PVC resin.\nOffsetting these benefits were lower caustic soda prices and higher feedstock and fuel cost.\nOur utilization of the FIFO method of accounting resulted in a favorable pre-tax impact of approximately $55 million or $0.33 per share compared to what earnings would have been reported under the LIFO method.\nThis is only an estimate and has not been audited.\nNow let's move on to discuss the performance of our two segments, starting with our Vinyls segment.\nThroughout the first quarter, we experienced robust global demand for PVC anchored by strong global construction activity.\nOur downstream building products business continued to benefit from solid residential construction and repair and remodeling demand.\nPVC strength was driven by broad-based end market demand, including residential construction, automotive and medical equipment.\nWhile the severe winter storm impacted our production in the quarter, the strong demand for PVC and our downstream building products saw higher sales prices, and we benefited from strong integrated margins during the quarter.\nFor the first quarter of 2021, Vinyls operating income of $200 million increased $127 million from the prior year period, primarily as a result of higher sales prices and margins for PVC resin and higher sales prices and margins in our downstream building products business.\nThis is partially offset by reduced sales volumes and lost production from the severe winter storm, lower sales prices for caustic soda and higher feedstock and fuel cost.\nFor the first quarter of 2021, Vinyls operating income increased $34 million from fourth quarter of 2020, primarily the result of higher sales for PVC resin and higher volumes in our downstream building products business.\nIn our Olefins business, robust global demand for packaging and other consumer products expanded our integrated margins in polyethylene.\nOur first quarter 2021 operating income of $180 million increased $118 million from the first quarter 2020, driven by strong pricing and improved demand, offset by lower sales volumes resulting from the severe winter storm.\nFor the first quarter 2021, Olefins operating income increased $158 million from fourth quarter of 2020, primarily due to higher sales prices and margins as well as increased sales volumes, partially offset by higher feedstock and fuel cost.\nNext, let's turn our attention to the balance sheet and statement of cash flows.\nWe generated $265 million in cash flows from operations in the first quarter 2021, resulting in total cash and cash equivalents of $1.4 billion.\nFirst quarter 2021 capital expenditures were $141 million.\nWe maintain a long-dated debt maturity profile with a weighted average debt maturity of 14 years, anchoring our investment-grade balance sheet.\nNow to address some of your modeling questions.\nWe expect our effective tax rate for the full year of 2021 to be approximately 23% and a cash tax rate of approximately 19%.\nAs we stated in our last call, we forecast our capital expenditures for the year to be between $700 million and $800 million.\nWe are planning for a turnaround of our Petro II ethylene unit to begin in September of this year.\nThis turnaround and associated outage is expected to last approximately 60 days.\nAs we look ahead, we see continuing strength in global demand in polyethylene, PVC and downstream building products driven by the solid market in residential construction, packaging, automotive and healthcare.\nOur high-level integration extends through the value chain from natural gas liquids and other feedstocks through to consumer building products.\nOur chemical operations sit on the lower end of the global cost curve, which enable us to drive long-term value throughout the business and investment cycles while meeting the needs of our end-use customers with the downstream building products business, bringing additional value.\nIn our Vinyls segment, we see continuing strength in the PVC and downstream building products markets, driven by strong construction and other durable goods demand.\nIn our Olefins business, end-use demand remains strong as the essential everyday products such as consumer packaging and healthcare are driving polyethylene demand.\nWith the continued emphasis on corporate stewardship, we remain vigilant with our focus in developing products and solutions for a more sustainable future while protecting and investing in our people.\nAs an example of our commitment to sustainability, we have introduced green caustic soda, a certified climate-friendly caustic soda, utilizing renewable energy.\nThis product is available under the brand name GreenVin, which has a reduced CO2 impact of more than 30% compared to conventional caustic soda.\nWe look forward to further discussing these products with you as more developments are made and furthering our commitment to transparency through our future ESG reporting.\nThese initiatives reflect our dedication to being a dominantly and socially responsible corporate citizen.\nWestlake remains focused on our core tenets, namely, to protect the health and safety of our employees, deliver on our commitments to our customers, and strengthen the company in all aspects.\nAnchored by these values, we are confident that Westlake is well positioned to serve the growing worldwide needs of our customers while maintaining financial discipline, which, combined with the strong fundamentals of our business, enable us to deliver long-term value to our shareholders.\nWe'll provide that number again at the end of the call.\nDaphne, we'll now take questions.\n", "role": "user" }, { "content": "q1 earnings per share $1.87.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: This is Brandon Day, Whiting's investor relations director.\nAlso, available to answer questions during the Q&A session will be our COO, Chip Rimer.\nThose include risks relating to commodity prices, competition, technology, environmental and regulatory compliance, midstream availability and others described in our filings with the Securities and Exchange Commission, which are incorporated by reference.\nI want to keep all this in perspective in light of what's happening in the world stage.\nAbove all else, we hope peace is restored as quickly as possible.\nYou can refer to our 10-K we filed yesterday and our news release for detailed information, as well as reconciliations to non-GAAP measures.\n2021 was a strong year.\nWe exited the year with some momentum and expect to see another good year in 2022.\nWe exceeded our guidance numbers.\nWe paid off the balance of our revolver.\nWe added inventory in our core areas, and we, most recently, took the first step toward a capital return plan by initiating our first-ever regular dividend.\nWhile we were assisted by a rising commodity price environment, our team did a great job executing our 2021 program, as well as the initiatives we set out at the beginning of the year.\nOnce Jimmy concludes, I want to talk about our 2022 program, our return of capital approach for 2022 and to answer some questions that arose from our last news release.\nAnd I echo your thoughts on -- as our thoughts and prayers go out to Ukrainian people on news that we're all watching here and hope that peace is resolved quickly.\nWell, I hate to spot off a bunch of numbers.\nI know you all read in our filings already.\nI do want to highlight a few things, a few results that are really striking.\nIn the fourth quarter of 2021, we had net income on a GAAP basis of $292 million or $7.34 per diluted share as compared to $198 million or $5 per share in the previous quarter.\nAdjusting for certain items, but primarily the mark-to-market of our hedging transactions, we had adjusted net income of $168 million or $4.23 per diluted share in the fourth quarter as compared to $142 million or $3.57 per share for the previous quarter.\nAdjusted EBITDAX was $226 million compared to $201 million in the previous quarter.\nThe increase is primarily due to the better commodity prices and a slight uptick in our oil production quarter-over-quarter.\nOur production on a barrels of oil equivalent basis remain relatively flat quarter-over-quarter, averaging 92,800 BOE per day compared to a third quarter production of 92,100 BOE per day.\nOil production for the fourth quarter averaged 52,900 barrels of oil per day, which is up slightly from 51,800 barrels of oil in the third quarter.\nOil differentials were considerably higher in the fourth quarter as overall basin production levels remain well within total takeaway capacity.\nAs we move into 2022, our term commitment levels have decreased, resulting in more exposure to spot value premiums that we're seeing now.\nOur natural gas prices benefited in 2021 from a premium at our primary pricing point, the Ventura point as compared to Henry Hub.\nAnd NGL prices continued to be strong in the fourth quarter at an average percentage of WTI oil of around 37%.\nJust for context, this compares to less than 20% that we were experiencing in the same quarter last year.\nAs noted last quarter, the majority of our gathering and processing agreements are structured as fixed fee contracts, and therefore, receive a more pronounced benefit to our net realized price at current residue gas and NGL benchmark pricing.\nThe company invested capex of about $66 million during the fourth quarter to bring 16 gross, 12 net wells on to production and we drilled 17 gross, 10.4 net operated wells.\nWe ended the quarter with 34 gross, 20.2 net drilled and uncompleted wells.\nWe currently have two rigs running and one completion crew.\nBoth of those drilling rigs are in the Sanish Field and our completion crews working in the Cassandra area.\nLease operating expense was $62 million for -- or $7.31 per BOE for the fourth quarter of '21.\nNote that LOE continues to be impacted by expensed workovers that we've talked about previously.\nOur cash G&A expenses were $12 million for the fourth quarter and for the year totaled about $39 million, averaging right around $1.16 per BOE for 2021.\nWe did see a dramatic increase year-over-year with the estimated total proved reserves totaling 326 million BOEs with a pre-tax PV10 value of $4.4 billion at year-end compared to 260 million BOE and $1.2 billion at the year-end 2020.\nPricing under SEC rules increased by approximately $27 per barrel to $66.56 per barrel at December 31, 2021, compared to December 31, 2020.\nGas increased to $3.60 per MMBtu compared to $1.99 for the same two periods.\nObviously, these price changes were the biggest factor in the year-over-year changes, but we also added 20.3 million BOE through the drill bit and 16 million BOE with acquisitions, which more than offset the decrease from selling our Colorado assets.\nLastly, I'll point out that our proved developed properties accounted for roughly 80% of our total proved reserves with approximately $3.6 billion in value.\nIt's worth noting that this value is at SEC pricing of around $67 per barrel of oil as compared to spot prices today.\nWith that, I'll turn this back over to Lynn and talk a little bit about where we're headed in 2022.\nThere were a lot of numbers here.\nSo I appreciate that.\nDivesting of our Colorado properties, combined with adding meaningful inventory through our acquisition work, we'll pay great dividends in future years, and we should really start to see the benefits accruing at the end of 2022 and moving into 2023 with our development plan.\nThe board and management understand the importance of returning capital to shareholders.\nWe have had much engagement throughout the last year by our board, and we are excited to lay out our plans as we go through the year.\nAs such, the board approved a quarterly dividend of $0.25 per share that will be paid beginning in March, which was only the first step of our capital return program.\nOur board wants to be very thoughtful and measured in developing a plan.\nTo that end, we have had multiple discussions of stock buybacks and fixed and variable dividends.\nAnd I am completely comfortable in saying our board of directors is going in this direction, and we would expect to lay out additional information that would place the company in the fairway of what we are seeing from returning capital from our peers.\nWhen we look out over the next four years and consider a $70 price environment for WTI crude, we see our company generating free cash flow in an amount approximately the same as our current market cap.\nI know we live in a world of instant gratification.\nBut again, I will state that our board of directors is aligned with our shareholders, and we will methodically develop and return a capital plan that should please our shareholders.\nAnd I want to shift and outline how we thought about our 2022 capital plan and production profile.\nLooking ahead, we will have a slightly higher activity level, we will have larger working interest in the wells drilled and completed in our Sanish Field due to the acquisitions.\nWe anticipate an increased level of non-operated activity, and we have built in inflationary factors that we are currently experiencing and anticipate throughout the year.\nOur supply chain team has done a great job of locking many of the big-ticket items for the first half of 2022.\nHowever, we are less protected in the back half of the year.\nWe estimate the inflationary pressure to the program to be in the low double-digit percentages, but the high end of our guidance has contingency for higher inflation should that become an issue.\nTurning to our production profile.\nWe have shifted some production from the first half of the year and into the second half due to the drilling and completion activities on a five well pad mentioned in our previous release.\nWe had the rig down on the pad in January, and we'll be moving back in, in March.\nThis delay, combined with our current activity in the Sanish Field, create somewhat of a hockey stick, moderating our overall '22 production but creating impressive growth as we exit the year and move into '23, which should benefit with a sharp increase in production.\nIn February, we announced the acquisition of non-operated assets in our Sanish Field.\nWe negotiate these transactions in the fall of '21 in a lower price environment, and we believe they add significant shareholder value.\nWe have been able to hedge production from these acquisitions at a much higher WTI pricing.\nThe acquired interest included wells currently on production, wells that have already been drilled and are awaiting completion in '22, as well as significant interest in wells scheduled on our '22 and '23 drilling programs.\nThis is a field that we understand very well, and I have a high confidence in the well economics, supporting our belief that these are highly accretive transactions with excellent risk-adjusted returns.\nWe're starting '22 in an incredibly strong financial position, and I expect to have attractive cash flow from operations during the year.\nWith our current hedges in place and using the $70 price for WTI and $4 for gas, we model over $900 million in EBITDA, resulting in over $500 million of adjusted free cash flow, which demonstrates that we can continue to grow our return to capital program while also continuing to pursue acquisition opportunities that will compete with our current profile.\nBy investing in Whiting, we think shareholders can really have it all.\n", "role": "user" }, { "content": "q4 adjusted non-gaap earnings per share $4.23.\nq4 gaap earnings per share $7.34.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: You can also access these slides on the website.\nBefore we begin, I'd like to review the Safe Harbor statement.\nActual outcomes and in results could differ materially from those forecasts due to the impact of many factors, beyond the control of the company.\nAs Mortgage Credit Markets rallied in the third quarter, Valuations on Western Asset Mortgages residential and commercial credit assets benefited meaningfully.\nWMC's GAAP book value increased to 29.2% in the quarter to $4.07 per share.\nGAAP net income was $59.8 million or $0.98 per share and core earnings were $6.4 million or $0.10 per share in the quarter.\nOur net interest margin improved to 2.27%, which together with the underlying performance of the portfolio contributed to solid core earnings despite a significant reduction in recourse leverage from 3 times as of June 30 to 2.2 times as of September 30.\nOver the last two quarters, we fortified the Company's balance sheet, improved funding terms increased liquidity and equity, and reduced recourse leverage to ensure that our shareholders could benefit from the performance of the underlying assets of our portfolio.\nIn light of our results this quarter including the strengthening of our balance sheet, improved liquidity and solid core earnings, the Company declared a cash dividend of $0.05 in the quarter.\nThe payment of an attractive dividend is an important priority for our shareholders and the resumption of the dividend was a key milestone for the company.\nThe recovery and asset prices across the portfolio and the redemption of our dividend contributed to an economic return on book value of 30.8% for shareholders this quarter.\nWe remain highly focused on our long-term objectives of generating sustainable core earnings that support an attractive dividend with relative stability in our book value.\nWe believe our portfolio's earnings power is likely to provide a solid underpinning for future dividends.\nAnd while we have seen substantial recovery in asset values across our portfolio this quarter, we believe there is the potential for additional improvement, particularly in our commercial mortgage investments.\nMuch of this will be dependent on the path of the virus as well as the pace of recovery in economic activity.\nIn our view, our diversified investment strategy focused on high-quality commercial and residential borrowers is well-positioned for the uncertainties of this environment.\nThe third quarter of 2020 saw the equity and credit markets continued to rebound, driven by improved liquidity conditions across financial markets and the ongoing reopening of the economy, which translated into higher valuations for a number of our portfolio holdings.\nThe recovery of our residential portfolio combined with improvement in our commercial holdings translated into a significant improvement in our GAAP book value.\nAs the market and our portfolio have improved, so has our liquidity position, which contributed to our decision to reinstate our dividend for the third quarter.\nOver the course of the quarter, we saw continued improvement in the credit performance from both our residential and commercial holdings.\nOur non-QM residential loan portfolio is performing well and experienced a decline in the percentage of loans that were part of a forbearance plan dropping to 10% at September 30, from 16% at the end of the second quarter.\nWe see this as a strong indication that borrowers with meaningful equity in their homes will prioritize their mortgage payment in order to remain current on that obligation.\nWe believe that this trend will continue given the positive data coming out of the U.S. housing sector including robust purchase and refinance demand and ongoing home price appreciation in many major markets across the country.\nOur commercial loan and non-agency CMBS portfolios are performing in line with expectations even though those expectations have shifted as a result of the pandemic.\nThe commercial whole loan portfolio carries an approximate 65% original LTV and all but one of the loans remains current.\nAs we mentioned last quarter, the delinquent loan has a principal balance of $30 million which is secured by a hotel.\nWe are currently exploring various workout strategies and believe that there is a reasonable likelihood that the majority of the principal and missed interest payments will be recovered.\nAlthough, there is no guarantee that will be the case.\nOur large low non-Agency CMBS portfolio has an original LTV of 60% and despite exposures to some retail and hotel assets over 82% of the loans by principal balance remain current compared with 70% at June 30.\nWe are in forbearance and modification discussions with the delinquent borrowers in this portfolio.\nIn fact, we have been active with many of our commercial real estate borrowers, monitoring their situations and working with them to help preserve the value of the underlying properties in order to protect our collateral and increase the probability of an eventual recovery in asset values.\nThat being said, we believe that our focus on high quality properties with well-capitalized sponsors capable of withstanding short-term disruptions should enable our commercial real estate portfolio to emerge from the crisis without significant overall impairment.\nWe have spent a significant amount of time and effort over the last two quarters to improve the terms of our financing arrangements and the company's risk profile.\nThese ongoing efforts continued in the third quarter as we amended our existing residential home loan facility to convert it to a limited mark to market facility with more attractive terms.\nWith respect to our outlook going forward.\nWhile the US economy rebounded during the quarter most economic measures remain well below where they started the year.\nWe believe that the recovery will continue to be dependent on the future trajectory of COVID 19, the availability of improved therapeutics and vaccines and continued fiscal and monetary support.\nWe also expect that the Federal Reserve will follow through on its commitment to keep interest rates at or near zero for an extended period of time.\nWe continue to believe mortgages secured by real estate assets with meaningful equity in the properties and higher quality credit will continue to perform well over the long term.\nWhile many sectors of the mortgage market currently offer historically attractive valuations, our primary focus remains on maintaining sufficient liquidity, protecting the value of our assets and positioning the portfolio for continued future appreciation.\nSo I'm only going to focus on the items that warrants' some additional explanation.\nDuring the quarter we continue to focus on optimizing our portfolio financing, increasing liquidity and improving shareholder's equity.\nIn July, we retired $5 million of our convertible senior notes at a 25% discount to par value.\nIn exchange for the issuance of $1.4 million shares of our common stock.\nWe were once again active in improving the financing of our assets during the third quarter.\nWe amended our existing residential home loan facility in October to converted to a limited mark to market facility with more attractive term.\nAmong other terms the amended facility has a 12-month term and bears interest at one month LIBOR plus 2.75%.\nWe reported core earnings of $6.4 million or $0.10 per share for the third quarter.\nOur core earnings came in higher than the $4.3 million generated in the second quarter, primarily driven by a higher net interest margin and a full quarter's benefit of the lower financing costs associated with last quarter's Arroyo securitization, which allowed us to reduce the income drag experience under the original Residential hold on facility.\nEconomic book value for the quarter increased 2.2% to $4.11 per share.\nAs mentioned last quarter, we believe that this non-GAAP financial metric provides investors with a useful supplemental measure to evaluate our financial position.\nIt reflects our actual financial interest in all of our investments and eliminates the accounting mismatch that arises from our Arroyo securitizations where we fair value the loans, but not the debt.\nThis quarter the difference between our GAAP book value and our economic book value narrowed only $0.04 due to the sharp rebound in asset values, mainly in the residential whole loan portfolio, which reduce this accounting mismatch.\nIn summary, we believe these steps solidify our capital structure, increase our liquidity and will enable us to participate meaningfully in the economic recovery.\nOur Recourse leverage was 2.2 times at September 30, significantly lower than the 9.5 times level at the end of March and 5.4 times at the beginning of the year.\nOur net interest margin remains healthy and with a significant portion of our assets now finance with attractive longer-term financing.\nWe believe that we are well positioned for another quarter of positive financial results in the fourth quarter.\n", "role": "user" }, { "content": "q3 core earnings per share $0.10.\nq3 gaap earnings per share $0.98.\nresumed our quarterly dividend, declaring a $0.05 per share cash dividend.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We appreciate your patience while we work through some of the technical issues.\nAs you know, there's a new process and procedure for calling into these calls, and the vendor and the operator were working through that.\nSo, again, we appreciate you being patient during the delay.\nA copy of the release has also been included in an 8-K submitted to the SEC.\nFiscal 2021 started off strong as demand and business activity in the first quarter remain stable at the top with some underlying variability by state and end market.\nOrganic sales grew 3%.\nAnd recall that we communicated to you in May that customers bought approximately $20 million of product in the fourth quarter of fiscal 2020 due to pre-buying in our construction end markets and favorable weather conditions in our agricultural end market.\nAbsent this dynamic, first quarter organic sales would have increased 8% and non-residential would have been flat year-over-year.\nDomestically, we had strong performance in key growth states like the Carolinas, Florida, the Southeast and Utah, and we were able to offset sales in states that reduced construction activity due to the COVID pandemic early in the quarter.\nAs a whole, we benefited from our national presence, as well as our geographic and end market exposure, including the increased exposure of the Infiltrator and ADS' focused homebuilder programs provide to the residential end market and our strong presence in the agricultural market.\nWe had another strong quarter in the domestic agriculture business, where sales grew 36%.\nThis growth was primarily driven by actions previously taken to increase our focus on performance in this end market, as well as positive underlying demand in this market and what was a strong spring selling season.\nA lot of good work is being done in the sales and operations initiatives we defined as part of the renewed focus on agriculture at ADS, and the fall season is shaping up favorably.\nInternational net sales decreased 9% in the quarter.\nSales in our Canada business did well, but it was not enough to offset weakness in Mexico in our exports business.\nWe have recently hired a new Senior Vice President of our International segment, Tom Waun.\nTom comes to ADS after a successful career at Emerson, and we are excited to have him as a member of our team.\nTom has decades-long experience in executive management, strategy and sales, and I look forward to working with Tom to improve the performance of our International segment.\nInfiltrator once again exceeded revenue expectations with sales growth accelerating as we progressed through the first quarter.\nInfiltrator sales increased across their product portfolio with a strong underlying demand in the residential and repair-remodel end markets.\nRoy and his team believe, and I agree, that the favorable trends for single-family housing brought on by the pandemic are quite favorable for Infiltrator, so we are making additional capital and resource investments there.\nAs we get into the second quarter, demand looks very similar to what we experienced in the first quarter.\nOur order book, project tracking, book-to-bill ratio and backlog are all positive, and we feel good about the first half of our fiscal 2021.\nWe expect the normal seasonal patterns to apply to the business, which only sharpens our focus for this first half of the year.\nAs mentioned previously, our national presence, distribution model and end market exposure enable us to capitalize on growth and activity across the US.\nAs you can see on the chart on the screen, our residential end market exposure has increased to 38% of domestic sales, our second largest domestic end market behind non-residential.\nWe view this as favorable, given current market trends and the uncertainty in the non-residential market.\nThe residential market should benefit from single-family housing undersupply and potential future suburban trends as people look to spread out in the aftermath of the COVID pandemic.\nThis dynamic should also benefit horizontal, non-residential and infrastructure development as developers look to support the increase in single-family homes and communities.\nI think in the first quarter with the residential portions of ADS and, of course, Infiltrator growing to double digits, the success of our renewed focus on the agriculture market and the uptick in the sales to the retail segment, driven by the DIY and stay-at-home project activity, demonstrated to us the power of this end market diversity and we've initiated several programs to increase success across these markets so we can be prepared for changes in demand across our business.\nFrom a profitability standpoint, we achieved record adjusted EBITDA in the first quarter.\nOrganic adjusted EBITDA margin increased 830 basis points, driven by favorable material costs, lower manufacturing and transportation costs driven by our operational initiatives, contributions from the proactive cost mitigation steps announced in March and leverage from the growth in pipe and allied products.\nInfiltrator also has record profitability in the quarter due to favorable material costs, the contributions from the synergy programs and continued execution of their proven business model.\nThe synergy programs are right on track to achieve the run rate synergies we've previously communicated.\nSimilar to my comment earlier on the second quarter revenue, the second quarter profitability trends continue in much the same way as the first quarter at both ADS and Infiltrator.\nWe are making good progress on our operational improvement initiatives within our manufacturing and distribution network.\nMaterial pricing remains favorable to the prior year, though the comparison will become more difficult as the year progresses.\nWe will continue to watch our spending very closely as we deal with many of the same issues that other companies are dealing with.\nReopening is presenting challenges, including recruiting and retaining production workers, absenteeism, and all of these challenges we have to deal with on a daily basis.\nWe've had roughly 80% of the salaried workforce, including sales, pretty much working from home since late March.\nSo there are a lot of issues you would expect that we're dealing with daily.\nWe have made adjustments and proven to ourselves that we know how to run the business in these conditions, and that's what we'll to focus on as we manage through this period of unique circumstances.\nThere's no doubt that uncertainties exist for future demand.\nWe will be focused on disciplined execution and doing the basics well as we move forward through fiscal 2021 and build on the strong start at both ADS and Infiltrator.\nOn Slide 6, we present our first quarter fiscal 2021 financial performance.\nNet sales increased 23%, with 3% organic growth plus the contribution of Infiltrator.\nWithin ADS, domestic sales increased 4%, driven by sales growth in both the agriculture and construction end markets.\nImportantly, sales increased 4% in both pipes and allied products.\nConstruction sales accelerated at the end of the quarter as states with more stringent restrictions for the pandemic began to open back up.\nFrom a profitability standpoint, our adjusted EBITDA increased $79 million, or 99% compared to the prior year.\nOur organic adjusted EBITDA increased $38 million, with strong performance from our sales, operations, procurement and distribution teams.\nADS is very well positioned to capitalize on the current stability in our end markets, as well as lower input costs, given our market-leading position, breadth of products and services, geographic and end market diversity, as well as our national relationships.\nThese attributes or modes make us the premier partner and leader in the industry and led to the margin expansion and financial performance in the quarter.\nInfiltrator contributed an additional $42 million to adjusted EBITDA and has many of the same benefits as ADS in this market environment.\nInfiltrator achieved a record adjusted EBITDA margin this quarter and is in a very good position to grow as a result of the underlying demand in the residential market, as well as their material conversion strategy.\nMoving to free cash flow on Slide 7.\nWe more than doubled our free cash flow in the quarter, increasing from $53 million in the first quarter of fiscal 2020 to $124 million in fiscal 2021.\nThe very strong free cash flow results were driven by the strong sales growth and profitability we achieved in the quarter, as well as execution on our working capital initiatives.\nOur working capital as a percent of sales decreased to about 21% as compared to about 25% last year.\nFinally, on Slide 8, we present our current capital structure.\nOur trailing 12-month pro forma leverage ratio is now 1.9 times below our target range of 2 times to 3 times levered we've previously communicated and well ahead of our original target to achieve a leverage ratio of less than 3 times by the end of this calendar year.\nThis performance was achieved as a result of our working capital initiatives, as well as the strong profitability performance we demonstrated both in fiscal 2020, as well as in this quarter.\nWe ended the quarter in a very favorable liquidity position, with $235 million in cash on June 30, 2020 and $289 million available under our revolving credit facility, bringing our total liquidity to $524 million.\nIt is also important to note that we have no significant debt maturities until 2026.\nFurther, we paid down the remaining $50 million balance on our revolving credit facility this past Friday, bringing that balance to zero as of today.\nOur capital deployment priorities remain to invest in our business with a focus on safety, capacity expansion, productivity and efficiency improvements, as well as our innovation initiatives.\nIn addition, we will continue to assess bolt-on acquisition opportunities through our discipline process, staying close to our core and focusing on adding products to our water management solutions package.\nLastly, due to the uncertain market environment, we are not providing guidance on the call today.\nOperator, please open the lines.\n", "role": "user" }, { "content": "not issuing financial guidance at this time.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: With me here, I have Scott Barbour, our President and CEO; and Scott Cottrill, our CFO.\nA copy of the release has also been included in an 8-K submitted to the SEC.\nWe had a strong second quarter of fiscal 2021, with 10% net sales growth as demand and business activity remains favorable.\nI also appreciate our customers for working with us in new and imaginative ways to serve the construction markets.\nWe generated strong performance in key growth states, including Florida, the Carolinas, Tennessee, Georgia and Utah as well as more broadly across the south and southeast regions of the United States.\nAs a whole, we benefited from our national presence and geographic exposure as well as our increased residential exposure from Infiltrator and to focused homebuilder programs at ADS.\nInfiltrator once again exceeded revenue expectations with 63% sales growth in the second quarter.\nInfiltrator continues to see double-digit growth in tanks and leach field products, with particular strength in Florida, the Carolinas, Georgia, Tennessee and Alabama.\nRecall the Infiltrator results are for two months of the prior year quarter, given the timing of the acquisition, which closed July 31, 2019.\nIn the residential end market, legacy ADS sales increased 15% this quarter.\nWe see favorable dynamics in new construction, repair, remodel and on-site septic.\nOrders, backlog and sales remained strong through the period, with very limited impact from the slowdown in residential starts earlier this year.\nAs a whole, we are well positioned for growth in the residential market.\nOn the front end of the cycle, the ADS products and go-to-market strategy are positioned for the land development phase, whereas Infiltrator products come in play toward the end of the cycle when construction is nearing completion.\nAdditionally, both Infiltrator and ADS have a repair and remodel component that is strong and growing its home improvement activity and existing home sales continue to rise.\nAbout 1/3 of the Infiltrator sales are related to repair and remodel, and at ADS, the repair and remodel exposure is covered through our retail and national accounts.\nThe company's exposure to the residential market has increased to 38% of domestic sales compared to 28% at this time last year.\nSales in our nonresidential end market were up modestly, led by strong growth in HP Pipe and Storm Tech retention detaching chambers as we continue to benefit from our exposure to horizontal construction.\nWe are tracking very closely to the segments of the nonresidential market that continue to do well such as data centers and warehouses as well as geographies that are experiencing growth like the southeast and Atlantic Coast.\nImportantly, we believe ADS is well positioned to continue to grow above market due to our conversion strategy, national coverage and water management solutions package.\nAnd given what we see in the market today, we believe the second half of the year will be similar to the market conditions we experienced in the first six months.\nAgriculture sales were down just slightly this quarter as we called out to a tough comparison period.\nStill, the agricultural sales team has had a great first half of fiscal 2021, with sales up 14% year-over-year.\nIn addition, the fall selling season is off to a great start as we continue to benefit from the programs we put in place around organizational changes, new product introductions and improving execution in the agriculture market.\nInternational sales increased 3%, driven by double-digit growth in our Canadian business.\nCanada is doing well across both the construction and agriculture end markets.\nMexico, on the other hand, is not performing as well and having been more significantly impacted by the COVID-19 pandemic.\nOverall, strong demand is causing some regional and product level constraints.\nLead time and inventory levels are stretched as we get into this part of the season.\nBased on this strong demand and our desire to more fully capitalize on opportunities in our core markets, we are stepping up our capital investments, which we now expect will total between $80 million and $90 million for this fiscal year.\nThe focus of our investments will be to improve safety, increase capacity for future growth and improve productivity.\nWe will rebuild finished goods inventory in the second half of the year by level loading production at our facilities and our traditionally slow lots, preparing both ADS and Infiltrator for good customer service and normal lead times.\nThis build will depend on our second half demand, ramping up new capital and dealing with the COVID-19-related circumstances like employee retention, absenteeism and local conditions.\nFrankly, this is consistent with the environment we've been managing since the pandemic hit.\nWe are also making investments in talent, including the recent addition of a senior leader to accelerate new product introductions, marketing and innovation.\nI'm pleased to announce Brian King joined our organization in September to lead this effort as the Executive Vice President of Product Management and Marketing.\nBrian has 25 years of successful product management experience, and we're excited to have him join our team.\nMoving to our profitability results.\nWe achieved another quarter of record adjusted EBITDA during the period.\nAdjusted EBITDA margin increased 820 basis points overall with a 640 basis point increase in the legacy ADS business.\nThis was driven by favorable material costs, leverage from the growth in Pipe and Allied Products, execution of our operational initiatives and contributions from the proactive cost mitigation steps we took earlier this year.\nInfiltrator also achieved record profitability in the quarter due to strong demand, favorable material costs, contributions from our synergy programs and continued execution of their proven business model.\nThe synergy programs are right on track to achieve the run rate targets we've previously communicated.\nAs we look ahead to the second half of the year, we are optimistic as our order book, project tracking, book-to-bill ratio and backlog all remain positive.\nWe expect the normal seasonal patterns to apply to the second half of our fiscal year as installation activity slows down in geographies with colder temperatures.\nWe also have some profitability headwinds coming up in the third and the fourth quarters, including inflationary costs from materials and labor.\nWe are working to offset these headwinds through pricing actions, operational productivity initiatives and our synergy programs.\nIn summary, we did a very good job executing this quarter.\nWe're focused on safety, managing through the COVID-19 environment, servicing our customers and driving these new levels of profitable performance.\nThough uncertainty still exists regarding the broader market environment, we are well positioned to capitalize on residential development and horizontal construction while continuing to generate above-market growth through the execution of our material conversion and water management solution strategies.\nWe remain focused on disciplined execution as we look to build off a very strong first half of our fiscal 2021.\nOn slide six, we present our second quarter fiscal 2021 financial performance.\nNet sales increased 10%, with 4% growth in our legacy ADS business plus 63% growth in our Infiltrator business.\nSales growth in the legacy ADS business was led by a 15% sales growth in the residential market, which remains robust.\nAs Scott discussed, demand in our nonresidential market remains stable, with pockets of strength in horizontal construction, data centers and warehouses.\nOverall, sales were solid throughout the quarter and this trend has continued through October.\nSales grew in Infiltrator across their portfolio, driven especially by strength in their leach field and tank product lines.\nInfiltrator continued to benefit from the underlying strength in the repair and remodel market as well as growth in single-family housing.\nThis growth was further accelerated by their material conversion strategy.\nFrom a profitability standpoint, adjusted EBITDA increased $56 million or 47% compared to the prior year.\nAdjusted EBITDA for the legacy ADS business increased $33 million or 35%, with strong performance from our sales, operations, procurement and distribution teams.\nADS is very well positioned to capitalize on the current stability in our end markets due to our market-leading position, national relationships, breadth of products and services as well as our geographic and end market diversity.\nThese attributes make us the premier partner and leader in the industry and led to the margin expansion and strong financial performance in the quarter.\nInfiltrator's adjusted EBITDA increased $21 million or 86%, benefiting from strong demand, favorable pricing, lower input costs, productivity improvements as well as our synergy programs.\nMoving to slide seven.\nOur free cash flow increased $112 million to $257 million as compared to $135 million in the first half of fiscal 2020.\nThese impressive free cash flow results were driven by the strong sales growth and profitability we achieved in the first half of fiscal 2021 as well as execution on our working capital initiatives.\nOur working capital decreased to right around 20% of sales, down from 22% at this time last year.\nFurther, our trailing 12-month pro forma leverage ratio is now 1.5 times, slightly below our target range of two to 3 times leverage.\nWe ended the quarter in a very favorable liquidity position as well, with $204 million of cash and $339 million available under our revolving credit facility, bringing our total liquidity to $543 million.\nThe favorable changes we have made to our capital structure have also resulted in no significant debt maturities until 2026.\nWhile pleased with our conversion of adjusted EBITDA to free cash flow in the first half of this year, we will need to make strategic investments in working capital and capex during the second half of this year to position us to take full advantage of expected growth as well as to make the necessary investments to support our productivity initiatives at both the legacy ADS and Infiltrator businesses.\nIn addition, we continue to assess bolt-on acquisition opportunities through our disciplined acquisition process.\nFinally, on slide eight, we introduced our guidance for fiscal 2021.\nBased on our performance to date, order activity, backlog and current market trends, we currently expect net sales to be in the range of $1,790,000,000 to $1,840,000,000, representing growth of 7% to 10% over last year; adjusted EBITDA to be in the range of $495 million to $515 million, representing growth of 37% to 42% over last year, and we expect to convert our adjusted EBITDA to free cash flow at a rate of around 60% for the full year, driven by our strong results as well as the investments we just discussed.\nOperator, please open the line.\n", "role": "user" }, { "content": "sees fiscal 2021 adjusted ebitda is expected to be in range of $495 to $515 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: A copy of the release has also been included in an 8-K submitted to the SEC.\nWe achieved a record $706 million in sales in the second quarter, an increase of 30% compared to the same period last year.\nSales growth was primarily driven by pricing at both ADS and Infiltrator across our geographies and our end markets.\nOur volume was down slightly in the second quarter, primarily due to the retail business within the ADS residential end market, which had a difficult comparison relative to last year when we experienced record shipping levels in the retail category at the height of the COVID-19 pandemic.\nExcluding retail, the ADS construction market sales volume was up slightly despite constraints within our manufacturing and transportation operations.\nInfiltrator sales increased 38%, primarily due to favorable pricing as well as a slight volume increase with strong growth in the Southeast and Southern regions of the United States.\nAdditionally, international sales for the total company increased 29% this quarter with double-digit growth in our Canadian and Mexican businesses.\nOur backlog and pace of orders remained favorable as well as our ability to capture price in the market, which gives us confidence in the updated sales targets we issued today.\nThe price increases we implemented in the second quarter will hit their full run rate in the fiscal third quarter, and we have obtained some additional pricing on certain products and in certain end markets to cover the continued inflationary cost pressures.\nOverall, the demand environment remains favorable, and our leading indicators point to continued strength as we work through the high levels of backlog in our order book.\nFrom my perspective, we must continue to work down the backlogs in both ADS and Infiltrator, managed through the customary weather and seasonal impacts in the second half of the fiscal year and continue to leverage the self-help programs that are creating additional production capacity.\nIn addition, we are focused on installing and ramping up new equipment coming online, which will add some production capability in the second half of the year and additional capacity as we enter fiscal 2023 this coming April.\nOur adjusted EBITDA decreased 5% this quarter.\nFavorable pricing issued over the past year covered inflationary cost pressure on materials and diesel.\nHowever, labor shortages in both manufacturing and transportation impacted our profitability.\nThis was particularly evident within our transportation business, where we had to ship more deliveries to third-party logistics services, a cost premium compared to our internal fleet.\nIn addition, the year-over-year cost for third-party logistics services is up significantly.\nWithin the manufacturing organization, we were unable to consistently operate all the production lines we wanted to run due to labor shortages.\nImportantly, though, the programs we discussed on our last call around SKU reduction, process simplification, inventory consolidation and sourcing products from Mexico are working, resulting in improved daily production rates as we progress through the second fiscal quarter and into October.\nAvailability of raw materials was more problematic in the first part of the quarter, but improved month-to-month.\nMaterial costs remained elevated.\nAnd then as expected, the second quarter had the largest gap between high material prices this year and historically low prices of last year.\nImportantly, we were able to maintain the amount of adjusted EBITDA generated at the Infiltrator business in the second quarter.\nInfiltrator products are primarily produced at a single manufacturing location and less transportation sensitive than the ADS products.\nWhile Infiltrator face similar headwinds from labor and transportation, the impact on profitability was less pronounced.\nOverall, the first half of this fiscal year has largely played out as we expected.\nAs discussed on our first quarter call, we're going to see the year-over-year improvement in adjusted EBITDA in the back half of this fiscal year.\nWe will realize the full run rate of price increases in the third quarter as well as the benefits from our self-help initiatives.\nThough this year has been challenging, we remain confident in our ability to identify and execute the right programs to expand our margins over time.\nFinally, our year-to-date capital spending more than doubled in the first half of this fiscal year.\nWe are making investments to increase capacity with some having an impact in Q4 for Infiltrator and the ADS pipe manufacturing.\nWe started up our production line in the Midwest at the end of the first quarter to help increase capacity, and we also made investments in the Storm Tech business to increase production capacities and Infiltrator.\nNew injection molding processes -- presses are starting up now with additional presses coming online in the fourth quarter to support the growing on-site septic business.\nThese new investments also include automation that will help offset the impact from the labor shortages.\nImportantly, once our improved capital investments are up and running, we expect capacity will increase by double digit at both ADS and Infiltrator, which will allow us to continue to meet the robust demand environment through the back half of this fiscal year and beyond.\nAll that said, core drivers of our business remain strong.\nWe will continue to systematically work our self-help programs, particularly on the labor and transportation, that improve both production and our service levels to customers.\nAnd as we move through this unique period with record demand, significant inflation labor challenges, we are confident with the programs we are working will benefit our business for many years to come.\nOn slide five, we present our second quarter fiscal 2022 financial performance.\nFrom a top line perspective, we generated significant growth year-over-year, driven by both ADS and Infiltrator.\nLegacy ADS pipe products grew 31%, Allied Products sales grew 19% and Infiltrator sales increased 38%, with double-digit sales growth in both tanks and lease field products.\nWe continue to demonstrate our pricing power with significant year-to-date price increases across each of our segments.\nAs Scott mentioned, during the second quarter, Strength in our construction market sales partially were offset by constraints within manufacturing and transportation as well as weakness in our retail end market, which was impacted by tough comparisons year-over-year.\nConsolidated adjusted EBITDA decreased 5% to $165 million, resulting in an adjusted EBITDA margin of 23.3% in the quarter.\nWe knew this quarter would be our most challenging from a year-over-year comp perspective, given the low input cost and high demand environment we experienced last year.\nImportantly, we have good line of sight into the cost impacting our business and have taken actions to mitigate them in the back half of this year.\nThese efforts have already contributed to margin improvement on a sequential basis throughout the second quarter.\nThe long-term fundamentals of our business remain intact, and we are on track to hit the double-digit growth in our adjusted EBITDA guidance for the fiscal year.\nMoving to slide six.\nWe generated $31 million of free cash flow year-to-date.\nIn addition to the growth-oriented capital investments Scott outlined, working capital was a significant use of cash year-to-date as we purchased raw materials and built inventory at a much higher cost compared to last year in order to support the demand we are experiencing.\nWe continue to make progress on our working capital initiatives, most recently working to extend our payment terms with some of our largest suppliers.\nAs a percent of sales, working capital was 22% as compared to 20% in the same period last year.\nFrom a capital deployment perspective, we remain committed to efficient and disciplined capital allocation to drive shareholder value.\nOur first priority for capital deployment remains investing organically in the growth of the business, as we view this as the highest return and lowest risk use of our available capital.\nTo that end, we have spent more than two times the amount as last year at this time, primarily on these type of growth initiatives.\nFor the full year, we continue to expect between $130 million and $150 million in capital expenditures with the largest investments focused on future growth, followed by our productivity and automation initiatives.\nIn addition, we continue to work an active M&A pipeline, focus on staying close to the core, including regional pipe capacity, Allied Products that fit our solutions package and recycling capacity to support the future growth of the business.\nWe are committed to a strong balance sheet, financial flexibility and returning excess cash to our shareholders, as demonstrated by the $312 million returned to shareholders year-to-date through share buybacks and dividends.\nWe completed our share repurchase program in the second quarter, purchasing a total of 2.6 million shares year-to-date.\nFinally, our trailing 12-month leverage ratio was 1.7 times, remaining below our targeted leverage of two to three times that we've previously communicated.\nFinally, on slide seven, we have updated our fiscal 2022 guidance.\nBased on our performance and pricing actions taken to date, order activity, backlog and current market trends, we currently expect net sales to be in the range of $2.55 billion to $2.65 billion, representing growth of 29% to 34% over the prior year.\nOur adjusted EBITDA guidance is unchanged at a range of $635 million to $665 million, representing growth of 12% to 17% over last year.\nThe increase in our revenue guidance today is due primarily to the continued strength in orders in our backlog as well as the impact of favorable pricing that we've introduced to the market to date.\nOperator, please open the line.\n", "role": "user" }, { "content": "advanced drainage systems - fiscal 2022 adjusted.\nebitda is unchanged and expected to be in range of $635 million to $665 million.\nsees fy2022 capital expenditures to be in range of $130 million to $150 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: With me, I have Scott Barbour, our President and CEO, and Scott Cottrill, our CFO.\nA copy of the release has also been included in the 8-K submitted to the SEC.\nWe delivered another quarter of record financial performance in the third quarter of fiscal 2021.\nSales grew 24% year-over-year, driven by 17% non-residential sales growth and 36% residential sales growth, as we continue to execute at both ADS and Infiltrator in a favorable demand environment.\nIn fact, sales across each of our end markets increased double digits in the quarter.\nIt was very encouraging to see the demand in our non-residential end market increase 17% this quarter.\nWe continue to benefit from growth in horizontal construction, such as warehouses, distribution centers, data centers and developments that follow the residential build-out.\nThere was continued strength in the regions we have experienced growth this year, such as the Atlantic Coast and Southeast, and we experienced a rebound in regions that have been softer this year like the Northeast and Western United States.\nIn addition, allied product sales in the non-residential market increased 23%, giving us confidence in the underlying market strength.\nWe also continue to experience strength in our residential market with 36% growth in the quarter, driven by favorable dynamics in new home construction, repair/remodel and on-site septic, accelerated by the material conversion strategies at both businesses.\nOur indicators are showing that homebuilders continue to acquire land for future development and that there's an overall shortage in available homes, which bodes well for both the front end, new community development stake with ADS and at the home completion stage with on-site septic at Infiltrator.\nThe retail market, which is roughly 25% of our residential sales, continues to experience strong growth as well with the continued strength in remodeling and home improvement.\nSales in the agriculture market increased 33% this quarter, driven by the programs we put in place around organizational changes, new product introductions, and improving execution as well as favorable weather and market dynamics.\nThese dynamics are being driven by favorable indicators such as higher farm income and strong crop pricing, which is leading to farmers to invest in land productivity through better field drainage.\nImproving field drainage is a low-risk, proven method of increasing per acre yield for farmers.\nInternational sales also increased 18%, primarily driven by double-digit growth in our Canadian business, which represents about 70% of the international revenue.\nCanada is doing well across both the construction and agriculture end markets with similar market trends to the United States.\nAdditionally, this quarter, we were able to leverage our pipe manufacturing facilities in Mexico to help service the strong demand we experienced in the United States.\nWe expect a slower recovery from the COVID-19 pandemic in our Mexico and our export businesses, but these markets will recover and return to growth.\nFinally, Infiltrator continues to exceed expectations with 37% sales growth in the third quarter.\nInfiltrator continues to see double-digit growth in tanks and leach field products with strong growth in Georgia, North Carolina, Florida and Tennessee among other states.\nThis was led by their material conversion strategy of displacing concrete septic tanks with plastic tanks and the economic advantages of septic chambers in leach field systems.\nMoving to our profitability results.\nWe achieved another quarter of record adjusted EBITDA during the period.\nAdjusted EBITDA margin increased 540 basis points overall in our first full quarter of comparable results from the Infiltrator acquisition.\nThe increase in profitability in both businesses was driven by leverage from the strong sales growth, favorable pricing and material costs as well as contributions from our operational productivity initiatives.\nIn January, we hosted a well-attended ADS Distributor Conference to touch base with our partners and outline how we are thinking about the business moving forward.\nWe have many new faces and roles among our senior leadership team and with that comes new focused programs to build on the ADS value proposition, including the service component of our business.\nThe ADS value proposition includes not only the products we design and manufacture, it includes the delivery and design services led by the logistics and transportation we provide to our distribution partners and customers.\nThis speaks to ADS' unique model, is not just a pipe manufacturer, but also a large specialized logistics and transportation company.\nWe are committed to investing in the people, processes, technology and fixed capital to deliver on customer expectations and increased capacity to meet our customers' needs.\nWe also talked to our customers about the new ADS brand and our digital marketing initiatives.\nYou may have noticed we updated the ADS logo, and are in the process of rolling out our refreshed brand to encompass the progress we've made over the last several years.\nOur new brand identity not only visually updates the look of ADS to reflect who we are as a company today, it reflects where we are going.\nOur products and services platform, sustainability initiatives and community involvement all drove the new brand look and tag line, Our Region is Water, setting the tone for our updated mission and values, which will be rolled out over the next several months.\nLooking forward, we believe the demand environment in calendar 2021 will look similar to what we experienced overall this past year.\nWe are certainly fortunate that as part of the construction industry supply chain, we could manufacture and ship our products over the last 12 months without significant interruption.\nMy observation is that the construction industry, including the manufacturing, distribution and contractors weathered the pandemic and related economic disruptions better than many parts of the economy.\nWe will continue executing on our material conversion and water management solution strategies in what I expect to be a favorable demand environment, benefiting from our national presence as well as our favorable geographic focus in end market exposure.\nOur confidence in these favorable trends is supported by the strength of our order book, our project tracking, the book-to-bill ratio in the backlog.\nWhile we have some cost headwinds coming at us in the fourth quarter, including inflationary costs, such as materials and transportation, we are confident we will be able to offset them through favorable pricing, level loading at our facilities, operational productivity initiatives, our recycling programs and the capital deployment initiatives.\nIn summary, we did a great job executing this quarter, and we'll look to build on our strong market position, execution and new levels of profitability going forward.\nWe will stay focused on employee health and safety and delivering on the needs of our customers.\nAs we look ahead, we are well-positioned to capitalize on residential development and horizontal construction, while continuing to generate above-market growth due to execution of our material conversion and water management solution strategies.\nWe will remain focused on disciplined execution as we look to close out on a very strong 2021.\nOn Slide 6, we present our third quarter fiscal 2021 financial performance.\nI'll be brief on this slide, as Scott has already covered a lot of the details here, but I want to reiterate a few key points.\nThe very strong 24% revenue growth we reported this quarter was driven by both volume and pricing as well as strong growth across both our ADS legacy and Infiltrator businesses as well as in each of our end markets and product applications.\nThe demand environment for our products remain strong, and we expect this strength to continue as we move forward into calendar 2021.\nThe 52% growth in consolidated adjusted EBITDA was driven not only by this strong topline growth, but by favorable material costs, operational efficiency initiatives as well as our synergy programs.\nFinally, we continue to monitor our costs and are committed to offsetting increases that materialize through a combination of pricing as well as operational and productivity initiatives and continue to look to expanding margins year-over-year as we move forward.\nOverall, we are very well-positioned to leverage the favorable demand environment anticipated due to our market-leading position, national relationships, breadth of products and services, as well as our geographic and end market diversity.\nMoving to Slide 7.\nOur year-to-date free cash flow increased by $141 million to $391 million as compared to $250 million in the prior year.\nThese impressive free cash flow results were driven by our strong year-to-date sales growth and profitability as well as execution on our working capital initiatives.\nOur working capital decreased to 16% of sales, down from 19% of sales last year.\nIn addition, we ended the quarter in a very favorable liquidity position, with $224 million of cash and $339 million available under our revolving credit facility, bringing our total liquidity to $563 million.\nIt is also worth noting that our trailing 12-month leverage ratio is now 1.1 times.\nGiven our strong balance sheet position, capital deployment remains one of our top strategic initiatives.\nOur first priority continues to be investing organically in the ADS and Infiltrator businesses to support growth, innovation, productivity, safety and new product development.\nM&A is our next priority.\nWe remain very focused on following our disciplined acquisition process as we move forward into calendar 2021.\nFinally, on Slide 8, we increased our revenue and adjusted EBITDA guidance ranges for fiscal 2021.\nBased on our performance to date, order activity, backlog and current market trends, we currently expect net sales to be in the range of $1.915 billion to $1.950 billion, representing growth of 14% to 17% over last year.\nAdjusted EBITDA to be in the range of $550 million to $565 million, representing growth of 52% to 56% over last year.\nAnd we expect to convert our adjusted EBITDA to free cash flow at a rate of greater than 60% for the full year.\nOperator, please open the line.\n", "role": "user" }, { "content": "for fiscal 2021 net sales are expected to be in range of $1.915 billion to $1.950 billion.\nfor fiscal 2021 adjusted ebitda is expected to be in range of $550 million to $565 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: With me here, I have Scott Barbour, our President and CEO; and Scott Cottrill, our CFO.\nA copy of the release has also been included in an 8-K submitted to the SEC.\nWe delivered another quarter of record financial performance in the fourth quarter of fiscal 2021.\nSales grew 20% year-over-year, driven by 21% residential sales growth and 11% non-residential sales growth as we continued to execute at both ADS and Infiltrator in a favorable demand environment.\nThe residential market remains strong.\nBoth ADS and Infiltrator residential market sales grew over 20% in the fourth quarter, driven by favorable dynamics in new home construction, repair/remodel and on-site septic, accelerated by our material conversion strategies at both businesses.\nResidential market sales have increased to 39% of our domestic sales as compared to 23% prior to the Infiltrator acquisition.\nThe market indicators show that homebuilders continue to acquire land for future development and that there is an overall shortage in available homes, which drives the front-end new community development sales of ADS, and the on-site septic system sales of Infiltrator are driven during the home completion stage.\nIn addition, the repair/remodel business remains robust.\nADS participates in the repair/remodel segment of the residential market through retail, which is about 40% of the legacy business' residential sales.\nInfiltrator's repair/remodel business in the residential on-site septic market accounts for roughly one-third of their business.\nGrowth in our non-residential end market was broad based throughout the United States.\nWe continue to benefit from growth in horizontal construction, such as warehouses, distribution centers, data centers, as well as the developments that follow the residential buildout.\nAbout two-thirds of our domestic allied product sales are in the non-residential markets, where sales increased 13% further, giving us confidence in the underlying market strength.\nSales in the agriculture market increased 50% this quarter, driven by strong demand as the spring selling season got off to a good start.\nThe agriculture economy remains favorable and we continue to benefit from the programs we put in place around organizational changes, new product introductions and improving execution.\nWe experienced strong demand in the Midwest region, particularly in Minnesota, Ohio, Iowa and Michigan.\nFurther, we are expanding our presence in key strategic areas like Missouri and parts of the Southeast to drive increased market share.\nInternational sales also increased 49%, primarily driven by sales growth in our Canadian business which nearly doubled compared to last year.\nCanada is doing well across both the construction and agriculture end markets, with similar trends to the United States.\nAdditionally, this quarter, we continued to leverage our pipe manufacturing facilities in Mexico to help service the strong demand we experienced in the United States.\nFinally, Infiltrator continues to exceed expectations with 23% sales growth in the fourth quarter against a very tough comparison to the prior year and broad-based growth across the Infiltrator product portfolio.\nThis includes double-digit growth in tanks and leachfield products, with strong growth in Florida, Tennessee, Alabama and Indiana, among other states.\nThis was led by our material conversion strategy of displacing concrete septic tanks with plastic tanks, and the economic advantages of septic chambers in leachfield systems.\nThe Infiltrator business is benefiting from strong distribution presence in the Southeast and Midwest, as well as rapidly growing micropolitan areas which typically lack the sewer infrastructure needed to support rapid housing development.\nWe achieved record fourth quarter adjusted EBITDA during the period.\nAdjusted EBITDA margin increased 190 basis points.\nThe increase in profitability in both businesses was driven by leverage from the strong sales growth, favorable pricing as well as contributions from our operational productivity initiatives which helped to offset inflationary cost.\nI'm very proud of our employees and management team at both ADS and Infiltrator for bringing fiscal 2021 to a close with strong financial performance this quarter.\nI would like to highlight our fiscal 2021 financial performance compared to the 2018 Investor Day plan, now that we have finished out the year.\nWe communicated a three-year plan in November 2018 about a year after I got to[Phonetic] ADS and I'm very pleased to have exceeded the targets we laid out.\nThe ADS legacy business grew sales at 7.7% CAGR, driven by the sales programs we laid out in November 2018.\nWe continued to execute our proven market share model, converting traditional materials to our plastic pipe products and a strong -- in the stormwater market to drive this outperformance.\nOur sales team is going after the significant growth opportunity for large diameter HDPE pipe, which has grown at a double-digit CAGR over the three-year period.\nWe are focused on key -- on growth in key states, mainly Florida, Texas and California, as well as additional priority states where we have -- where we find attractive market opportunities.\nWe continue to penetrate the allied product market through our existing portfolio as well as through innovation and acquisitions.\nAllied product sales have also grown at a double-digit CAGR over the time period.\nFinally, our agriculture and Canada businesses performed above our expectations, both returning to strong growth.\nAnd the plan laid out in November 2018 restated our intention to grow adjusted EBITDA margin to between 18% and 19%.\nThe legacy ADS business finished fiscal 2021 with a margin of 24.3%, significantly outperforming our plan.\nThe outperformance was driven by execution, topline growth, favorable material cost, fixed cost leverage, as well as improved efficiency in our supply chain, operations and distribution.\nThe improvement in profitability as well as execution of our working capital initiatives and the acquisition of Infiltrator drove the improvement in free cash flow conversion to 66% of adjusted EBITDA, significantly better than the 45% in fiscal 2018 and above our target of at least 50%.\nOur performance over the last three years, coupled with the acquisition of Infiltrator, changed the growth and financial profile of the Company.\nThe acquisition of Infiltrator was a great addition to our business.\nThrough Infiltrator, we increased our exposure to the residential market, diversifying our end-market exposure and gained a very high quality management team, set of engineers and operators who continue to execute the Infiltrator proven business model.\nWe believe executing on the strategies and plans laid out in 2018 increases the value of our business, as evidenced by the significant increase in our stock price since issuing this plan in 2018.\nWe will continue to focus on driving topline growth, improving our profitability, and converting profitability to cash at a high rate, in turn creating additional value for our shareholders.\nWe will continue to pursue these proven strategies and we'll issue our next three-year plan this fall at our next Investor Day.\nIn summary, we did a great job executing this quarter and fiscal year, and are pleased to continue our track record of generating above-market growth across our key end markets.\nIn the past, we've shown our growth relative to the market.\nHowever, market statistics are a bit distorted right now due to the pandemic, making it more difficult to measure.\nThat said, regardless of how you measure the market growth or decline, we handily outperformed the market giving us confidence that our material conversion story is intact or even accelerating.\nOur success in growing above market is a function of our unique advantages.\nWe continue to have success in gaining market and wallet share through our material conversion and water management strategies, we are more vectored to key states where construction activity remains high, and we're making focused bets in others where we see opportunities for growth.\nWe are benefiting from broader market trends, including rapid growth in micropolitan areas and high -- higher exposure to suburban development.\nAnd since the acquisition of Infiltrator, we are more exposed to the residential construction market, which now represents nearly 40% of sales.\nAnd within the non-residential market, we are also benefiting from our outsized exposure to horizontal construction, which was far more healthy than vertical construction in this past year.\nIn other words, we're an evolving and a stronger ADS today than any point in our history and we look forward to the future.\nAs we look to fiscal 2022, we will build on our strong market position, execution and new levels of profitability.\nWe will stay focused on employee health and safety, and then on -- and on delivering the needs of our customers.\nWe are well positioned to capitalize on market demand while continuing to generate above-market growth through the execution of our material conversion and water management solution strategies.\nWe remain focused as always on disciplined execution.\nOn Slide 7, we present our fourth quarter fiscal 2021 financial performance.\nI'll be brief on this slide as Scott covered a lot of the details already, but I do want to highlight a few key points.\nOur strong topline revenue growth of 20% was driven by both volume and pricing, with strong growth across our ADS and Infiltrator businesses as well as in each of our segments, markets and product applications.\nThe demand environment for our products remain attractive and we expect these dynamics to continue as we move forward into calendar 2021.\nThe 31% growth in consolidated adjusted EBITDA was driven by strong topline growth in addition to favorable pricing, operational efficiency initiatives, as well as our synergy programs.\nIn addition, due to the strong results for fiscal 2021 and to reward the incredible service and dedication of our employees this past year, we decided to pay a one-time bonus to employees who were not part of our annual incentive compensation plans, resulting in approximately $4 million of additional compensation expense in the quarter.\nOur ability to deliver in the face of a uniquely challenging year and a strong demand environment would not have been possible without their hard work and dedication.\nMoving to Slide 8, we present our full-year results.\nRevenue this year increased 19% to $1.983 billion, coming in above the high end of our guidance range.\nThis was the result of strong demand we experienced this year, growing double-digits in both the domestic and international businesses.\nOur adjusted EBITDA increased $205 million to $567 million, driven by strong volume growth in both pipe and allied products, favorable pricing and material costs, and operational efficiency initiatives that offset inflationary cost pressures.\nInfiltrator contributed an additional $88 million, driven by strong volume growth, favorable price/cost performance as well as continued benefits from our synergy programs.\nWe also had the benefit of owning Infiltrator for the full year as compared to eight months in fiscal 2020.\nFinally, our adjusted EBITDA margin increased 700 basis points to 28.6%, a Company record.\nMoving to Slide 9.\nOur year-to-date free cash flow increased $134 million to $373 million as compared to $239 million in the prior year.\nThese impressive free cash flow results were driven by our strong sales growth and profitability, as well as execution on our working capital initiatives.\nOur working capital decreased to approximately 18% of sales, down from 21% of sales last year.\nFurther, our trailing 12-month leverage ratio is now 1.1 times.\nWe ended the quarter in a favorable -- very favorable liquidity position with $195 million of cash and $339 million available under our revolving credit facility, bringing our total liquidity to $534 million.\nAnd finally, on Slide 10, we have our fiscal 2022 guidance.\nBased on our performance to date, order activity, backlog and current market trends, we currently expect net sales to be in the range of $2.220 billion to $2.300 billion, representing growth of 12% to 16% over this past year, and adjusted EBITDA to be in the range of $635 million to $665 million, representing growth of 12% to 17% over this past year.\nAs we look to[Phonetic] fiscal 2022, we are confident in the demand environment across our end markets.\nOur residential end-market growth is also expected to remain strong, particularly in those key southern crescent states we are focused on, including Florida and Texas.\nIn addition, our agricultural market remains robust with strength in crop pricing, driving investments in land productivity through better field drainage.\nAnd finally, the international outlook is turning more favorable driven by our business in Canada, which is our largest international market.\nLastly, the exports business is expected to rebound as COVID-19 restrictions continue to ease.\nThis strong demand outlook gives us confidence in our revenue guidance.\nWe have also executed several price increases since our third quarter call across all of our end markets at both ADS and Infiltrator.\nTo date, our pricing actions are flowing through and we will continue to closely monitor the situation to ensure we stay ahead of inflationary cost pressures.\nOn the cost side, we are seeing inflationary pressure in materials, labor and transportation, as well as some issues with labor availability.\nWithin transportation, the third-party market availability is tight and there is inflationary cost pressure on diesel, wages and common carrier rates.\nIn this type of inflationary cost environment, we are also able to control our transportation cost better than most due to our large internal fleet, and we are working to leverage such to offset the rising cost we are seeing through payload efficiency, route planning and other programs to more efficiently serve our customers.\nWhile we expect EBITDA margins to be flat to slightly up this year, it is important to highlight that we expect the most pressure on our price/cost spread to occur during the first half of our fiscal year.\nBottom line, we believe our long-term growth and margin expansion ability remains intact, despite the near-term inflationary cost environment we will be dealing with this year.\nGiven our strong balance sheet and leverage position, strategic capital deployment remains one of our top priorities.\nWe will continue to execute a balanced and disciplined capital deployment strategy, focusing on organic investments as our highest-return, lowest-risk option.\nIn fiscal 2022, we plan to spend between $130 million and $150 million on capital expenditures to support growth, recycling, innovation, productivity, and safety initiatives at both ADS and Infiltrator, basically doubling our commitment to capex year-over-year.\nIn addition to organic investments, we continue to actively explore M&A opportunities that are aligned with our strategic vision.\nWe are extremely excited about the M&A opportunities we are pursuing and see this as a key component of our capital deployment strategy in both the near term and longer term.\nIn addition to investing in the business through deploying capital organically and through M&A, we, today, announced a 22% increase in our quarterly dividend as well as a $250 million increase in our share repurchase program.\nWe previously had $42 million available under this program, and the increase announced today brings the total authorization to $292 million.\nOperator, please open the line.\n", "role": "user" }, { "content": "for fiscal 2022, net sales are expected to be in range of $2.220 billion to $2.300 billion.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm joined by members of our executive team, including Doug McMillon, Walmart's president and CEO; Brett Biggs, executive vice president and chief financial officer; and John Furner, president and CEO of Walmart U.S. In a few moments, Doug and Brett will provide you an update on the business and discuss fourth quarter and full year results.\nThat will be followed by our question-and-answer session.\nThese risks and uncertainties include, but are not limited to, the factors identified in our filings with the SEC.\nLet's jump right in.\nOur team delivered net sales growth of 7.6% and adjusted earnings per share growth of 9.3%, excluding divestitures.\nWe continued to gain market share in food and consumables in the U.S., and comp transactions were positive.\nConsumer demand during the quarter was strong, and the team overcame a number of challenges in the U.S. and around the world to deliver these strong results.\nGoing into the quarter, we were confident that we had the people, the products, and the prices to deliver.\nOur inventory position improved, and we delivered high sellthroughs in seasonal categories across markets.\nFood, consumables, and apparel were also strong globally.\nWe comped low single digits in general merchandise in the U.S. against strong results last year.\nAnd Sam's Club saw broad-based strength across categories in the U.S. and in China.\nOur merchants are doing a nice job of navigating the pressure from cost of goods inflation with our customers and shareholders in mind.\nI'd like how we're mixing out the business.\nConsolidated gross profit rate increased 10 basis points for the quarter, including more than 50 basis points in Walmart U.S. We're working closely with our suppliers to manage inflation, finding a few places where we can roll back prices.\nAnd we're paying close attention to how we manage our opening price point items.\nQ4 and the full year are proof points that we can keep our price gaps in the range where we want them, grow market share, and deliver against our top- and bottom-line growth algorithm.\nOur associates did an amazing job of serving customers and members during this busy season, even as we faced omicron and supply chain challenges.\nThis quarter's COVID leave peak was larger than anything we had experienced in 2020 or previously in 2021.\nWe hired more associates.\nAnd our plan called for to help fill that gap, which negatively impacted expenses.\nBut it was clearly needed.\nI'm grateful to our associates and store and club management teams for how they set priorities on behalf of our customers and members during the quarter.\nAs I visit stores and clubs, it's inspiring to see how our team is navigating such a fluid environment.\nThey're delivering tremendous growth while making significant progress against our longer-term strategy.\nDuring the fiscal year just ended, excluding divestitures, we grew net sales by 9%, grew operating profit by 18%, invested $13 billion in capex to grow our business, returned 16 billion to shareholders via share buybacks and dividends, grew advertising business globally to $2.1 billion, and took important steps to build our U.S. financial services capabilities with agreements to make two key acquisitions.\nSometimes, it feels like 2020 and 2021 were just one long year.\nIf you look at growth since the beginning of fiscal '21 through the end of fiscal '22, excluding divestitures, our company is about 17% larger in terms of revenue, 31% larger in terms of operating income, and globally, our percentage of digital sales grew from 6% to 13%.\nAs the company grows, we're fueled by the new business model and flywheel we outlined last year.\nOur strategy is coming to life.\nEnsuring that we deliver our strategy is where I invest the majority of my time.\nIt starts with the customer and earning primary destination.\nThe big basket stock-up trip is important.\nIt's foundational to our relationship with families.\nWe earn that shopping occasion by running great stores and clubs and offering seamless pickup and delivery experiences, including for our Walmart Plus and in-home members in the U.S.\nOur membership offering, Walmart Plus, continues to be an important piece of what we're building.\nWe're adding capacity for pickup and delivery.\nWe increased capacity by nearly 20% last year, and we expect to increase capacity by another 35% this year.\nFor Walmart InHome, we recently announced an expansion of this membership service to make it available to about 30 million homes in the U.S., up from 6 million.\nTo enable the expansion, we're creating roles for more than 3,000 associate delivery drivers.\nThe majority of these roles will be filled by existing experienced associates.\nWe'll be building out a fleet of all electric delivery vans to support our delivery services and our goal of a zero emissions logistics fleet by 2040.\nOur flywheel is designed to serve families more broadly, deepening our relationship with them and creating a healthy mix of merchandise and services for our business.\nthat will operate under the ONE brand going forward.\nThe combined talent of our JV leadership team and that of the pending acquisitions of ONE Finance and Even is impressive.\nAnd our plans are aggressive.\nWe can help our customers and Walmart Plus members save money, have an experience with less friction, and help strengthen the financial position for millions of families.\nAs with our advertising business, our financial services capabilities cross borders.\nOur PhonePe business in India is growing incredibly fast.\nAnd we have strong capabilities in Mexico, which is such an important market for us.\nAs we look to improve the customer experience and strengthen the mix of our business, expanding our marketplace is important.\nWe added more than 20,000 new sellers to the platform in the U.S. last year and expect to add nearly 40,000 more this year.\nWe're now up to nearly 170 million SKUs, and we're adding more every day.\nmarketplace to sellers from India and created a dedicated team there to help sellers onboard and grow.\nMany sellers are looking to diversify their business, and they're pushing us to add capabilities, including the expansion of our Fulfillment Services.\nWe grew our U.S. GMV delivered by our Fulfillment Services by 500% last year.\nWe expect the robust growth will continue this year as we add more capacity.\nFor Q4, our Fulfillment Services represented 44% of total marketplace orders in India and 22% in Mexico.\nGrowing our marketplace expands choice for our customers, helps our sellers grow, and enhances our profit margins.\nOur plan for this year includes strengthening the experience for sellers and adding fulfillment capacity so customers have access to more items faster.\nIt's clear to me that we have years of profitable marketplace and Fulfillment Services growth ahead of us.\nStaying on the theme of fulfillment and scaling new businesses, we recently launched Walmart GoLocal, a last-mile delivery solution using our Spark Driver platform to help businesses of all sizes reach more customers.\nGoLocal is making deliveries for the Home Depot and other large retailers.\nBut I'm most excited about serving small local retailers.\nWe have nearly a thousand GoLocal service to pickup points, and we expect to end this year closer to 5,000.\nThis is good for customers, our clients, and for us, as we lower the cost per order by increasing the combined order size and the route density.\nAs we bring more customers, sellers, and suppliers into our ecosystem, it expands our ability to monetize those relationships.\nA great example is our advertising business.\nGlobally, it's been growing at a high rate with high margins and is now a $2.1 billion business in only a few years.\nAnd we expect this strong growth to continue.\nAnd as our e-commerce business, including marketplace, continues to grow, so will our advertising business.\nand India and growing in places like Mexico, Canada, and Chile.\nImportantly, we're beginning to build tech platforms that can be leveraged in multiple countries.\nOur strong team of technologists and our digital transformation enable global synergies.\nWe see traction in our core business, as well as in our newer businesses.\nThere's real power in the ability to make these pieces mutually reinforcing to design them such that one portion of a customer relationship leads them to another because it's easy and intuitive.\nConnecting B2B opportunities, like advertising, enables us to grow earnings and make key investments at the same time.\nBecause of how the fly wheel is coming together, I feel great about our ability to deliver against the growth algorithm we discussed last year of about 4% top-line growth and operating income growth rates higher than sales.\nWe've highlighted the increased costs we had in Q4 from COVID, supply chain, and wages, and some of these costs are likely to continue through part of this year.\nBut I feel confident in the underlying strength of the business and our ability to deliver the growth we expect.\nThe Walmart we're building is becoming more impactful for our customers and members, more digital, more automated, and more diversified on the top and bottom lines.\nNow, let's move on to our performance by operating segment.\nThe team had a great holiday season.\nThey drove comp sales of 5.6%.\nYou know about our strength in food and consumables.\nBut despite the supply chain challenges, the seasonal hard lines execution for holiday looked good in stores.\nWe're continuing to navigate cost pressures and in-stock challenges.\nBut overall, I'm really proud of the team for delivering the holiday season, and I believe we'll work our way to an improved in-stock level through the course of the year.\nBuilding a seamless omnichannel experience for customers and prioritizing convenience for them is critical.\nOur stores have become hybrid.\nThey're both stores and fulfillment centers.\nLast year, we increased the number of orders coming from our stores by 170% versus the previous year, and that's on top of more than 500% from the year before.\nHaving inventory so close to so many customers is a competitive advantage.\nIn some cases, we're getting items to customers in hours rather than days.\nIn Sam's Club U.S., the momentum continues.\nSales and membership were strong.\nExcluding fuel and tobacco, comps were 10.8% for the quarter and nearly 26% on a two-year stack.\nMembership income grew 9.1%, driven by membership count, which reached another record high during the quarter.\nThe team leveraged operating expenses and grew operating income 24%, excluding fuel.\nThey had another fantastic quarter and year.\nSam's continues to drive digital innovation and add capabilities.\nOur bold and blue club remodels and our strengthened pickup in delivery services will drive growth.\nAt Walmart International, we had another strong year with good progress in all aspects of the flywheel.\nOverall sales were strong again in Q4 with growth of 9.8% in constant currency, excluding divestitures.\nChina, Mexico, and Flipkart led the way.\nOur 21% e-commerce penetration is a new record and up nearly 400 basis points from last year.\nWe get to serve a spectrum of holidays and festivals during the holiday quarter from Diwali and Big Billion Days in India through to preparation for Chinese New Year.\nDuring Big Billion Days, 40% of sellers were first time sellers on the marketplace, and more than 100,000 kiranas participated by making last-mile deliveries.\nThis is strong inclusive growth.\nWhile our omnichannel model gives the gift of time, access and affordability remain important.\nWe're expanding our ecosystem, and we've made investments in areas such as healthcare, marketplace, telecommunications, and our online food business.\nA few great examples include the launch of Flipkart Health Plus that aims to increase access to affordable care in India.\nAnd the acquisition of Foodmaestro in Canada to build more personalized shopping experiences for customers.\nAnd, BAIT, our value-based internet and telephone service that enables customers in Mexico to enjoy digital connectivity, surpassed 2 million members.\nIt's great to see all three of our operating segments doing so well.\nI'm grateful to our strong and capable leadership team and to all of our associates.\nWe've had an incredible couple of years during these challenging times.\nWe have momentum in the business.\nWe have aggressive plans, and we're executing on the strategy.\nIt still feels like we're just getting started.\nWe wrapped up another great year with a strong fourth quarter and good momentum as we start the new year.\nOver the last couple of years, each quarter has presented unique challenges, but I'm proud of how we've navigated each one of those.\nThe fourth quarter was no different as we faced the rise of omicron with its impact on the supply chain and our associates.\nThis resulted in some significant unexpected expenses.\nBut despite that, we delivered the top- and bottom-line results we expected.\nWe continue to execute on our strategic initiatives to fulfill the vision we outlined last February.\nflywheel is accelerating and is evident through initiatives like our pending fintech JV acquisitions, the launch of a new data business, and acceleration of last-mile delivery.\nSam's growth and membership income has been strong throughout the year as we expand Omni options including club pickup.\nThese and other key initiatives represent large revenue and profit opportunities over the next few years.\nFor the full year, we had record sales of $568 billion with increased traffic to stores and clubs, while e-commerce penetration approached 13%.\nWalmart U.S. grew sales by more than $23 billion and saw strong market share gains in food and consumables.\nOver the past two years, our U.S. segments have grown sales by $67 billion, or 17%, and operating income by 25%.\nNow, let's discuss Q4 results.\nAs a reminder, the previously announced international divestitures significantly affect year-over-year comparisons, so my comments today will exclude the effect of divestitures.\nTotal constant currency revenue grew 7.9% to over $153 billion and reached another important milestone with quarterly net sales exceeding $150 billion.\ngross margin rate increasing by a healthy 54 basis points, reflecting primarily price management resulting from cost increases in mix, along with benefits from a growing advertising business, partially offset by higher supply chain costs.\nSupply chain costs were over $400 million higher than expected, but we expect some of those costs to abate overtime.\nInternational gross margin rates were lower due primarily to format mix.\nwage costs were partially offset by strong sales and lower COVID costs versus last year.\nAlthough COVID costs were lower than last year, we have significantly higher associate leave costs in the U.S. than anticipated.\nIn the first three quarters combined, COVID leave costs were about $600 million but increased over $450 million just in Q4, presenting an unexpected headwind of over $300 million.\nDespite these expense challenges, adjusted operating income increased more than 6% and earnings per share increased more than 9%.\nWe're in a great financial position, enabling us to allocate capital toward both growth and shareholder returns.\nFree cash flow was $11.1 billion for the year, down versus last year due primarily to inventory build throughout the year, higher capex, and cost increases.\nWe increased share repurchases significantly this year with buybacks of just under $10 billion, a pace we plan to continue or increase in the coming year given our view of the long-term value of the company.\nROI increased 90 basis points to just under 15%, the best level in five years due primarily to growth in operating income.\nNow, let's discuss the quarterly results for each segment.\nhad its first ever $100 billion-plus sales quarter with sales of $105 billion.\nComp sales grew 5.6%, up more than 14% on a two-year stack.\nWe continue to grow grocery market share as food comps increased high single digits, while health & wellness, apparel, seasonal, and automotive categories were also strong.\nTransactions were up more than 3% despite COVID pressures.\nE-commerce sales grew 1% against strong gains last year, resulting in a 70% two-year stack.\nWe continue to see elevated levels of cost inflation and have taken prudent steps to manage pricing while having slightly wider price gaps than pre-pandemic.\nWe have a good balance of growing market share while managing price with both customers and shareholders in mind.\nWe continue to make strong progress in some of our newer higher margin initiatives.\nWalmart Connect advertising experienced robust sales growth this year with a strong pipeline of new advertisers and large growth opportunities ahead.\nIn fact, the number of active advertisers using Walmart Connect grew more than 130% year over year.\nAnd about half of the ad sales came from automated channels in Q4, more than double last year.\nWe expect Walmart Connect to continue to scale over the next few years with plans to become a top 10 ad business in the midterm.\nGrowing e-commerce marketplace at WFS have been a priority over the past couple of years as we've invested to expand fulfillment capacity, introduce new services for sellers, and double the number of items available for customers.\nIn fact, we expect to have over 200 million items in our e-commerce assortment by the end of the year.\nThe expansion of WFS has also been a key unlock in bringing more sellers to Walmart's marketplace.\nCustomers increasingly want home delivery, and we had a six-fold increase in delivery in the fourth quarter versus pre-pandemic levels.\nWe continue expanding capabilities, including announcing the acceleration of in-home delivery to 30 million households by year-end.\nWe also announced our new fintech business ONE in January, with the pending acquisitions of fintech platforms ONE Finance and Even.\nSG&A expenses deleveraged 95 basis points as increased wage costs were partially offset by strong sales and lower total COVID-related expenses year over year.\nStill, as I mentioned earlier, COVID leave costs were much higher than expected.\nOperating income grew slightly, aided by strong margins as well as solid growth in membership and other income.\nInventory increased about 28% overall, including higher cost of goods due to inflation, mix, and higher-than-normal in-transit shipments, reflecting continued efforts to improve in-stock.\nInternational sales were strong, up nearly 10%, led by China, Mexico, and Flipkart as seasonal events, omni growth, and good inventory position contributed to results.\nE-commerce sales in constant currency grew 21% on top of strong gains last year with growth of more than 75% on a two-year stack.\nChina comps increased nearly 20% in constant currency with continued strength from Sam's Clubs, as well as more than 90% growth in e-commerce sales.\nComp sales in Mexico increased nearly 8% and grew faster than the market according to ANTAD.\nFlipkart had another good sales quarter, aided by strong holiday events and favorable trends in monthly active customers and users.\nWe're also pleased with the strong growth of PhonePe with TPV of more than 130% versus last year with a current run rate of $650 billion.\nIn Canada, comp sales were up 4.6%, led by in-store shopping and comps increased more than 13% on a two-year stack.\nInternational adjusted operating income in constant currency increased nearly 3%, reflecting lower COVID costs, partly offset by gross margin rate decrease related to higher sales penetration from Sam's China and e-commerce.\nFor the full year, international adjusted operating income grew 12.7%.\nAnd we feel confident about our international business as we head into the new year.\nSam's Club had another impressive quarter with comps up 10.8%, excluding fuel and tobacco, an increase of nearly 26% on a two-year stack.\nTransactions increased 7% and ticket was up 3.2%.\nE-commerce sales grew 21%, and we expanded the rollout of delivery capabilities of digital orders to nearly all clubs during the quarter.\nSam's is leveraging Walmart's GoLocal last-mile delivery service to provide more convenience to members.\nMembership income was up more than 9% with another record in member counts and strong Plus penetration.\nOperating income was up 41% as higher fuel and membership income, as well as strong expense leverage were partially offset by gross margin pressure from inflation and supply chain costs.\nNow, let's turn to guidance.\nWe feel very good about the underlying strength of the business and believe we can deliver full year growth in FY '23 that aligns with the growth algorithm we discussed last year.\nAs you saw in Q4, we're still challenged with increased costs related to COVID and supply chain disruptions.\nOur guidance assumes that we will see some relief from that as the year progresses and that the U.S. consumer remains in a generally favorable economic position throughout the year.\nstimulus in FY '22.\nAs a reminder, the divestitures of our businesses in the U.K. and Japan were completed near the end of the first quarter last year, contributing about $5 billion in sales and about $0.07 of earnings per share in Q1, FY '22.\nOur guidance will be ex-divestitures.\nWe expect total company sales to increase about 4% with Walmart U.S. comp sales slightly above 3% for the year.\nGiven the timing of stimulus overlaps, we expect about a 1% to 2% comp sales increase from Walmart U.S. in the first quarter, followed by somewhat higher comp sales growth throughout the remainder of the year.\nWe expect FY '23 total company operating income to increase at a rate slightly higher than sales growth and earnings per share to grow 5% to 6% versus FY '22 adjusted earnings per share due in part to our aggressive share repurchase program.\nThe quarterly profit growth cadence is expected to be quite variable due to last year's U.S. stimulus, as well as lapping wage investments initiated in February and September 2021.\nAs you would expect, the variability of the quarters looks less extreme when viewed on a two-year stack.\nWe expect Q1 operating income and earnings per share to be down low double digits to low-teens as we cycle the stimulus effects from last year that resulted in nearly 30% operating income growth, as well as increased wages this year.\nOn a two-year stack, Q1 operating income would still be up a mid-teens percentage.\nQ2 and Q3 operating income and earnings per share are expected to increase at low to mid-single digit rates, as year-over-year comparisons ease due in part to the moderation of stimulus benefits last year.\nWe expect higher growth rates in the back half of the year as we fully cycle wage investments, resulting in fourth quarter operating income and earnings per share increasing by a high-teens percentage.\nQ4 operating income will also benefit from some timing versus FY '22, particularly in international, as well as cycling elevated COVID leave costs in FY '22.\nOur effective tax rate is expected to increase to 25% to 26% due primarily to earnings mix.\nFor the year, we expect gross margin rates to increase due to pricing, mix, and new business initiatives.\nAlthough, there will be variability quarter-to-quarter as is usually the case.\nFor the first time in a while, we expect some expense deleveraging as we continue to see elevated supply chain wage and tech costs.\nWe'll continue the multiyear journey of accelerated capital investment focused on increasing fulfillment capacity, automation, and technology to enhance productivity.\nFY '22 capex was about $13.1 billion, lower than anticipated due to timing of projects impacted by supply chain challenges.\nDue to that and continued investment in strategic priorities, we anticipate this year's capex being at the upper end of the guidance we gave last year of 2.5% to 3% of sales.\nIn closing, I'm really pleased with our FY '22 results.\nI'm very confident as I look to this year and to the future.\nThe company is in an enviable position to serve customers and members and also to achieve our financial goals, benefiting shareholders.\n", "role": "user" }, { "content": "quarterly ecommerce sales grew 1% and 70% on a two-year stack.\nq4 inventory up 26% globally; 28% in u.s., affected by higher cost of goods, mix, and higher in-transit shipments.\nquarterly walmart u.s. comp sales, without fuel, up 5.6%.\nmembership income increased 9.1%.\nsees fy 2023 walmart u.s. comp sales growth, excluding.\nfuel, slightly above 3%.\nsees fy 2023 consolidated net sales, excluding divestitures, increase about 4%.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: You will hear prepared comments from each of them today.\nJim will cover high-level financials and provide a strategic update, John will cover an operating overview and Devina will cover the details of the financials.\nJohn will discuss the results of the areas of yield and volume, which, unless stated otherwise, are more specifically references to internal revenue growth or IRG from yield or volume.\nDuring the call, Jim, John and Devina will discuss operating EBITDA, which is income from operations before depreciation and amortization.\nAny comparisons, unless otherwise stated, will be with the first quarter of 2020.\nNet income, EPS, operating EBITDA margin and SG&A expense results have been adjusted to enhance comparability by excluding certain items that management believes do not reflect our fundamental business performance or results of operations.\nThese adjusted measures, in addition to free cash flow are non-GAAP measures.\nwm.com for reconciliations to the most comparable GAAP measures and additional information of our use of non-GAAP measures and non-GAAP projections.\nTime-sensitive information provided during today's call, which is occurring on April 27, 2021, may no longer be accurate at the time of a replay.\nIt was said many times last year that 2020 was a year like no other.\nFor many reasons, it was an incredibly difficult and trying year, yet our positive message internally was that great companies use tough times to better themselves, and that's precisely what WM did and the first quarter of 2021 showed that with an exclamation point.\nWe had an exceptionally strong start to the year as we kept our focus on those fundamentals that have always been great.\nOur people first, then our customers and then we focus on the details of our business, and that order inevitably produces the best results.\nIn Q1, it sure did as we achieved record operating EBITDA of $1.16 billion and robust cash from operations of $1.12 billion.\nTypically, during our first-quarter earnings call, we reaffirm our full-year guidance.\nHowever, as we view these strong results, in addition to our confidence in the transformative changes we're making to our business model and the fact that we have yet to see a full recovery in our critical landfill, commercial and industrial volumes, it became clear that we're on track to outperform our guidance from only two months ago.\nCombine this with the broader economic trends and all indicators show that our full-year revenue, adjusted operating EBITDA and free cash flow are on track to meet or exceed the upper end of the guidance ranges we provided in February.\nDevina will discuss our updated guidance, but it's safe to say we're very excited about our performance for the first quarter and we expect to show continued strength throughout the year.\nWe're seeing tangible benefits from the investments that we've made in recycling and renewable energy.\nIn our recycling line of business, we've developed a model for all new plants which, with the addition of sophisticated technology, produces far better returns through a combination of added efficiencies, a higher quality of saleable material and less residual material for disposal at the end of the process, all while our basket of recycled commodity prices have climbed back nicely to historical average price levels.\nAdditionally, three years ago, we made the decision to close the loop between our natural gas fleet and the gas produced at our landfills by investing in the renewable energy business.\nWe're now seeing those investments pay healthy dividends with approximately two to three-year paybacks on our four plants, in tandem with greater stability and higher pricing in the renewable energy markets.\nAs we discussed last quarter, WM is also well positioned to leverage our ESG leadership, and particularly our focus on environmental sustainability to help our customers meet their own climate goals through recycling and other beneficial uses such as renewable energy generation.\nWe're in a unique position to help key stakeholders rise to the challenge.\nAnd we can do this while growing our business at the same time, collaborating with our stakeholders to find new ways to create value together.\nContinuing to integrate environmental sustainability into our strategic business framework for long-term sustainable and profitable growth requires a strong focus, which is why we've taken a step to dedicate a member of our senior team to this effort.\nI'm pleased to announce that Tara Hemmer, senior vice president of operations, will be taking this new role as senior vice president, chief sustainability officer reporting directly to me effective July 1.\nWith Tara's move, our Area vice president leading the Greater Mid-Atlantic area, Rafa Carrasco, will be promoted to a member of the senior leadership team as senior vice president of Operations.\nWe've also launched a new exciting education benefit for our team members this month that will provide development and upskilling opportunities for our workforce.\nThese changes underscore how the tenets of ESG are embedded into our broader business strategy.\nAs digital transformation sweeps across nearly every industry in the wake of the pandemic, we're making strides in differentiating our customers' experience through end-to-end digital transformation.\nToday, our customers can manage their relationship with us through online -- through our online WM -- My WM platform, which is connected operationally through our smart truck technology and supported by our customer analytics and data management tools.\nOur newly automated setup process streamlines customer orders and accelerates the speed at which we can deliver on our commitments, while also reducing our cost to serve.\nThese developments, combined with the continued growth of our e-commerce channel, give us confidence that our decision to accelerate technology investments was the right one, and we will emerge from the pandemic a stronger, more agile company.\nWM is well positioned to benefit from the continued reopening as more states and provinces emerge from the pandemic, and we expect our commercial, industrial and landfill businesses, our three most profitable lines of business, to benefit from further volume recovery and produce robust financial results with high incremental margins over the remainder of the year.\nBefore reviewing the terrific operating results that we achieved in the first quarter, I want to provide an update on the integration of ADS.\nOver the last six months, we've made significant progress on combining the two businesses, and we've been able to accelerate some of our integration plans.\nThe teams have worked tirelessly to make sure that this combination goes smoothly.\nAnd based on the success of the integration so far, we are increasing our synergy expectations to $150 million of total annual run rate synergies, $130 million coming from operating costs and SG&A savings and $20 million coming from capital savings.\nFor 2021, we now expect synergies of between $75 million and $85 million, all coming from cost savings.\nWith approximately $15 million of annualized synergies captured in 2020, we expect to exit 2021 on an annual run rate synergy level of around $100 million.\nThe remaining $50 million is expected to be captured in 2022 and 2023 from a combination of operating costs, SG&A and capital expenditures.\nNow turning to our first-quarter results.\nOrganic revenue grew 2.1% as disciplined pricing and improved recycling results overcame modest volume declines.\nPricing performance for the quarter was very solid with both core price of 3.4% and collection and disposal yield of 2.8%, outpacing our expectations.\nNotably, our commercial yield rebounded sequentially from 3.1% -- to 3.1% from 1.9% in the fourth quarter.\nAs economic reopening progressed during the first quarter, collection and disposal volumes improved again sequentially to a decline of 2.3% from 2.7% in the fourth quarter.\nIn the first quarter, net new business turned positive, churn improved meaningfully to 8.2% and service increases expanded.\nWhile volumes have recovered meaningfully from the second quarter of 2020 collection and disposal decline of 10.9%, as Jim pointed out, WM is positioned to benefit from further improvements in North American economies.\nFor example, at the end of the first quarter, we have recovered about 72% of the commercial yards lost due to COVID, providing room for considerable improvement in commercial volumes as we progress through the year.\nSimilarly, our other highest-margin businesses, industrial and landfill, have volume upside opportunity as visibility into the economic reopening continues to improve and more event work is scheduled and completed.\nLooking at the lines of business, we're making improvements with the help of a very delivery pricing focus, residential, landfill and recycling, I'm happy to report that we have had standout in each of these areas during the quarter.\nResidential yield doubled year over year to 4.2% as we made strides to improve the profitability in this line of business.\nThis is the highest residential yield we have achieved since 2008 and it showcases our success in demonstrating the value of our service and pricing it appropriately.\nThe increased yield drove operating EBITDA margins in the residential line of business to the highest level in the past 12 months despite still elevated residential container rates.\nLandfill core price was 3.2%, a strong result when you consider the impact of lower volumes related both to the pandemic and severe winter weather.\nIn recycling, operating EBITDA doubled year over year to achieve earnings that rank in our top five best quarters ever.\nThese results are truly a reflection of our work to improve the business model while creating a sustainable solution for our customers and not simply the result of an increase in recycled commodity prices.\nWhile our other top recycling quarters had an average commodity price of $127 per ton, we achieved our strong first-quarter results with a price of $79 per ton.\nFinally, turning to costs.\nFirst-quarter operating expenses as a percentage of revenue improved 130 basis points to 61.1%, demonstrating that we are maintaining our cost discipline as volumes recover.\nIn the first quarter, we saw a 40-basis-point improvement in our labor costs as we continue to manage overtime spending.\nWe also saw efficiency improvements in both the commercial and industrial lines of business, which we were able to identify and capture as our investments in technology help make us nimble.\nAs you've heard from both Jim and John, we had a fantastic start to 2021 and we forecast continued strength our business as local economies emerge from the pandemic.\nThese strong results and our confidence in our outlook for the remainder of the year have led us to raise our full-year financial guidance.\nRevenue growth is expected to be 12.5% to 13%, with combined internal revenue growth from yield and volume in the collection and disposal business of four and a half percent or greater.\nThe increased outlook is underpinned by our disciplined pricing programs and strong outlook for continued volume recovery.\nFor adjusted operating EBITDA, we now expect to generate between $4.875 billion and $4.975 billion, a $100 million increase at the midpoint from our prior guidance.\nThe improved outlook for adjusted operating EBITDA translates directly into incremental free cash flow, and we now expect that we will generate between $2.325 billion and $2.425 billion of free cash flow for the year.\nOur team members on the frontline continue to deliver and the investments we are making in our people, technology and customer experience are generating strong results.\nTurning to our first-quarter results.\nNet cash provided by operating activities grew $355 million.\nThe contribution from operating EBITDA growth accounted for a little less than half of that increase, with the remainder coming from lower incentive compensation payments and an increase in cash collections from customers, and favorable timing of some of our payables.\nWhile we expect some of the timing differences experienced in the first quarter to reverse for the year, the remaining contributors to our strong cash flow from operations results position us for a very strong year.\nIn the first quarter, capital spending was $270 million, a $189 million decrease from the first quarter of 2020.\nCapital expenditures were lower in the quarter, primarily due to timing, but the timing of fleet purchases, which we had intentionally front-loaded in 2020 and steps we took in late 2020 to accelerate some of our 2021 capital given our confidence in the pace of volume recovery.\nWe continue to prioritize the investments in the long-term growth of our business, including recycling, renewable energy and technology investments that we have previously discussed.\nFor the full year, we expect capital spending to be at the high end of our $1.78 billion to $1.88 billion guidance range as we invest in our business to support growth, reduce our cost to serve and extend our environmental sustainability efforts.\nPutting it all together, our business generated free cash flow of $865 million in the first quarter.\nThe operating EBITDA growth, lower capital expenditures and favorable working capital changes that I discussed drove the significant year over year free cash flow increase.\nThis sets us up very well to achieve our increased free cash flow outlook.\nIn the first quarter, we used our free cash flow to pay $247 million in dividends and allocated $250 million to share repurchases.\nTurning to SG&A costs.\nSG&A was 10.7% of revenue in the first quarter.\nThat's a 20-basis-point increase over 2020.\nWe remain focused on managing our discretionary costs, optimizing our structure for the ADS acquisition and using SG&A dollars to enhance our business.\nOur deliberate increased level of investment in technology as well as higher incentive compensation accruals are the driver of SG&A as a percentage of revenue being above our long-term target of less than 10% of revenue, but we are committed to ensuring we return to that optimized cost structure in the near term.\nOur first-quarter leverage ratio of 3.04 times has improved from the fourth quarter due to our strong operating EBITDA growth.\nThis leverage ratio remains well within the financial covenant of our revolving credit facility and right at the top of our long-term targeted range of two and a half to three times.\nOur strong first-quarter results and increased expectations for current year operating EBITDA and free cash flow, position us to purchase at least $1 billion of our shares in 2021, and at the same time, achieve our target leverage of 2.75 times by the end of the year.\nOur capital allocation priorities continue to be a strong balance sheet, prudent investment in the growth of our business and strong and consistent shareholder returns.\nWith the strength of our collection and disposal business, expectations for continued recovery and improved market backdrop for recycling, effective cost control and even better-than-expected integration synergies from the ADS acquisition, cash flow converges conversion is strong.\nAnd as a result, we expect to increase cash allocated to shareholder returns from our initial plans.\nOur strong results are a testament to their commitment, and we're excited about what we will achieve together over the remainder of the year.\n", "role": "user" }, { "content": "company increases 2021 financial guidance.\nadjusted operating ebitda is expected to be between $4.875 billion and $4.975 billion in 2021.\ntotal company revenue growth is expected to be 12.5% to 13% in 2021.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: You'll hear prepared comments from each of them today.\nJim will cover high-level financials and provide a strategic update.\nJohn will cover an operating overview, and Devina will cover the details of the financials.\nJohn will discuss our results in the areas of yield and volume, which unless otherwise stated, are more specific references to internal revenue growth or IRG from yield or volume.\nDuring the call, Jim, John, and Devina will discuss operating EBITDA, which is income from operations before depreciation and amortization.\nAny comparisons, unless otherwise stated, will be with the second quarter of 2020.\nNet income, EPS, operating EBITDA margin, and SG&A expense results have been adjusted to enhance comparability by excluding certain items that management believes do not reflect our fundamental business performance or results of operations.\nThese adjusted measures, in addition to free cash flow, are non-GAAP measures.\nwm.com for reconciliations to the most comparable GAAP measures and additional information about our use of non-GAAP measures and non-GAAP projections.\nTime-sensitive information provided during today's call, which is occurring on July 27, 2021, may no longer be accurate at the time of a replay.\nLast quarter, we were feeling very good about the prospects for the year when we announced our Q1 results and raised our full-year guidance.\nNow more than halfway through the year, all parts of our business have performed well above those revised expectations.\nIn the second quarter, we achieved an operating EBITDA of $1.31 billion, which we converted into strong cash from operations of more than $1 billion.\nFirst and foremost, this superb performance is a result of our outstanding core business model.\nIn addition, this performance was driven by our continued focus on providing our customers with exceptional service, offering our employees a great place to work, and driving sustainability through our business model.\nOur very strong results, in addition to our confidence in the transformative changes we're making to our business model, led us to increase our full-year guidance once again.\nThe size of our revisions in each of these first two quarters clearly demonstrates the earnings-producing potential of our strategy.\nIn the back half of the year, we expect continued strong volume, pricing that offsets inflationary pressures and record results from our commodity-based businesses.\nWith all of this powerful momentum, we now expect to generate 2021 adjusted operating EBITDA of at least $5 billion with free cash flow of at least $2.5 billion, all while continuing to make growth investments in our sustainable solutions and technology platforms.\nAt the core of these strong results is our recycling business, which is central to our sustainability and business strategy.\nOur efforts to improve the recycling business, combined with robust demand for recycled commodities, led to second quarter delivering the recycling business' best ever financial performance by a considerable margin.\nWe've made substantial progress in derisking our recycling business by shifting to a fee-for-service contract structure, which has lifted the floor for recycled returns and created an economically sustainable business model.\nWe've also made significant technology investments to improve the cost structure and grow the business.\nAt our automated facilities, labor costs were 35% lower in the second quarter compared to our other single-stream MRFs.\nThese investments not only lower operating costs and improve plant efficiency but also allow us to adjust our equipment to respond to evolving end-market demands.\nFor example, we're now segregating out specific plastics that in the past were sold as a bundled lower-priced bales, reacting quickly as markets evolve for new recycled commodity types.\nThe capability to efficiently sort these materials allows us to extract more value for these commodities as demand increases for recycled material.\nOverall, our investment in recycling technology -- our investments in recycling technology are generating solid returns, and we are accelerating our plans to roll out this new operating model across our MRF network.\nSustainability has been a central part of our strategy for many years, so I want to take some time to highlight how we're advancing our sustainability journey.\nAt the beginning of the month, Tara Hemmer transitioned into her new role as senior vice president and chief sustainability officer, bringing together our sustainable solutions and ESG efforts under one umbrella.\nWe believe this strong focus is critical to continuing to integrate environmental sustainability and social responsibility into a strategic business framework.\nOur supply chain goals, which include increasing our spending, both with sustainable and diverse suppliers, are examples of how this focus is integrated in our day-to-day operations.\nNext month, we're hosting a supplier diversity initiative called Share the Green, which will give women-owned businesses the opportunity to become a supplier for one or more of the 45 companies participating in the event.\nThis three-day nationwide event will provide great opportunities for diverse businesses and help participating companies to secure excellent suppliers.\nAnd finally, we continue to make real progress on our digital transformation to differentiate our customers' experience.\nIn the past, I've mentioned our automated setup process that streamlines customers' orders and reduces our cost to serve.\nThrough our advanced technology, we're eliminating nearly all manual steps in setting up a customer account, allowing the setup to occur almost instantaneously after an order is processed.\nThis will save us several million dollars annually, improve setup accuracy and increase customer satisfaction.\nThis more accurate setup of customers also helps us to auto-route these customers, which increases operational efficiency and will optimize routes without manual processing.\nWe are now connecting our advanced technologies to automatically insert 90% of our new commercial customers into existing routes, reducing our cost to serve and improving our speed to service.\nOur customer and digital teams continue to enhance the capabilities of our digital tools to provide a unique and engaging experience for our customers while, at the same time, connecting this front-end experience to our operational systems to allow for improved efficiency and lower costs.\nWe expect that these investments in technology will continue to benefit us for many years to come.\nIn conclusion, strong performance across all of our businesses, collection and disposal, recycling, and renewable energy generated outstanding results so far this year.\nOur focus on disciplined pricing and cost management helped to offset the inflationary cost pressures that we've seen.\nAnd we expect to continue this focus into the second half of the year to help us deliver on our newly revised outlook.\nWe're pleased with the excellent second-quarter results we achieved across our business.\nWe produced exceptional EBITDA growth of almost 24% in the collection and disposal business as the economy continues to recover from the pandemic's steepest impacts in the second quarter of 2020.\nCollection and disposal volume climbed 9.6% in the quarter, which exceeded our expectations.\nAnd our focus on disciplined pricing programs produced a substantive second-quarter collection and disposal yield of 3.7%.\nTurning more specifically to our volume results.\nRobust recovery in our highest-margin businesses, commercial, industrial, and landfill, drove our very strong performance.\nIn the second quarter, commercial and MSW volume reached pre-pandemic levels, and industrial volumes recovered to levels just shy of those before the pandemic.\nWhile we're very pleased with the pace of volume recovery thus far, there remains opportunity for further volume improvement in the second half of the year from key areas of our business, including industrial, special waste, and certain geographies such as Canada.\nAdditionally, pockets of our commercial business, such as education and offices, have yet to fully recover.\nFor the full year, we now expect organic volume in the collection and disposal business to grow 2.5% or more.\nPivoting to price, our second-quarter results further demonstrate the focus the entire team has on overcoming our cost headwinds as well as improvements following the intentional customer-focused steps we took in the second quarter of 2020.\nThis focus is particularly evident in our residential core price of 5.4%, landfill core price of 4.7% and transfer core price of 3.4%.\nWe continue to be committed to pricing programs that are aligned with our cost structure, which is even more important as we see pressure on labor, transportation, supplies, and capital costs.\nOur new full-year outlook for collection and disposal yield is 3.7% or greater.\nOur strong revenue growth was also supported by great results in our customer metrics.\nChurn was 8.8% in the quarter, and service increases outpaced service decreases by more than twofold.\nAdditionally, we increased our net customer growth rate, driven by the optimization of our sales force and investments in technology.\nLooking at operating costs.\nSecond-quarter operating expenses as a percentage of revenue improved 10 basis points to 61.1%, demonstrating that we are continuing to manage our cost as volumes recover even in the face of inflationary cost pressures.\nIt's no surprise to anyone who follows economic indicators that most businesses are experiencing inflation in their costs throughout 2021, and our business is no exception, particularly with regard to labor.\nWe expect to overcome these pressures by increasing operating efficiencies and executing on our disciplined pricing programs.\nThere's no silver bullet when it comes to attracting and retaining talent, and we are using a multifaceted approach that includes addressing wages, offering flexible schedules, and broadening benefits.\nOur long-term focus is on keeping our people first so that we are the employer of choice.\nOverall, inflation trends are something we are watching very closely and managing very proactively with our area, supply chain, and revenue management teams.\nWe continue to make progress on the integration of the Advanced Disposal operations.\nTo date, we've combined around 45% of the ADS operations into our billing and operational systems, which has allowed us to capture synergies and provide additional services to those customers.\nWe are on track to migrate virtually all the ADS customers by the end of the year.\nYear to date, we have achieved more than $30 million of annual run-rate synergies, and we expect cost synergies of between $80 million and $85 million in 2021.\nThis will bring the annual run-rate synergies to around $100 million at the end of 2021, and we continue to forecast another $50 million to be captured in 2022 and 2023 from a combination of cost and capital savings.\nAnd finally, as Jim mentioned, our recycling team set new highs in the second quarter with record contributions to earnings and margins.\nWe also achieved strong growth in our renewable energy business as we generated and sold more RINs and sold them at higher prices.\nWe've made significant investments in these businesses in recent years, and we're pleased with the strong returns they're generating.\nOur people really are the foundation of our success.\nAnd with that, I'll hand off to Devina to discuss our financial results in further detail.\nOur team once again delivered a strong performance in the second quarter.\nRobust volume growth since last year's peak pandemic impact, dynamic pricing efforts, record recycling results, disciplined integration of the ADS business, and our continued focus on cost management combined to deliver 28% operating EBITDA growth and 50 basis points of operating EBITDA margin expansion.\nAs Jim mentioned, these outstanding results and our confidence in the continued strength of our business model have led us to raise our 2021 financial guidance yet again.\nFull-year revenue growth is now expected to be 15.5% to 16%, with organic growth in the collection and disposal business of 5.5% or greater.\nFor adjusted operating EBITDA, we expect to generate between $5 billion and $5.1 billion, an increase of $225 million at the midpoint from the original guidance we provided in February.\nOur business is exceeding the strong outlook we established at the beginning of the year on a number of fronts.\nVolume has recovered, particularly in the commercial collection business at a faster rate than we expected.\nMarket values for recycled commodities and RINs have increased.\nOur integration of the ADS business has generated more synergy value.\nAnd certain of our technology investments focused on reducing our cost to serve have delivered more savings than planned.\nWhile the bridge from our initial guidance to the current guidance has a number of puts and takes, the most significant drivers have accelerated price and volume recoveries in the collection and disposal business of about $135 million; improved recycling profitability of another $135 million; renewable energy increases of about $55 million; and additional ADS synergies of around $25 million.\nThese increases are partially offset by elevated cost inflation and incentive compensation costs that we currently estimate to be about $125 million.\nThe increase in adjusted operating EBITDA guidance is expected to translate directly into incremental free cash flow, and we now expect that we will generate between $2.5 billion and $2.6 billion of free cash flow for the year.\nTurning to our second-quarter results.\nSG&A was 9.6% of revenue in the second quarter, a 30-basis-point improvement over 2020.\nThis result demonstrates our success-making incremental technology investments that will benefit our customer engagement and cost to serve over the long term.\nAt the same time, we're realizing benefits from the integration of ADS and returns on certain of our new technology solutions.\nWe also continue to focus on managing our discretionary spending to optimize our costs.\nSecond-quarter net cash provided by operating activities grew more than 20%.\nThis increase was driven by our extremely strong operating EBITDA growth.\nThere was an unfavorable working capital comparison in the second quarter, but we attribute that to timing differences in tax payments and cash received from CNG credits.\nWe are encouraged to see continued progress on our DSO and DPO measures.\nIn the second quarter, capital spending was $396 million, bringing capital expenditures in the first half of 2021 to just over $665 million.\nWhile capital spending in the first half of the year was expected to be less than the prior year due to timing differences in truck delivery schedules, our 2021 pace of capital expenditures has been slower than we planned.\nThe slower pace is due to supply chain and labor constraints impacting some of our vendors, and we've made deliberate decisions to defer spending in some categories as we observe what we expect to be temporary dislocation in certain markets.\nTo offset these delays, we're proactively pulling forward capital investments in areas we can and also where we know the returns will be strong.\nAs Jim mentioned, we're in the process of accelerating recycling investments as we have strong proof points of technology and equipment upgrades, reducing the cost structure of the business, and improving delivered quality of processed materials.\nWe continue to target full-year capital spending within our $1.78 billion to $1.88 billion guidance range.\nIn the first half of 2021, our business generated free cash flow of $1.5 billion, a conversion from operating EBITDA of 61%.\nThis very strong result positions us well to achieve our new higher free cash flow outlook even as we target capital spending increases in the second half of the year.\nOur capital allocation priorities continue to be a strong balance sheet, prudent investment in the growth of our business and strong and consistent shareholder returns.\nIn the second quarter, we paid $242 million in dividends and allocated $250 million to share repurchases.\nOur leverage ratio of 2.84 times has improved even more quickly than expected due to our strong operating EBITDA growth, and it's tracking well toward our target leverage of 2.75 times by the end of the year.\nAt the same time, our robust cash generation in the first half of the year positions us to increase our full year share repurchase expectation up to our full $1.35 billion authorization.\nWith this increase, we expect our weighted average share count for the full year to be approximately 422 million shares.\nThe successes of the first half of 2021 position WM to deliver on our commitments to our people, our customers, the communities we serve, and our shareholders.\n", "role": "user" }, { "content": "total company revenue growth in 2021 is expected to be 15.5% to 16.0%.\nfree cash flow is projected to be between $2.5 billion and $2.6 billion in 2021.\nadjusted operating ebitda is expected to be between $5.0 billion and $5.1 billion in 2021.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: You'll hear prepared comments from each of them today.\nJim will cover high-level financials and provide a strategic update, John will cover an operating overview and Devina will cover the details of the financials.\nJohn will discuss our results in areas of yield and volume, which unless stated otherwise, are more specifically references to internal revenue growth or IRG from yield or volume.\nDuring the call, Jim, John and Devina will discuss operating EBITDA, which is income from operations before depreciation and amortization.\nAny comparisons, unless otherwise stated, will be with the third quarter of 2020.\nNet income, EPS, operating EBITDA and margin, operating expenses and SG&A expense results have been adjusted to enhance comparability by excluding certain items that management believes do not reflect our fundamental business performance or results of operations.\nThese adjusted measures, in addition to free cash flow, are non-GAAP measures.\nwm.com for reconciliations to the most comparable GAAP measures and additional information of our use of non-GAAP measures and non-GAAP projections.\nTime-sensitive information provided during today's call, which is occurring on October 26, 2021, may no longer be accurate at the time of a replay.\nOur third-quarter performance highlighted the exceptional cash generation capability of our business model as we generated nearly $1.2 billion of cash from operations.\nOur solid results put us on track to meet the higher full-year financial outlook we provided last quarter, even as we faced some of the highest inflation that we've seen in years, along with the labor and supply chain constraints.\nVirtually no segment of the economy, including government and the private sector, has been unaffected by these historically acute inflationary and supply chain challenges.\nThis burst of inflation accelerated through the third quarter, and during the quarter, we saw roughly $60 million of labor inflation and about $100 million of inflation in other operating cost categories.\nOverall, our underlying labor inflation for the third quarter was 8.7%.\nSo that's the tough news.\nThe good news is that the business continues to perform well as demonstrated by the fact that we still expect to finish the year within our previously adjusted operating EBIT raise, adjusted operating EBITDA and free cash flow guidance ranges.\nAnd we will be above our prior revenue range due to strong price execution and strengthening volumes.\nJohn, Devina and I will discuss what we're doing about these labor and inflationary pressures in the short term and the medium term.\nNot surprisingly, our disciplined price programs are the primary lever to combat cost inflation.\nOur pricing programs delivered core price of 4.6% and collection and disposal yield of 3.5% in the third quarter.\nStandout performance continues to be the residential line of business with a yield of 5%, while MSW yield improved to 3.5%.\nBut keep in mind, the price escalations on about 40% of our revenue are tied to an index, often based on a look-back over the prior year, so there's a timing lag in adjusting index pricing when costs step up as quickly as they have.\nAnd it's important to understand that a portion of the remaining 60% of our business won't get the full 7% to 10% price increases we believe we need to cover rising costs until their next price increase cycle.\nA customer who has increased 4% in May won't get the full cost recovery price increase until next May.\nThat said, we're seeing a favorable price environment across our open market businesses, evidenced by our lowest level of rollbacks in more than a decade.\nWe're very focused on directly addressing the labor challenges.\nJohn will discuss the quarterly impact and how we're working to address this immediately.\nStrategically, we're looking at this acute challenge as an opportunity to expedite the automation of certain jobs.\nWe said previously that we view the automation of certain high turnover positions as both a competitive advantage and a derisking mechanism in today's labor market where certain jobs simply don't attract the interest they previously did.\nThe most recent examples of that are the customer setup role, which we just finished fully automating and the 35-plus percent reduction in labor we've seen where we've upgraded and rebuilt our single-stream recycling plants.\nGiven the success of these rebuilds and the labor inflation challenges of late, we've accelerated the retooling of the remaining single-stream plants and expect to address 90% of single-stream volume by the 2023-2024 time frame.\nIn the quarter, we saw some of the positive impacts of those new single-stream plants in our outstanding performance in our recycling business.\nEarnings contribution and margins for recycling were at their highest level ever, driven by strong demand for recycled material and great operating performance from the new state-of-the-art MRFs.\nWe were equally pleased with results in our renewable energy business in the quarter, where robust growth continued, driven by more RINs sales and higher prices.\nWith our long-standing expertise, continued growth in sustainability solutions and unrivaled asset network, WM is uniquely situated to support our current and prospective customers in their evolving sustainability needs.\nOur customers are increasingly seeking circular solutions for their materials, which is causing growing demand for recycled content.\nOf note, our focus on unlocking more plastic from the waste stream drove a 25% increase in plastics we recycle since 2019.\nRecycling and renewable energy are two of our key growth areas, highlighted in our annual sustainability report published earlier this month.\nThe report outlines the progress WM has made against our sustainability goals and details investments we've made to advance our sustainability journey.\nIn particular, this year's report focuses on the people behind the progress WM has made in the past year and how they are doing their part to take care of our customers, neighbors and the environment and communities across North America.\nThe bottom line for the quarter is this: we generated higher-than-expected volume and revenue growth in the third quarter, which positions us well for 2022.\nAt the same time, we faced an unexpectedly acute and fast-moving challenge from the inflation, supply chain and labor shortage headwinds, and we managed our way through it well and still expect to achieve results within our 2021 guidance ranges.\nAnd this challenge presents an opportunity for us to move more decisively in those strategic areas of automation, sustainability and workforce planning to further separate ourselves in this industry.\nThey continue to deliver, driving another quarter of double-digit growth in revenue, operating EBITDA and free cash flow.\nOur team continues to execute very well despite a challenging operating environment, producing more than 7% organic revenue growth in collection and disposal business in the third quarter.\nThis growth, combined with continued integration of Advanced Disposal, drove operating EBITDA more than 14% higher.\nAs Jim mentioned, we are seeing pressure on labor and other cost categories, and we are addressing these impacts through our pricing programs, controllable cost management, efficiency improvements and workforce planning.\nAdjusted operating expenses as a percentage of revenue increased 180 basis points to 62.2% in the third quarter as we experienced pressure from inflationary costs, supply chain constraints and stronger-than-expected volume growth.\nIn particular, costs related to the hiring and training of new employees impacted labor costs in the third quarter.\nWe also saw overtime hours increase as the team adjusted to meet the higher-than-expected collection volumes.\nWe anticipated a good portion of this labor pressure that is showing up in our costs as we made proactive market wage adjustments earlier in the year to get in front of labor shortages and meet growing demand.\nAt the same time, we are working to automate a number of roles where we see longer-term challenges to attract and retain employees.\nIn the residential line of business, we continue to work through the last 40% of our routes, including those from ADS that are not fully automated while continuing to be very selective in the business we are willing to take on, as evidenced by our yield and volume results in the third quarter and the last few years.\nWhile we're now incurring the costs associated with these investments, we are only in the early stages of seeing the benefits.\nThe labor market supply chain constraints have accelerated in Q3, coupled with robust volume growth in the third quarter, have also added pressure in our fleet operations.\nRepair and maintenance costs are increasing as we hire additional technicians and incur some overtime hours to address the strong volume growth we continue to see in the collection lines of business.\nSimilarly, we've had to temporarily place some of our higher-cost trucks back in service to address the volume demands.\nIn addition, our third-party subcontractors at our transfer stations are facing similar pressures and are passing those increased costs on to us.\nOverall, efficiency in the collection business in the third quarter adjusting -- improved in the collection business in the third quarter, adjusting for increased training hours.\nThe fundamentals of our business remain strong, and we are committed to recovering our cost increases through pricing and again, taking the most expensive truck off the road and reducing the most expensive hour of the day.\nNow I want to focus on several of the positives in the quarter.\nTurning to our strong revenue results, third-quarter collection and disposal volume grew by 3.8%, which outpaced our expectations.\nWe continue to see strong volume, driven by economic reopening with commercial volume up 4.6% and special waste volume up by 16.6%, and we see runway for continued solid performance in the fourth quarter.\nCustomer metrics were also strong in the quarter.\nService increases outpaced service decreases by more than twofold for the second consecutive quarter and churn was 8.7%.\nYear to date, net new business for small and medium business customers is up more than 10%.\nAnd finally, our integration of Advanced Disposal continues to go smoothly.\nWe've combined around 70% of the acquired operations into our billing and operational systems, and we remain on track to migrate virtually all the ADS customers by the end of the year.\nWe've achieved nearly $26 million in annual run rate synergies during the third quarter, bringing the year-to-date total to $60 million.\nCombined with the $15 million of annual run rate synergies realized in the fourth quarter of 2020, we're on track to reach $100 million by the end of the year.\nAnd we continue to forecast another $50 million to be captured in 2022 and 2023 from a combination of cost and capital savings.\nAs we have seen all year, robust volume growth, strong recycling commodity prices and increased collection and disposal core price continued to deliver top-line growth ahead of expectations in the third quarter.\nAs a result, we are once again updating our revenue outlook for the year.\nTotal company revenue growth is now expected to be between 17% and 17.5%, with yield and volume in our collection and disposal business of about 6.5%.\nThis guidance also includes an expectation for continued strength in recycled commodity prices and RIN values.\nWe're confirming our most recent 2021 adjusted operating EBITDA guidance of between $5 billion and $5.1 billion, which is an increase from the prior year of about 17% at the midpoint and almost 5% higher than our initial outlook for the year.\nThird-quarter SG&A was 9.7% of revenue, a 40-basis-point improvement over 2020.\nIncluded in our results is about $16 million of increased digital investments as we advanced technology that will benefit customer engagement and lower our cost to serve over the long term.\nWe remain focused on managing our controllable spending, making sure that we allocate each dollar to initiatives that will enhance our business.\nThird-quarter net cash provided by operating activities was $1.18 billion, an increase of 15%.\nCash from operations growth continues to be driven by our robust increase in operating EBITDA, including the contributions from the ADS acquisition and lower interest costs.\nWhile there was a modest unfavorable working capital comparison in the third quarter, due in large part to the timing of cash from CNG credit and our deferral of payroll taxes in 2020, overall, improvements in working capital demonstrate the benefit of tools we are putting in place to enhance our systems and processes.\nIn the third quarter, capital spending was $464 million, bringing capital expenditures in the first nine months of the year to $1.13 billion.\nOur 2021 pace of capital spending has continued to be slower than we planned due to supply chain constraints and construction project work taking longer than planned.\nAs we discussed last quarter, we are proactively pulling forward capital investment, particularly in recycling, where we know the returns will be strong.\nInvestments in recycling technology and equipment at our MRFs are expected to be about $200 million for the year.\nWhile we continue to target full-year capital spending at the low end of our $1.78 billion to $1.88 billion guidance range, we could see 2021 coming in below targeted levels, with some of our spending pushed into 2022, primarily due to supply chain constraints.\nWe generated $773 million of free cash flow in the third quarter.\nAnd through September, our business generated free cash flow of $2.29 billion, seeing us well on our way to our full-year targeted free cash flow of $2.5 billion to $2.6 billion.\nWe've returned more than $1.7 billion to our shareholders through the first nine months, paying $730 million in dividends and repurchasing $1 billion of our stock.\nWe continue to expect to repurchase up to our full authorization of $1.35 billion in 2021.\nOur leverage ratio at the end of the quarter was 2.71 times as the strength of our business performance and the successful integration of the acquired ADS business drove the achievement of our targeted leverage ratio ahead of plan.\nAs we enter the final stretch of 2021, our teams are focused on accelerating our disciplined pricing programs, managing our controllable costs, positioning WM as an employer of choice and capturing growing volumes.\nWe know our strategy sets us up for a solid finish to 2021.\nWith that, Erica, we'd be happy to address the team's questions.\n", "role": "user" }, { "content": "compname says total company revenue growth in 2021 is expected to be between 17% and 17.5%.\ncompname says adjusted operating ebitda is expected to be between $5.0 billion and $5.1 billion in 2021.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: You'll hear prepared comments from each of them today.\nJim will cover high-level financials and provide a strategic update.\nJohn will cover an operating overview and Devina will cover the details of the financials, including our 2021 outlook.\nDuring the call, Jim, John and Devina will discuss operating EBITDA, which is income from operations before depreciation and amortization.\nAny comparisons, unless otherwise stated, will be with the fourth quarter of 2019.\nNet income, EPS, operating EBITDA and margin and SG&A expenses have been adjusted to enhance comparability by excluding certain items that management believes do not reflect our fundamental business performance or results of operations, including costs incurred in connection with our fourth-quarter acquisition of Advanced Disposal Services or ADS.\nwm.com for reconciliations to the most comparable GAAP measures and additional information about our use of non-GAAP measures and non-GAAP projections.\nTime-sensitive information provided during today's call, which is occurring on February 18, 2020, may no longer be accurate at the time of a replay.\nWe're extremely pleased with our fourth quarter and our full-year 2020 results.\nIn many ways, our fourth quarter was a continuation of our strong third-quarter performance.\nOnce again, despite the impacts from the pandemic, our team delivered strong and consistent operating EBITDA in the fourth quarter that exceeded the fourth quarter of 2019.\nIf you set aside the $38 million of operating EBITDA contribution from ADS and the $60 million fuel tax credit benefit in the fourth quarter of '19 versus 2020, our legacy WM operating EBITDA grew 4% versus Q4 of 2019.\nThis was our seventh consecutive quarter to generate operating EBITDA of more than $1 billion, showcasing the strength and consistency of our business.\nAs with the third quarter, our fourth-quarter operating EBITDA margin was impressively strong at 28.1% when you consider that it included 50 basis points of dilution from ADS.\nFor the full year, 2020 matched our highest annual operating EBITDA margin of 28.4%.\nAnd excluding ADS, we set a new record with 2020 operating EBITDA margin of more than 28.5%.\nSo in a year where many companies have suffered significant financial impacts from the pandemic and resulting economic crisis, at Waste Management, the resilience of our people and our business model delivered full-year 2020 results within one and a half percent of our record-high 2019 operating EBITDA.\nAs we look to 2021, in addition to the strong, continuous improvement measures we're taking in our collection and disposal business, WM is in a perfect position to leverage our focus on ESG and our accelerated investments in technology to benefit all of our constituents, employees, customers, shareholders, communities and the environment.\nWM made the decision in March to accelerate technology spending, and we're more confident than ever that our investments in customer service digitalization, or CSD, are the right approach to propel us forward in the post-COVID world.\nWe've made considerable progress toward transforming our business model by seamlessly connecting the front-end customer experience to our back-end processes.\nOur online sales channel is growing at a triple-digit rate.\nMost importantly, we're receiving positive feedback from our customers.\nIn 2021, the value creation of CSD will step up as we further differentiate our service to our customers, automated -- automate manual processes and drive further efficiencies and reliability in our operations.\nOn the ESG front, WM has emerged as a true leader in sustainability, and we're doing so in a manner that will benefit both shareholders and the environment.\nPossibly like no other year, this year's WM Phoenix Open pointed to our ability to demonstrate our expertise and leverage our brand recognition for sustainability.\nThis was highlighted during our Sustainability Forum panel discussion with two other ESG-focused CEOs, Satya Nadella of Microsoft and Doug McMillon of Walmart.\nHis note was flattering personally to me, but it was also an important statement about where WM stands reputationally with large companies like Walmart with regard to sustainability and where we can help them and our other customers to achieve their sustainability goals.\nAs corporations build road maps to address their own climate impacts, WM is well positioned to assist through an array of service offerings, including recycling and other beneficial uses such as composting and renewable energy generation.\nLooking at the potential impact on our financials.\nSo far in 2021, commodities are on a strong upward trajectory, and many experts believe this to be the start of a long-term trend.\nAnd as North America's largest recycler and one of the largest producers of renewable natural gas for landfill gas, WM should benefit disproportionately from that long-term trend.\nWe're able to close the loop by using that renewable gas to power our natural gas fleet, redefine the processing business with our next-gen recycling technology enhancements and our fee-based pricing strategy, make new investments in innovative solutions for low-value commodities and expand our portfolio of renewable natural gas plants, all of which position us perfectly to benefit our shareholders over the next three to five years.\nIn addition to the E in ESG, we're taking the S, our social responsibility, very seriously, too.\nWhether it's our long-established focus on inclusion and diversity, our commitment to our employees to enhance benefits and guaranteed hours during COVID or our efforts to help the underserved and unemployed through our work with organizations like UpSpire and Concordance Academy, we believe in these causes, and we're very confident in the long-term value add for our shareholders.\nIt's rewarding to see that our focus on ESG as a strategic value creator for our shareholders as well as being the right thing to do is getting recognition.\nAt the beginning of February, we were named to Fortune magazine's World's Most Admired Companies List for the third year in a row, claiming the top spot in our industry category.\nDuring the fourth quarter, we were named to CDP's prestigious A List for tackling climate change.\nThe global environmental nonprofit recognized Waste Management for the fifth consecutive year for our actions to cut emissions, mitigate climate risks and help develop the low-carbon economy.\nWe were also named to the Dow Jones Sustainability Indices for North America and the World.\nFor the third year in a row, we are in the title of Sector Leader for Commercial Services & Supplies.\nOur view is that our strategic approach to ESG will complement our investments in technology and our core business process improvements as the key ingredients of our future success.\nLast year, we laid the foundation for lowering our operating cost model and for offering greater choice to how our customers interact with us, and we completed the sizable acquisition of ADS.\nAll of this positions us well for growth in 2021.\nIn the year ahead, we expect to deliver organic revenue growth of four and four and a half percent as we continue to execute on our disciplined pricing programs and expect volume growth to improve in 2021 as the impact from the pandemic lessens.\nFrom an operating cost perspective, we've learned how to operate our business with a lower cost structure, and we remain -- we expect to retain that lower cost structure in 2021 and beyond.\nAs a result, we anticipate overall operating EBITDA growth between 10 and 13 and a half percent in 2021.\nWe expect this substantial growth as we realize the value of synergies from continuing to integrate ADS and improve the profitability of its business, all while we increase our investment in CSD.\nThe benefits from these technology investments and the full integration of ADS will provide runway for further margin expansion in the future.\nIn closing, we performed exceptionally well in 2020 despite the difficulties presented with COVID-19, and we're poised for another strong year in 2021.\nFor that, I'm eternally grateful to our teammates who have made it happen this year in the face of difficult circumstances.\nWe're very pleased with our strong finish to 2020, both the performance of the legacy Waste Management business and our progress in integrating the ADS operations.\nAs Jim said, our quarterly and full-year results really underscore the strength and resiliency of our business model.\nImproving volumes, healthy pricing and better recycling performance produced organic revenue growth for the first time since the pandemic began.\nAs expected, legacy Waste Management collection and disposal volumes improved sequentially in the fourth quarter from a decline of 5.5% in the third quarter to a decline of 2.7% in the fourth.\nFourth-quarter MSW volume grew 1.2% and C&D volume, excluding hurricane cleanup, grew 1.8%, both strong indicators of continued economic recovery.\nWhile the rate of volume recovery did moderate during the quarter, we did not see a backslide when COVID cases increased in the fall.\nIn fact, as we look at volumes in January, we're encouraged to see improvement from the lull in late November and December.\nCollection and disposal yield was 2.3% in the fourth quarter, and core price was 3.2%.\nAdjusted for the impact of lower volume, core price would have been 3.8%.\nIn the collection business, we continue to make progress improving the residential line of business.\nOur residential yield improved 60 basis points to 3.7% in the fourth quarter compared to the same period in 2019 and was up again sequentially from 3.5% in the third quarter.\nResidential volumes declined 1.4% as we shed business that does not meet our return requirements.\nOverall, our actions to improve the residential line of business in 2020 resulted in $40 million of operating EBITDA benefit, and we expect this to carry forward into 2021.\nIn the post-collection business, fourth quarter landfill core price was 3.3% and transfer station core price was 3.1%, demonstrating our continued pricing discipline in these key lines of business.\nOperating costs were 61.5% of revenue in the fourth quarter compared to 60.2% in the fourth quarter of 2019.\nThere were some noise in the fourth quarter results.\nLet me walk you through the difference.\nIn the quarter, as expected, the ADS acquisition increased operating expense as a percentage of revenue by 40 basis points.\nAdditionally, the timing of government approvals for fuel tax credits, which benefited the fourth quarter of 2019 with two years worth of credits, resulted in a 150-basis-point headwind to operating expense as a percentage of revenue in the fourth quarter of 2020.\nAside from these impacts, operating costs as a percentage of revenue improved 60 basis points, demonstrating that we are laser-focused on cost control and continue to benefit from a lower cost structure.\nAs an example, commercial yards and industrial halls declined between 5% and 6% during the fourth quarter, yet overtime decreased in the range of 15% to 18%, and we see additional opportunities.\nWe also have plenty of opportunity to improve operating costs as a percentage of revenue in the ADS business as we further integrate operations and work to exceed our planned synergies.\nDevina will cover our 2021 financial guidance in more detail, but I want to spend a minute on some key components of growth as we look at the year ahead.\nWe are extremely confident in the aspects of our outlook that we can control, and we based our guidance on a stabilizing economy, moderate volume growth and disciplined pricing.\nWe expect organic revenue growth from yield and volume in the collection and disposal business of between four and four and a half percent and overall revenue growth between 10.75% and 11.25% during 2021.\nWe hit the ground running on the ADS integration on October 30, and it's progressing very well.\nWe expect to achieve between $50 million and $60 million in synergies during 2021.\nCombined with the $10 million to $15 million of annualized synergies already achieved in the fourth quarter, our run rate synergies exiting 2021 is expected to be between $60 million and $75 million.\nWe are extremely confident in achieving these synergies and that we'll be able to capture the remaining synergies in the first half of 2022.\nAbout one-third of the 2021 synergies will come from route optimization, which will begin early in the second quarter.\nWe estimate that our onetime cost to achieve these synergies will be $50 million in 2021.\nAnd as we've mentioned, we plan to adjust the majority of these costs from our results.\nAs Jim discussed, our recycling and renewal energy businesses are central to our strategy, and we're anticipating strong growth from these businesses in the year ahead.\nWe expect continued improvement in recycling from our fee-for-service model, improved operating cost structure at new MRFs and stable demand for recycled materials, which, together, provide a tailwind of between $40 million and $50 million to 2021 operating EBITDA.\nWe also expect an incremental $10 million of year-over-year contribution from our renewable energy business from the sale of RINs as pricing for those credits has increased over the last several months.\nDevina will talk more about our plans to invest in these key businesses in 2021.\nThe team has done an exceptional job managing our operations, and I know this will continue in the year ahead.\nOur 2020 results demonstrate strong execution from our frontline teams across North America, serving our customers throughout the pandemic and doing so in an increasingly cost-effective way.\nThe same focused execution and cost discipline extended to our team members in sales and back-office functions, which delivered strong SG&A results for the year.\nExcluding $25 million of SG&A for the ADS business, SG&A improved by $56 million in 2020 to 10.2% of revenue, a 10-basis-point improvement over 2019.\nWe achieved these results while accelerating our technology investments and despite the revenue decline from the pandemic.\nI'm proud of our team for this cost discipline in a difficult economic environment.\nFourth quarter capital spending was $394 million, and that included $29 million of capital to support [Inaudible] ADS and about $30 million of capital that we intentionally pulled forward given the strong recovery in our operations during the third and fourth quarters.\n2020 capital spending was $1.632 billion.\nOur team showed tremendous discipline throughout 2020 as we focused on reducing capital spending in a targeted manner given the volume declines from the pandemic.\nWaste Management generated free cash flow of $2.656 billion in 2020.\nGiven the significant impact of the ADS transaction on this result, let me provide detail on some of the moving pieces.\nAfter-tax proceeds from the divestitures of ADS and Waste Management businesses to GFL were $691 million.\nThese proceeds were partially offset by after-tax transaction and advisory costs to support the acquisition of $117 million.\nNormalizing for these two items, 2020 free cash flow was $2.082 billion.\nThis result demonstrates the resilient nature of our business and the strength of capital discipline as we nearly achieved our original 2020 free cash flow guidance of $2.15 billion despite the impact of COVID-19.\nGiven the strong result, at the end of 2020, we were positioned to forgo relief provided by the CARES Act, and we elected to pay approximately $120 million of payroll taxes that we had planned to defer.\nAs we repay that amount in 2021 and 2022, as anticipated, 2020 free cash flow, excluding the ADS impact I mentioned, would have been about $2.2 billion for the year, which is better than we expected at the end of the third quarter.\nIn the fourth quarter, we used our free cash flow to pay $231 million in dividend.\nFor the full year, we returned $1.33 billion to shareholders, comprised of $927 million in dividends and $402 million in share repurchases.\nIn November, we issued $2.5 billion of senior notes at an extremely attractive pre-tax weighted average cost of less than one and a half percent.\nThis allowed us to repay short-term borrowings used to fund the ADS acquisition at close.\n2021 cash interest savings are expected to be more than $90 million.\nFourth quarter total debt-to-EBITDA of 3.19 times and forecasted leverage ratios are both well within the financial covenants of our revolving credit facilities.\nWe are committed to returning to our long-term targeted range of two and a half to three times total debt-to-EBITDA during 2021.\nOur balance sheet and liquidity remain strong, and we are well positioned to continue our practices of sound investment and strong shareholder returns.\nMoving to our 2021 outlook.\nAs John mentioned, we anticipate 10.75% to 11.25% revenue growth in the year ahead with solid organic growth in the collection and disposal business of between four and four and a half percent.\nThis underpins our 2021 operating EBITDA guidance of $4.75 million and $4.9 million.\nWe expect this strong earnings growth to drive free cash flow of between $2.25 billion and $2.35 billion.\nCapital expenditures are expected to be between $1.78 billion and $1.88 billion in 2021.\nExcluding about $90 million of capital planned to support the ADS integration, this expectation is in line with our long-term capital spend as a percentage of revenue target of nine and a half to 10 and a half percent even while we step up our investments in CSD.\nAs Jim mentioned, we also see potential incremental investment opportunities in our recycling and renewable energy businesses, both of which aid in our sustainability efforts and generate strong returns.\nAs we've now seen improved returns in our state-of-the-art MRFs, we are taking plans to deploy the latest technology and additional MRFs in our network and moving those forward.\nWe're also planning to invest in more renewable energy plants at our landfills.\nThis investment extends our ability to close the loop between our renewable energy plant and our CNG fleet and does so with very strong economic returns for the company.\nWe remain committed to a capital allocation plan that maximizes long-term value and total shareholder returns.\nAs announced in December, we are pleased to be increasing our planned quarterly dividend for the 18th consecutive year.\nWe expect our dividend payments to be about $975 million in 2021.\nGiven our focus on the ADS integration, we expect tuck-in acquisitions to be on the lower end of our typical range of $100 million to $200 million.\nWith more than $1 billion remaining from our free cash flow guidance, we plan to allocate that to a combination of debt repayment, share repurchases and the high-return, sustainability-focused, capital investment opportunities I described earlier.\nWe are stronger than we were a year ago, and we're looking forward to a better 2021.\n", "role": "user" }, { "content": "total 2021 co revenue growth is expected to be between 10.75% and 11.25%.\nadjusted operating ebitda is expected to be between $4.75 and $4.9 billion for full year 2021.\nfy 2021 capital expenditures are expected to be in range of $1.78 to $1.88 billion.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: A couple of items before we get started.\nLet me begin by saying that we hope you and your families are healthy and that each of you have found a way to better connect with those you love.\nThe world has changed at a remarkable pace since our Q4 earnings call, and we have a lot of topics to get everyone up to speed on with regard to the current environment, the state of our strong liquidity position, current customer sentiment and our supply chain stability.\nI'd also like to offer some thoughts and perspective on the company's performance through the last recession in the 2008 to 2009 time frame and why we expect this experience to be very different.\nHowever, before we get into those details, I'd like to start by sharing the steps we're taking to safeguard the health, wellness and safety of our people.\nAs we are in essential central business, we have continued to operate from the onset of this pandemic.\nWabash products and services enable our customers to transform critical goods, whether it's tank trailers hauling feedstocks, the pharmaceutical processors, refrigerated trailers transporting fresh food to groceries or our truck bodies completing the last leg of a journey in delivering goods to the home.\nWe've been part of assuring that vital supplies and basic needs have been met, which has allowed people to stay home more comfortably and social distance more effectively.\nWe've initiated a companywide business continuity effort that has been helping us navigate through this extraordinary time with agility and speed.\nIn addition, we've made organizational changes throughout our company to facilitate bringing fast and deliberate decisions to action as we act on and within the business to best manage this dynamic landscape.\nWe have made frequent, candid and empathetic communication with all of our employees, customers and suppliers, a top priority, as we put plans in place around the current and anticipated disruption to the economy.\nOur supply chain and general work practices, as well as work to proactively manage the situation.\nWe have adopted and implemented best practices gathered by the World Health Organization, Centers for Disease Control and other respected sources of scientific fact to safeguard our people and our workplaces.\nIn addition, we have been in close contact with the states and municipalities where we operate to assure we are in alignment and supportive of local measures.\nIn our manufacturing facilities and offices, we've implemented working under standard social distancing protocols as a process that we need to embrace in the event that the standard of care must be in place for longer than any of us would like to imagine.\nWe are implementing smart, effective and risk-based control measures that are sustainable and productive, some of which are facility changes to reshape the physical manufacturing and office environments, wide reaching use of work from home or telecommuting tools, use of employee symptom prescreening tools, modification of common areas such as break rooms, cafeterias and other employee gathering areas, physical barriers, proper and effective use of personal protective equipment and administrative procedures such as enhanced/modified travel protocols and visitor procedures.\nI've been extremely proud of how our employees have reacted to and embraced the changes that allowed us to adapt our business to the current environment.\nEssential business or not, people are in different places in regard to their home situation, personal health, the health of those around them, as well as their own respective fear and anxiety regarding the risk in contracting this virus.\nBy and large, our people have been responsible, open-minded and supportive of our efforts to remain open and constructive during the past 60 days.\nOur culture is what makes it special to be part of Wabash National, and I am always humbled by it.\nLet's move on to an update on the customer and supplier landscape.\nAs an essential business, we've been able to maintain business continuity with our modifications in place.\nHowever, we have not been immune to supply related disruptions caused by intermittent COVID-related issues, as well as state government pandemic response actions.\nSupplier impacts have been mitigated by agile supply chain actions taken as a result of changes made to manage the last three years of peak product consumption, supplier capacity limitations and tariff-related impacts and speaks to the sustainability of those supply chain actions.\nWe have also managed through supply chain issues by holding increased inventory at some at-risk inputs identified as part of our supplier risk management process.\nAn area of risk that remains that we're watching is in regard to truck chassis in support of our truck body manufacturing process.\nAll major producers of truck chassis have implemented hard and relatively extended shutdowns in response to the COVID crisis.\nWhile we may expect chassis production to reopen in the near future, the full impact of the supply chain is still being worked through.\nOverall, our supply base has weathered the storm well.\nAnd at this time, we do not see significant liquidity or solvency risk within our supply base as a result of shutdowns or reduced market demand.\nIn terms of our customers, they've done an admirable job keeping the flow of essential goods moving in a challenging environment.\nGenerally, they've gone from extremely busy as consumers stockpiled prior to stay-at-home orders to experiencing a considerable market softening with nonessential business closures.\nThey are now gearing up to handle increased volumes as states begin to open up again.\nWhile customers are managing their capital outlays closely at the moment, I think there is also an appreciation for wanting to maintain average equipment ages at reasonable levels to ensure efficiency, attract driver talent and avoid a situation down the road that we saw in 2018 and '19, where some customers could not get equipment as they manage their capital needs.\nWe are also finding, as we expected, customers within our strategically managed customer portfolio have been relatively resilient as compared to their peers.\nWe can observe that in their Q1 earnings, internal pandemic response efforts and through our overall backlog stability.\nMoving to Wabash's financial results for the quarter, I'd like to split my comments between two distinct phases, which is January and February together and March specifically.\nThe first two months of the quarter were relatively in line with our expectations as our operating cadence was certainly similar to normal historical performance during these months.\nSpecifically for Commercial Trailer Products, March tends to be the most significant month from a revenue and income perspective during the first quarter.\nAnd just as a quick refresher on revenue recognition, we recognize revenue when products move off our lot.\nIn the case of trailers, pickups are typically heavy in March, a period this year that that coincided with carriers being busy as freight activity received an unusual boost from pre-shutdown purchase behavior.\nSo even though production was in line with our expectations, customer pickups were not.\nThis resulted in a revenue shortfall for Commercial Trailer Products during the first quarter.\nAs we discussed on our last earnings call, Final Mile Products was expected to see an operating loss during the first quarter due to weaker-than-anticipated customer pickups.\nCoupled with the initial impact on operations of COVID-19, the loss in the quarter exceeded our initial expectations.\nDiversified Products' quarterly performance was only lightly impacted by COVID-19-related reduction or customer complications.\nAs such, revenue and operating income were near our expectations for the quarter.\nLet's move on to customer orders and backlog.\nAs reports have shown, backlogs have come down throughout the industry as production has outpaced new orders since year-end 2019.\nWabash National's backlog ended the first quarter at approximately $1 billion after registering $1.1 billion at the end of 2019.\nThis is much less than the 20% decline that is seen in the broader industry over the same time period.\nWe feel very good about these industry figures as they continue to imply our share position.\nWe have previously mentioned we continue to believe that the customer conditioning that our portfolio executed over the past decade has and will continue to dampen the level of volatility that we've historically seen within our Commercial Trailer Products reporting segment.\nI will now move on to broader actions taken and look to the future.\nAlong with the well-being of our employees, we are focused on protecting the financial well-being of our company during these extraordinary times.\nWe have taken rapid action to rightsize our cost structure for the current environment.\nUnderstand that Wabash National has really been reacting to the pandemic in only the last 60 days, and those actions that we take will be seen in future periods.\nWe have eliminated essentially all travel, implemented a freeze on all nonessential spending across the company, only moving ahead on operating and capital spending that is viewed as critical and customer supportive.\nWe have ceased all hiring, cut expenses on outside resources, implemented furloughs and headcount reductions.\nIt is always difficult to part with team members who have devoted themselves to the betterment of our organization, but is our obligation as stewards of the company to ensure not only its near-term liquidity but also best position the company for overall stability, as well as the creation of longer-term customer and shareholder value.\nWe recognize that this is a period of shared sacrifice.\nAnd as such, myself and my team have taken voluntary salary reductions.\nAdditionally, variable compensation for salaried employees will be reduced and potentially eliminated if we do not meet targeted performance metrics that were set out at the beginning of the year.\nLooking ahead, we have well-developed contingency plans to reduce spending further, if necessary, based on further deterioration of product or macroeconomic market conditions.\nIn terms of how we're planning to operate in the near future, first and foremost, we will safeguard our people and our communities.\nWe will then focus on serving our customers in the premium manner they deserve.\nWhile assuring the previous mentioned priorities, we will work to produce as effectively and efficiently as possible.\nWe're in a very dynamic period of change and evaluation of how best to go forward balancing customer responsiveness now with efficient operations while looking to understand future operating needs.\nFrom a manufacturing perspective, furloughs are one tool that we have already used and will continue to evaluate to allow us to produce efficiently while up and running and then minimize our costs as much as possible during the downtime.\nOur intent is to maximize efficiency while assuring ongoing stability for the customer.\nFinally, I'd like to express my continued confidence in the future.\nWe've been preparing for several years for an eventual downturn in our end markets.\nAnd while no one expected the downturn to look like our world does now, the actions that we have taken to strengthen our balance sheet and ensure excess liquidity have proven extremely important.\nAlthough not all my leadership team was at Wabash National to learn from the company's experience during the Great Recession like I was, the diverse perspectives that we bring from other companies and other sectors have been additive to our approach to managing through this current situation.\nOur board of directors has also been extremely helpful through this time in devoting their expertise to helping us think through our approach to both short-term and longer-term initiatives.\nWe are fortunate that all levels of our organization, this is not our folks' first time at the dance, and our collective experience in managing through a market downturn, regardless of cause, is deep.\nWe expect to show our improved financial performance through the cycle that Wabash National is a more resilient company than we've ever been in the past.\nWabash National has enjoyed a number one or number two position in the vast majority of our markets, and we intend to leverage this crisis to further distance ourselves from our competition.\nThis crisis has afforded us the opportunity to move faster with organizational changes that were already under way, which we believe will allow us to increase our level of intimacy with our customers and drive an accelerated pace of customer-focused innovation that further differentiate our products in the marketplace.\nWe look forward to sharing those with you on future calls.\nIn closing, our focus right now is on navigating the impact of coronavirus.\nI'm confident that we're doing the right things to protect the health and safety of our associates, to continue serving our customers in this critical time and to play our part in supporting the transportation sector.\nWhile the economic impact of COVID-19 will be severe, Wabash National has been through difficult times before, and we have learned lessons from prior cycles that we have embraced to make us stronger and more agile heading into this one.\nFinally, our resilient culture and strong balance sheet provide us with the opportunity to emerge as a stronger company as we have continued to execute our strategic plan throughout this crisis.\nAs Brett mentioned, we feel that we're better positioned than at any point in our company's history to not only absorb a recession but also to use this period to set ourselves up to perform on the other side.\nBut first, beginning on Slide 4, I'd like to briefly give some color on our first-quarter financial results.\nOn a consolidated basis, first-quarter revenue was $387 million, with consolidated new trailer shipments of approximately 9,150 units during the quarter.\nAs Brent mentioned, customer pickups of equipment were below our initial expectations for the quarter, leading to revenue also coming in below expectations.\nFirst-quarter gross margin was 9.5% of sales, while operating income came in a loss of $110 million due to noncash goodwill impairment charges.\nOperating income on a non-GAAP adjusted basis was a loss of $2.9 million.\nGiven the uncertainty of the current environment, we recorded noncash goodwill impairment charges totaling $107 million relating to the acquisitions of the Walker Group and Supreme Industries.\nBrent and I would like to reinforce in the strongest terms possible that our Final Mile business remains an exciting opportunity and a growth platform that we intend to leverage in the short, medium and long term.\nThe progress we've made to recapture share, combined with Wabash's technology offerings, will continue to resonate in the marketplace, and we continue to work diligently on the operating performance within this business to ensure profitable growth.\nFinally, for the quarter, GAAP net income was a loss of $106.6 million or negative $2.01 per diluted share.\nOn a non-GAAP adjusted basis, net income was a loss of $2.3 million or negative $0.04 per share.\nMoving on to Slide 5.\nI'd like to review our cost structure and give you a little more detail about how we've made quick adjustments from a cost perspective.\nIn rough numbers, it's fair to say that our cost structure is highly variable with material cost of 60% and direct labor equating to another 10-plus percent.\nSo in total, I'd like to think of our total cost base is approximately 75% to 80% variable.\nWe have moved quickly to ensure that our variable costs are coming down in line with volumes.\nAdditionally, we have temporarily but significantly reduced fixed costs in the second quarter by executing a two-week, companywide furlough that incorporated 90% of all salaried employees.\nWe plan to handle the near-term market disruptions with furloughs and downtime as we continue to work to permanently lower cost.\nWe will give an update on some of these plans at the second-quarter call.\nWe are also heavily scrutinizing and anticipating cutting most discretionary, nonessential expenditures in the short term.\nIn addition, executive officers took voluntary salary cuts, as Brent mentioned.\nWe have a significant amount of our incentive-based pay that is tied to financial performance metrics, like operating income and free cash flow.\nAnd these act as a relief by significantly reducing depending on financial performance.\nI'd like to stress that we have contingency plans for multiple scenarios.\nAnd while the actions we've walked through are important steps in reducing costs, we have additional levers that we're ready and able to pull should the situation dictate.\nGiven that we're all managing through unprecedented uncertainty and conditions, that can change at a moment's notice, we have decided the time is not right to provide detailed forward guidance.\nHowever, under current circumstances, we expect free cash flow to be positive in 2020.\nMoving on to our balance sheet.\nOur liquidity or cash plus available borrowings as of March 31 was $277 million with $155 million of cash and $122 million of availability on our revolving credit facility.\nIn March of this year, we proactively drew $45 million from the revolver to bolster our cash balance.\nOur modeling suggested a $45 million revolver pool covered the worst case we could envision, which is to say, we do not expect to tap our revolving credit facility again in 2020, but it is further liquidity that remains available to us.\nMoving on to capital allocation on Slide 6.\nRegarding capital expenditures, we are again heavily scrutinizing spend and only proceeding with projects that are critical to the maintenance of our existing operations.\nWe are targeting a 50% reduction from our previous guidance to approximately $20 million in spend and stand ready to reduce further as required.\nWe expect to free up cash through working capital reductions, and that, coupled with our quick and decisive cost cuts, should allow us to deliver positive free cash flow even in this difficult operating environment.\nWith regard to capital allocation during the first quarter, we invested $6.3 million in capital projects, paid our quarterly dividend of $4.5 million and repurchased $8.9 million of shares prior to the pandemic.\nFor the near term, our approach to capital allocation centers around preservation of cash.\nWe will carefully control capital expenditures while prioritizing our dividend and assessing opportunities for debt reduction.\nTurning to our debt structure, our nearest maturity is not until March of 2022 when our term loan matures.\nThe balance stands at just $135 million, and we expect to look to refinance this instrument in the next year.\nWe are covenant-light with no financial covenants on our term loan or high-yield bonds.\nThe only potential financial covenant in place is on our revolving credit facility, which dictates a minimum fixed charge coverage ratio of one to one when excess availability on the revolver is less than 10% of the total facility.\nWe obviously do not expect this covenant to come into play.\nWe've been in close contact with our bank group over the past couple of months.\nThey have been very helpful in advising on the trends that they see developing in the debt markets, and we have confidence in continuing with the partnerships that we have in place.\nNow finally on Slide 7, I think it might be helpful to spend a moment comparing where the company stands now compared to prior cycles.\nWith the uniquely severe nature of this crisis, it seems like the 2008 to 2009 time period will provide the most relevant comparison.\nWhile we know some of you who have followed Wabash for more than a decade, I think it would be useful to discuss some of the challenges the company faced during the last cycle and why we don't expect a repeat this time.\nFirst and foremost, in early 2008, the company did not have the cash or liquidity balance that it enjoys today.\nThis lack of liquidity, combined with limited access to fresh capital during the financial crisis, forced the companies to take drastic steps that we will not repeat.\nI think it's fair to say that experience has left a scar tissue around the organization, and those are mistakes that we will not repeat.\nAnd clearly, our present liquidity situation speaks to that.\nBeyond our presently stronger liquidity situation, this company has also grown and diversified our product and end market exposure over the last decade.\nWe have gone from primarily a producer of dry vans to a holistic provider of transportation equipment and expanding our portfolio to include tank trailers, truck bodies and expanding our customer and end market exposure accordingly.\nIn summary, we feel that we're well-positioned to navigate the unprecedented time.\nOur cost structure is highly variable, and we've taken quick actions to reduce fixed costs.\nWe have excess liquidity, no financial covenants at present borrowing levels and a patient debt structure.\nIt's absolutely our intention to continue furthering the progress of our strategic plan and prepare ourselves to be stronger as market conditions recover.\n", "role": "user" }, { "content": "wabash national q1 non-gaap loss per share $0.04.\nq1 non-gaap loss per share $0.04.\nq1 gaap loss per share $2.01.\nq1 sales $387 million versus refinitiv ibes estimate of $418.5 million.\ntotal company backlog ending march 2020 was about $1.0 billion compared to backlog of $1.1 billion ending december 2019.\nliquidity as of end of q1 was $277 million with cash of $155 million and available borrowings of $122 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: A couple of items before we get started.\nI'll now hand it off to Brent for his highlights.\nI'd like to start by mentioning how pleased we were with our first quarter results.\nThe broader operating environment has been unusual to say the least.\nBut we'll touch more on that in a minute.\nI'd like to highlight the dedication and intense focus our team demonstrated in delivering solid quarterly performance.\nFirst quarter operating profit and earnings per share came in above our expectations as we executed on the manufacturing side, while continuing to tightly manage our overall cost structure.\nIndicators for our core transportation, logistics and distribution markets continue to be remarkably strong.\nRecord spot rates and expectations for continued increases in contract rates are indicative of a robust consumer demand and capital spending paired with already strained industry capacity.\nAll types of transportation solutions are in high demand as we begin 2021, and I'll call it our final mile truck body business because of core correction in FMP's markets during 2020 was more severe than we would have expected during non-pandemic circumstances, and we're optimistic that the bounce back is going to be summerly strong.\nIndications from our large leasing customers is that demand has returned from small and medium-sized business segments of the market that they serve so effectively.\nTheir rental businesses have also benefited as fleets scramble for equipment as well.\nWe believe these trends have staying power as the pandemic has clearly accelerated changes that were already under way in transportation, logistics and distribution, and we feel good about the demand environment as we look forward to this year and beyond.\nWe'll now talk about the labor and supply chain situation.\nRobust industrial and consumer demand across the broader manufacturing landscape has created imbalances throughout an array of manufacturing supply chains, leading to aggressive increases in the price of materials as well as further compounding labor availability across the country.\nI'm not aware of any manufacturer that's been immune to these issues.\nAnd although we have introduced effective countermeasures to mitigate the impact within Wabash, we also feel the result in headwinds rising from those labor availability and material cost increases.\nHiring remains a challenge.\nAnd after a relatively successful fourth quarter, our intake of new team members was less than desired during the first quarter and reflected of the general reality of the U.S., labor market.\nWe will continue to pursue additional manufacturing talent throughout 2021 as we work to meet our 2021 customer demand and prepare for our 2022 market reality.\nAnd our guidance is the reality that integrating additional manufacturing talent impacts overall productivity in the near term.\nThis is just a simple reality of the situation.\nThe other reality is that the bulk of this impact will not carry over into 2022.\nIt is fair to say that supply chains were already stressed heading into this year, and we had some unique Quarter one weather events to say the least, that compounded supply chain issues and heavy winter storms impacted production; both with ourselves and our suppliers.\nThis did impact our final mile manufacturing in Texas, disrupted basic flow of commerce for an extended period of time and significantly impacted chemical related production across many industries; all adding to the stressed supply chain, which we feel in terms of increased disruption and further increases in material costs.\nThe cost of commodities and semi-finish components has reacted strongly to the current manufacturing environment, constraints in basic feedstock and lack of labor availability, already elevating -- already elevated heading into the year, cost of un-hedged inputs have continued to rise which is why despite our earnings per share beat in Q1, we have maintained our prior earnings per share guidance.\nAs I mentioned when referencing market conditions, our products remain high in demand with our customers.\nIn particular, our molded structural composite technology is entering a new phase of market adoption, and we're moving into our next phase of modest MSC, molded structural composite technology capacity additions for 2022.\nAs we mentioned on a prior call, continued high demand for our current dry and refrigerated products, coupled with product innovation opportunities being brought forward by the structural changes made to our product innovation and technology team means that we are in need of manufacturing capacity to capture the full value of innovation in these traditional product markets.\nIn support, we will be committing new and additional resources into our product development and launch team to further scale and accelerate the introduction of new engineered solutions and our entry into new product and customer markets.\nAs we have now organized our commercial organization around our dynamic customer base, we're in the early stages of creating the appropriate conditions to leverage new technologies across our industry, leading first the final mile product portfolio to extend our competitive advantage with key customers.\nWith this evolving landscape, we see real opportunity to grow in our markets and grow the shared value created with our employees, our customers and our shareholders.\nGiven the opportunity ahead of us, being facilitated by strategic changes to our organizational structure and the ability to leverage flexible manufacturing across product lines, I can think of few opportunities more beneficial to our long-term shareholders than reinvesting in our business to support our future organic growth.\nCase in point is our backlog through the first quarter.\nIt's typical for Q1 backlog to decline sequentially after we booked large deals in the fourth quarter of the previous year.\nThis year, new orders get paced with our shipment activity during the quarter as we saw strong demand for our non van business, which, again, is sold out for 2021 and obviously unable to book new orders for the year.\nThis level of demand for diversified products and final mile was expected given our customer conversations heading into the year.\nBut it's always nice to see the committed customer orders come through.\nAs we look to the future, demand for Wabash engineered solutions continues to grow in a manner that requires us to act on our ability to satisfy them.\nAs I previously mentioned, we are maintaining our prior guidance.\nWe are very pleased with how our demand environment has taken shape in 2021 and its extension into 2022 and beyond.\nWe expected labor to be a challenge, and we were not disappointed on that.\nWe remain on track to ramp our total man capacity to enter 2022 in a very strong manner.\nHowever, I would say the rise of material cost has been greater than anything we could have reasonably expected, given that we are in uncharted territory with all-time highs in a number of commodities.\nWhat I'm pleased to see is that we have taken immediate decisive action to recover a large portion of those costs and manage in other ways to mitigate the impact far beyond Wabash's performance of the past.\nAs the world begins to return to something that resembles normalcy, we are optimistic that the labor and supply chain challenges of 2021 will normalize over time and leave us with a less challenging operating environment in 2022, while freight growth remains strong and customer demand continues to be robust.\nWe are, therefore, excited about what the future holds as many of the structural and process-based changes that we've made to our organization and having the intended outcome of synergistically furthering our ability to execute on our strategy.\nOur improved ability to operate and the growing reality of the established vision of enabling our customers to succeed with breakthrough ideas and solutions that help them move everything in the first to final mile is now an active play.\nWe are executing the plan.\nAnd with that, I'll hand it over to Mike for his comments.\nI'd like to start off by giving some color on our first quarter financial results.\nOn a consolidated basis, first quarter revenue was $392 million, with consolidated new trailer shipments of 9670 units during the quarter.\nGross margin was 12% of sales during the quarter, while operating margin came in at nine -- at 2.9%.\nAs Brent mentioned, these margins were somewhat above our expectations for the quarter as a result of continued strong cost control.\nAdditionally, I'd like to reference the 2020 initiatives to lower our cost structure by $20 million, of which $15 million was SG&A.\nBecause after the first quarter, we lose clean SG&A comparisons from last year as furloughs and other temporary cost control measures were implemented beginning in the second quarter of 2020.\nSG&A was lower year-over-year in Q1 by $4.7 million.\nAdditionally, about 25% of our savings initiatives are being realized as reductions in cost of goods sold.\nSo we are pleased that these structural savings are more than holding driving a significant ramp in volumes.\nOperating EBITDA for the first quarter was $26 million or 6.7% of sales.\nFinally, for the quarter, net income was $3.2 million or $0.06 per diluted share.\nFrom a segment perspective, commercial trailer products generated revenue of $248 million and operating income of $20.9 million.\nAverage selling price for new trailers within CTP was roughly $26,000, which represents a 7.5% decrease versus Q1 of 2020 as a result of meaningfully higher mix of pump trailers, where prices tend to be significantly lower than 53-foot driving trailers.\nDiversified Products Group generated $74 million of revenue in the quarter with operating income of $6.1 million and segment EBITDA margin that hit 14.3%; which was the best level since 2016.\nAverage selling price for new trailers within DPG was roughly $72,000, which represents a 4% increase versus Q1 of 2020.\nFinal mile products generated $77 million of revenue as this business ramps to meet stronger market demand.\nFMP experienced an operating loss of $4 million, which was expected in our prior quarterly guidance.\nBecause of FMP's heavy and increasing amortization burden, EBITDA provides a more stable measure of progress and more relevant measure of impact on operating cash generation.\nWe are encouraged that FMP's EBITDA moved back to positive territory during the first quarter with a gain of $621,000 as improved volumes allowed us to better leverage our fixed cost during the quarter.\nWe expect FMP EBITDA generation to improve in the second half of 2021 as the business installs additional capacity to continue meeting customer demand through the on-boarding of new employees.\nYear-to-date operating cash flow was negative $22 million.\nWe invested roughly $4 million via capital expenditures, leaving negative $27 million of free cash flow.\nAlthough our payables widened out considerably, receivables and inventory combined to have a meaningful impact on working capital as we expected during the quarter.\nWe continued to show working capital efficiency in Q1 as part of our One Wabash transformation, and we are well on our way to achieving a capital-efficient ramp in 2021.\nWe continue to target $35 million to $40 million in capital spending for 2021.\nWith regard to our balance sheet, our liquidity or cash plus available borrowings as of March 31 was $337 million of $169 million of cash and $168 million of availability on our revolving credit facility; which is fully untapped.\nFor capital allocation during the first quarter, we utilized $18.2 million to repurchase shares, pay our quarterly dividend of $4.3 million and invested $4.2 million in capital projects.\nFurthermore, in April, we made a voluntary $15 million payment on our term loan.\nOur capital allocation focus continues to prioritize reinvestment in the business through growth capex while also maintaining our dividend and evaluating opportunities for debt reduction and share repurchases.\nMoving on to the outlook for 2021.\nWe expect revenue of approximately $1.95 to $2.05 billion.\nCTP is right back to bumping up against capacity constraints, while FMP is fielding plenty of demand with labor being the primary gating factor.\nSG&A as a percent of revenue is expected to be in the lower six range for the full year, and we remain on track to sustain the reduction in our cost structure by $20 million relative to 2019, with around $15 million of that cost out, residing within SG&A.\nOperating margins are expected to be in the high 3% range at the midpoint.\nTurning to the second quarter.\nWe expect revenue in the range of $450 million to $480 million, up 17% at the midpoint sequentially versus Q1, with new trailer shipments of 10,500 to 11,500 as we look to keep increasing production throughout the year.\nGiven our expectations for operating margins in the low 3% range in Q2, this implies earnings per share in the range of $0.10 to $0.15 for the quarter.\nIn closing, I'm pleased with our results to start the year.\nRamping manufacturing is never easy, and this year certainly comes with unique challenges for ourselves and other manufacturers.\nBut we see it as a great opportunity to scale up and ensure that we're firing on all cylinders as customers increasingly become focused on 2022 and what we expect to be a smoother operating environment that will allow us to return the company revenues to levels approaching what was recorded in 2018 and 2019.\nThe company is just beginning to enter into these exciting times as the structure of our organization is in the early days of achieving its intended purpose of advancing our strategy, which emphasizes organic growth, leveraging our industry-leading first to final mile portfolio.\n", "role": "user" }, { "content": "q1 earnings per share $0.06.\nsees fy sales $1.95 billion to $2.05 billion.\nq1 sales rose 1.3 percent to $392 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Couple of items before we get started.\nI'll now hand it over to Brent for his highlights.\nI'd like to start by mentioning how pleased we were with our second quarter results.\nThe manufacturing environment continues to be challenging for everyone involved, but I feel Wabash National has navigated well through this environment.\nSecond quarter operating profit and earnings per share came in above our expectations as we executed on the manufacturing side, while controlling our cost structure.\nI now want to step back and discuss our ability to execute in this environment.\nWe are witnessing a new and heightened level of collaboration and coordination among our employees as we navigate possibly the most difficult external environment I've seen in my career.\nWith our new organizational structure, our supply chain, manufacturing and sales teams now work across our businesses to disseminate information and direction more effectively and with higher velocity than ever before.\nWe are delighted, but not surprised, because it was our intent to drive this level of management system improvement when we realigned our organization to drive functional excellence as well as a higher level of focus on our customers to expand our entire portfolio of First to Final Mile.\nSpeaking of our portfolio, I'd also like to congratulate our team on successfully divesting the Extract technology business at the end of the second quarter.\nWabash's acquisition of Walker Group Holdings in 2012 brought a handful of businesses into our portfolio, most notably tank trailers and process systems.\nExtract was also included in that deal and as a leading provider of containment and aseptic systems for the pharmaceutical, healthcare, biotech and chemical markets.\nAlthough Extract is an excellent business, our strategy is now squarely focused on the transportation, logistics and distribution industries.\nAs such, our best owner review concluded that we should look to monetize the asset and we believe Extract is very well situated for the future under the new ownership of Dietrich Engineering Consultants.\nAlso on the strategy for us, I'm very pleased that Dustin Smith has accepted the position of Chief Strategy Officer.\nThis is a new role for Wabash that is designed to accelerate our pursuit of innovative technologies, expand and increase the velocity of our product development activities as we identify and investigate emerging market opportunities within the changing landscape of transportation, logistics and distribution.\nDustin has been with Wabash National for 14 years and brings with him broad leadership experience across the areas of finance, manufacturing and supply chain from roles at Wabash and Ford Motor Company.\nMost of all he brings with him the trust of this leadership team and the rank and file of this organization.\nDustin's primary responsibilities will be two-folds.\nFirstly, he will work directly with Mike Pettit and I, as we generally chart [Phonetic] an evolving course to drive profitable growth for our shareholders over the next five years.\nSecond, he will drive the deployment of current strategic growth initiatives including cold chain and the portfolio expansion of our molded structural composite technology, leveraging the impact of e-commerce and overall logistics disruption for growth and profitable expansion with an upfitting, parts and services.\nAgain, this type of role would not have been possible in the context of prior organizational structure, but given our One Wabash approach, this will now can prioritize high-impact opportunities and marshal resources across the organization to execute our initiatives, achieve our vision and live our purpose of changing how the world reaches you.\nNow let's focus on market conditions.\nOur market indicators continue to show the underpinnings of a very strong setup for ongoing freight activity.\nElevated retail sales and depressed business inventories are prompting increased manufacturing production, which is driving strong freight activities within a dislocated freight landscape.\nAs a result, those spot and contract rates reside at very favorable levels for our customers and seem likely to remain well into 2022.\nHigh remained a challenge in seemingly all sectors of the economy and our experience has been no different.\nThat has enabled to gain in 2021 this perseverance and we continue to make improvement and our progress to increase overall labor capacity in a very challenging environment.\nMaterial costs and supply chain performance remained headwinds, but we are handling those in a manner that is considerably better coordinated than in past cycles due to our ability to see the field much better and react in a more deliberate, agile and time-sensitive manner.\nWe are also having the difficult but necessary conversations with our customers about recovering cost increases throughout our backlog and we continue to work to mitigate the impact of cost increases in other ways.\nAs I mentioned, on the supply chain side, we are working as one team to navigate the uneven landscape and are resulted in better than expected, given the amount of volatility in our diverse supply base.\nAll types of transportation solutions are in high demand for 2021 and labor and supply chain constraints occurring now has only heightened desire for customers to have demand planning conversations that include 2022 and beyond.\nThat said, our backlog for 2022 has not yet fully been opened.\nWe remain diligently focused on managing demand in a manner that reflects the reality of the challenges of material cost and labor uncertainty and assuring repriced products in a manner that reflects that environment.\nThat includes the reality that forthcoming demand will likely exceed the industries and our near-term capacity constraints.\nWe'll talk more about that in a minute.\nMoving on to backlog.\nIt's very typical for our order backlog declined sequentially from Q1 to Q2 as we fulfill customer orders and gear up for large deals for van trailers later in the year.\nBecause of backlog strength in our DPG and FMP segments, our order book saw the less than normal seasonality, it would indicate an overall backlog remained up 77% year-over-year.\nMoving on to our outlook, we are maintaining our earnings per share guide.\nRaw material cost increases have been greater than anticipated.\nOur financial performance in Q2 was enough to offset those material cost headwinds.\nAs such, we are leaving our prior guidance essentially intact.\nBecause of the Extract divestiture, we will address our outlook to reflect the absence of that business.\nWe remain on track to ramp our capacity utilization to enter 2022 in a strong manner.\nI am now going to shift the conversation to discuss how we'll better meet the implicit demand for our products and services into the future.\nAs we think about the past, present and future of our manufacturing footprint, we have found ourselves that demand has exceeded physical capacity for the production of dry vans.\nAs a result, we have asked a lot of our workforce in 2018 and 2019 to work significant over time in many weekends, so that we could fulfill as much customer demand as possible and even then we'll have customers wanting.\nProfitable demand for our dry vans has continued to grow over the past decade as we have strengthened our indirect channel, utilized innovative materials to create by far the lightest dry van in the industry and now reorganized our salesforce to increase the effectiveness of our commercial efforts.\nCouple that with a changing logistics landscape, knowing that our customers are uniquely positioned to grow capacity and 10 years of continued growth and overall trailer demand and it's time for Wabash National to move to increase our ability to capitalize on this profitable opportunity.\nTherefore, we are announcing the transition of existing manufacturing floor space to produce dry vans beginning in 2023 and we expect to be able to produce incremental 10,000 dry vans annually.\nTo put these numbers in context that is roughly a 20% increase in our dry van capacity, but only a 5% increase for the industry.\nThis is obviously a small change for the industry, but a considerable boost to Wabash National's ability to serve our direct customers and supply our indirect channel.\nTo facilitate this move, we will be ramping down manufacturing of our conventional refrigerated van product and converting that floor space to dry van production over the next 18 months.\nThe transition of this existing floor space and this existing highly skilled labor force create significant and sustainable financial benefit for Wabash as it provides both top line growth and accretive margin potential.\nWhen considering the strategic impact of our cold chain growth targets, this aligns with our intent to transition our traditional conventional refrigerated product technology, the far superior and industry leading Molded Structural Composite technology coupled with a more efficient and innovative future refrigerated van production capability.\nMolded structural composite technology refrigerated vans have over 10 million miles on the road and show better thermal efficiency combined with its lighter weight design.\nWith a differentiated approach to refrigerated trailers that addresses our customers growing needs for sustainability and operating efficiency, we expect to follow up with an announcement of additional molded structural composite refrigerated van assembly capacity in the coming quarters.\nWhen we started our journey to disrupt the refrigerated industry several years ago, we did so with a specific intent to jump over the competition with superior technology.\nWe have now reached the point where conventional reefer design is the past and we are all in, in commercializing the future.\nLet me close my portion of the call by saying that I'm extremely proud of our team's performance through these unusual times.\nIn 2020, we posted the best cycle to trough performance in the company's history by generating over $100 million of free cash flow.\nWe now continue to raise the bar on our performance at a different phase of the cycle as we manage through unprecedented labor and supply chain environments, while generating strong operating income.\nThis very obvious improvement doesn't happen by trying harder.\nThese improvements are the result of a refreshed strategy and an organization has now structured to execute that strategy.\nAll of these exciting changes have happened at a precisely the right time as we look forward to continuing this cadence of improved execution paired with the ability to move more thoroughly and more dynamically serving customers in the coming years.\nWith that, I'll hand it over to Mike for his comments.\nI'd like to start off by giving you some additional color on our second quarter financial results.\nOn a consolidated basis, second quarter revenue was $449 million with consolidated new trailer shipments of approximately 11,590 units during the quarter.\nGross margin was 12.4% of sales during the quarter.\nOperating margin came in at 5% or 4.6% on a non-GAAP adjusted basis.\nAs Brent mentioned, these margins were somewhat above our expectations for the quarter as a result of continued strong cost control.\nOperating EBITDA for the second quarter was $35 million or 7.8% of sales.\nThis is an EBITDA margin that is consistent with margins generated prior to the pandemic.\nFinally for the quarter, net income was $12.3 million or $0.24 per diluted share.\nOn a non-GAAP adjusted basis, earnings per share was $0.21.\nFrom a segment perspective, Commercial Trailer Products generated revenues of $296 million and operating income of $32.3 million.\nDiversified Products Group generated $77 million of revenue in the quarter with operating income of $5.8 million or $4 million on a non-GAAP adjusted basis when we take out the gain on the sale of Extract Technology.\nFinal Mile products generated $81 million of revenue during the second quarter.\nCustomer demand remains considerably stronger than industry production would show.\nWhile labor challenges have been part for the course in this business, supply disruptions have been greater as Chassis OEMs have taken unplanned downtime to adjust our capacity to chip shortages and we would expect these chip related chassis headwinds to continue for the rest of 2021.\nFMP experienced an operating loss of $3.2 million but a gain of $1.3 million in EBITDA.\nbecause of FMPs heavy and increasing amortization burden, EBITDA provides a more stable measure of progress and a more relevant measure of impact on cash generation.\nOperating cash flow during the second quarter was $9.3 million.\nwe invested roughly $6.9 million via capital expenditures, leaving $2.4 million of free cash flow.\nworking capital increased during the quarter primarily from inventory as volumes continue to ramp, partially offset by strong customer receivables.\nWe remain on a path of achieving a capital-efficient ramp during the remainder of 2021 and we would expect to be free cash flow positive in the second half of the year.\nBecause of our actions to reach [Phonetic] our existing capacity to support expanded dry van production.\nWe are increasing our capex guidance by $20 million to an anticipated range of $55 million to $60 million in capital spending for 2021.\nWith regard to our balance sheet, our liquidity our cash plus available borrowings, as of June 30, was $304 million with $136 million of cash, cash equivalents and restricted cash.\nAnd $168 million of availability on our revolving credit facility, which is fully untapped.\nAs Brent mentioned, we completed the sale of Extract Technology at the end of the second quarter.\nIn 2020, we announced that we'll be reviewing our portfolio of businesses for fit.\nSince that time, we have divested Extract, Beall tank trailers and sold our last remaining Wabash branch location.\nThese actions come after the divestiture in 2019 at Garsite, an aviation refueling business.\nThrough these non-core asset sales, we have raised a total of approximately $40 million and also structured our portfolio in a manner that aligns with our strategy for growth.\nWe feel great about the businesses that now comprise Wabash National and our corporate development focus is ready to flip from divestitures to building a pipeline of potential acquisitions.\nThe second quarter was a very active on for capital allocation as we used $30 million for debt reduction.\n$22 million to repurchase shares, $7 million for capital projects and $4 million to fund our quarterly dividend and we still ended the quarter with over $134 million of cash on the balance sheet and net debt leverage of only 2.6 times.\nOur capital allocation focus continue to prioritize reinvestment in the business through growth capex, while also maintaining our dividend and evaluate opportunities for debt reduction, share repurchases and M&A.\nMoving on to the outlook for 2021, we expect revenue of approximately $1.9 billion to $2 billion.\nSG&A as percent of revenue is expected to be in the low 6% range for the full year.\nAdjusted operating margins are expected to be in the high 3% range at the midpoint, which resulted in an earnings per share midpoint of $0.72 with a range of $0.67 to $0.77.\nAgain the updates are earnings per share midpoint is a result of the divestiture of Extract Technology.\nTurning to the third quarter, we expect revenue in the range of $510 million to $540 million, up 17% at the midpoint sequentially versus Q2 with new trailer shipments of 12,500 to 13,500 as we look to continue increasing production throughout the year.\nGiven our material cost headwinds will intensify as we move through the remainder of this year, we expect operating margins in the high 3% range in Q3.\nThis implied Q3 earnings per share in a similar range to Q2.\nIn closing, I'm very pleased with our performance for the first half of the year.\nAs is evident from our financial results, the company's execution has been quicker and more decisive, which has been enabled by our new organizational structure.\nThis new structure has proven integral and helping us capitalize on near-term opportunities and we believe it will continue to prove effective as we execute on the medium-term opportunities presented by strong customer demand, as well as the longer-term opportunities in our strategy, which emphasizes organic growth leveraging Wabash as industry leading First to Final Mile portfolio.\nExpanding our dry van production capacity is an exciting investment that underpins our First to Final Mile strategy and will further enable performance and will strengthen our push toward 8% operating margin, which is a target we continue to expect to achieve by 2023.\n", "role": "user" }, { "content": "wabash national q2 gaap earnings per share $0.24.\nq2 adjusted non-gaap earnings per share $0.21.\nq2 gaap earnings per share $0.24.\nquarter-end backlog of $1.3 billion, up 77% yoy.\nquarter end backlog of $1.3 billion up 77% yoy.\n2021 earnings per share outlook maintained, updated for divestiture impact at $0.72 per diluted share; range of $0.67 to $0.77.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: A couple of items before we get started.\nI'll now hand it off to Brent.\nWe have a number of exciting updates to share with you.\nUpon becoming CEO, our team began this journey of repositioning Wabash as an innovation leader of engineered solutions for the transportation, logistics and distribution markets with a unifying purpose of changing how the world reaches you.\nWe have made deliberate organizational and structural changes over the last few years to further enable and accelerate the deployment of our strategy.\nFirst, we built a portfolio of first to final mile equipment which positions us to have the most complete set of solutions for our customers as they respond to changing logistics environments, primarily driven by the growth of e-commerce.\nSecond, we implemented the Wabash Management System, a lean-based and enterprise-focused process development effort that drives breakthrough and scalable business capabilities.\nLastly, we introduced the One Wabash approach to focus all aspects of our business, our processes and our people to create and deliver value to our customers.\nThese significant advances to our company's structure and culture have been made with the goal of enhancing collaboration, innovation and customer centricity across the enterprise.\nWe now go to market as One Wabash which provides our customers with an improved experience as they continue to increase purchasing from across our product and service portfolio.\nOur innovation, product development and manufacturing capabilities from across all businesses are overseen by 1 centralized team which enables our talent to focus on solving the most pressing needs for our customers, focusing on deployment of resources, while driving the highest levels of innovation within our markets.\nThis structure enables the Wabash Management System, the foundation of how we do things to drive connected thinking, problem solving and alignment so that we can create breakthroughs at an increasingly rapid pace.\nThese changes have not only enabled a better customer experience but also allowed Wabash to be more productive as evidenced by our $20 million of structural cost efficiencies achieved during 2020.\nThis enhanced platform for growth positions Wabash to seize the opportunities created by an increasingly disruptive logistics landscape.\nThe Wabash Management System has also enabled the company to focus on the growing opportunities within the transportation, logistics and distribution markets.\nOur team has worked hard to align our portfolio of businesses with a new strategy.\nAnd as a result, we have adjusted 3 noncore businesses: Garsite, Beall and Extract.\nThese decisions all follow the principles of our system such as assuring resources are focused on deployment of the strategy, powerful redeployment of capital and focus is critical to our success.\nThe outstanding efforts of our extended leadership team and all of our employees to the accept and drive chain has strategically repositioned Wabash to execute the next phase of our growth strategy.\nCold Chain, the growth in e-commerce and parts and services offer numerous secular growth opportunities within the transportation, logistics and distribution markets and we intend to leverage our people, our technologies and our existing and growing capabilities in order to foster profitable growth in these attractive markets.\nOur Cold Chain initiative leverages new technologies to add value within the rapidly growing refrigerated transportation and logistics space.\nThe e-commerce space has been experiencing dynamic growth and our product portfolio is expanding to better serve that market from first to final mile.\nAnd our parts and service platform initiative is one where we are excited to build upon existing revenue streams to target growth of higher margins, more recurrent sales as we deliver to our customers' changing needs.\nWe will deliver on this growth from a market leadership position, while continuing to innovate and deliver industry-leading customer service.\nThe opportunities for profitable growth over the next decade have never been as significant in the company's history and Wabash is positioned to seize this moment.\nThis moment is special; transportation, logistics and distribution markets are going through a momentous transition as they adapt to a compilation of forces.\nWe see a different future reality than our competition in the context of social, technological and logistic changes and we've chosen to go down a substantially different pattern to reshape the industry and pull that future forward for our customers.\nIt is time to be bold and send a message to all of our stakeholders that we choose to take the next step forward in our maturity as a company, as a solution provider and as part of a greater contributor to the sustainability and social awakening of the world.\nThe decision to drop national from our name, while on the surface may seem insignificant, it is, in fact, a powerful change and symbolic for the significant strategic changes that we have made as One Wabash and will continue to make on our growth journey.\nWe are redefining and reimagining our identity with customers, dealers, suppliers, employees and shareholders.\nWabash has become a more dynamic place to work.\nWe are reshaped to grow beyond our traditional markets and we have a visionary mindset and the capacity to prosper in a changing world.\nSo today, we are announcing our name change and in the near future, we will outline our plans to adapt our brand strategy to reflect our vision of the future.\nIn addition to changing our identity, we are changing our segment reporting structure to align with how we operate the business and how we go to market.\nGiven we now have 1 face to the customer for our first to final mile portfolio of equipment, we will now have 2 reportable segments.\nThe first new segment, Transportation Solutions comprises of vans, platforms, tank trailers and truck bodies and accounts for about 90% of our year-to-date sales.\nWe continue to provide disclosure of new trailer unit shipment volumes and we have added disclosure on unit shipment volumes for truck bodies, provide visibility to what we anticipate will be a strong growth trajectory for that business going forward.\nThe second new segment is parts and services, a higher margin, more repeatable business that is poised to benefit from a changing logistics landscape, new and emerging customer needs and the rise of the digital marketplace.\nWhile we currently generate a small portion of our company's total revenue from parts and service businesses, we appreciate the cyclicality dampening effects in the margin uplift that parts and services can create for OEMs. As such, we have shifted significant talent to lead our parts and service team and they are focused on executing aggressive plans that now underpin our growth initiatives in this space, aftermarket parts, repair and maintenance services and upfitting as well as equipment services all present compelling opportunities for revenue growth and margin expansion.\nWe expect parts and services to benefit from our planned capital allocation activities to drive both organic and inorganic growth enabled by significant free cash flow generation by our Transportation Solutions segment.\nWith a mature strategic deployment process as one of our many new capabilities installed under the Wabash Management System, this will be an area of extreme focus and will benefit from our enhanced ability to create scalable and profitable growth in both OEM and aftermarket parts, focused service and update offerings as well as other service offerings.\nOur new segmentation structure reflects our enhanced focus on new growth opportunities as well as aligns how we discuss the business with how we operate the business.\nThis will create enhanced transparency and a more simplified discussion of how and where value is created at Wabash for our employees, our customers and our shareholders.\nI will now discuss our plans of shifting capacity from traditional refrigerated vans to dry vans and the scale growth of our composite refrigerated products which includes mode structural composite technology.\nI'm pleased to report that our progress remains on track for additional dry van production to begin in early 2023.\nAs we discuss these capacity changes with the investment community over the last quarter, I'd like to read those at a few points that I believe are helpful in explaining our rationale for these changes and the forthcoming benefits.\nGoing to market as One Wabash allows a portfolio selling approach that leverages the unrivaled breadth of our products.\nThat capability to meet this new customer demand more fully for our flagship dry van product is tremendously important in supporting our portfolio selling approach.\nAdditionally, our enhanced dry van capacity will allow us to more adequately supply product to our Wabash exclusive and industry-leading dealer network.\nThis added capacity is also necessary to supply logistics market that continues to drive changes in the way trailers are utilized.\nDrop and hook is a strategy carriers use to maximize drivers' time on the road.\nDriver shortages are a persistent problem but have become more severe since 2020 with little clarity on how or when this situation will materially improve.\nOverall, our customers' incremental economics of adding a trailer to a tractor have meaningfully increased and represent a compelling value proposition in the marketplace.\nAdditionally, incremental demand for dry van trailers is being generated by customers that did not consume trailer supply to 10 years ago.\nPrivate fleet and freight brokers are building trailer pools to ensure consistent access to capacity and more effectively leverage our only capacity.\nGiven our efforts to grow dry van production, we have also planned several steps ahead to ensure stability of component supply.\nAs 1 example, our management team has spent time with our supply partners at Hydro, a global leader in aluminum extrusions which have historically been in high demand during times of elevated trailer industry build rates.\nThe Hydro team appreciates the vision that Wabash is working to bring to life and Hydro has agreed to be a key supplier for Wabash over the life of a 10-year supply agreement which is a meaningful development, increasing supply certainty for both our existing and new dry van capacity.\nWhen considering the differentiation facilitated by our industry-leading lightweight panel technology, we believe this capacity expansion creates an incredible long-term opportunity for Wabash.\nWe also remain on track with our plan to scale our innovative molded structural composite technology within refrigerated vans, truck bodies and other transportation logistics and distribution-related products.\nWe believe we have a unique technology and operational capability that has the ability to disrupt the broad Cold Chain product market as well as change operating models for carriers and shippers.\nThese composite technologies facilitate improved operating efficiency for our customers, changes the model of asset usage and life while also supporting a customer base that is increasingly focused on sustainability and reducing their carbon footprint.\nWe now have over 25 million miles logged to date and we are excited to scale this opportunity as we move into full commercialization of this product technology.\nFinally, we believe long-term investors will be rewarded in the near term by our dry van capacity project as our converted traditional refrigerated van facility will produce 10,000 units post conversion which is twice as many dry vans as compared to the reefers that were previously manufactured.\nNotably, dry vans carry a higher margin compared with our conventional refrigerated product.\nAll told, we expect to realize $0.15 to $0.20 of annual earnings per share accretion in 2023 and beyond as a result of this near-term capacity move.\nThis capacity project will also enable us to further create shareholder value as we fully commercialize our breakthrough all composite refrigerated technology over the next several years.\nMoving to market conditions; demand for freight remains robust and supply continues to be constrained by a multitude of factors, strong business investment and consumer spending paired with persistently low inventory levels continue to propagate robust levels of freight activity.\nWe see the overall freight environment remaining positive through 2022 and well into 2023.\nCoupled with structural changes, as previously discussed, in terms of e-commerce related logistics disruption, the entry of new customers and the emergence of large trailer pools, we see demand remaining robust for an extended period of time, possibly the strongest period of demand we have seen in history.\nAs a reminder, the trailer industry has a strong seasonal pattern of ordering activity in which OEM backlogs built during the second half of the calendar year.\nThe strength within our customer businesses from First to Final Mile has been well reflected in our backlog which increased by $600 million sequentially in Q3 to a total of $1.9 billion.\nThis represents an 87% increase versus the same period last year.\n$1.9 billion in backlog also establishes a new record for our order book which is a testament to our new commercial structure and market strength as well as changing dynamics of how the market utilizes trailers.\nThe strength in our backlog creates the visibility necessary to offer an initial earnings per share outlook for 2022 $1.70, assuming no improvement in supply chain conditions.\nIn closing, we're excited to announce our identity change and the realignment of our external reporting with our operating structure, our growth initiatives and our strategy going forward.\nOur portfolio of transportation solutions positions us to leverage unmatched product breadth as a competitive advantage, shored up by unified commercial structure and go-to-market strategy.\nWe expect our increased dry van capacity to be a linchpin to many new and expanded customer relationships and our shift to all composite refrigerated technology to drive growth well into the future.\nDriving focus in our parts and service business enhances visibility to our higher margin, more repeatable business that features ample potential for growth.\nThese reporting changes are the culmination of modifications to our organization.\nto facilitate our refreshed strategy and we're eager to share our progress with you as the new reporting structure enables more effective communication.\nWe believe a story that started with a change in vision and a deep desire by so many of Wabash to be different, to be better.\nUltimately, we are living our purpose with action to change how the world reaches you.\nWith that, I'll hand it over to Mike for his comments.\nI'd like to start by offering some brief thoughts on the announcement Brent just discussed.\nFollowing our strategic, organizational and capacity update, today's company branding and segmentation refreshes are the culmination of work that has been going on behind the scenes for the last 2 years.\nOur decision to narrow our strategic focus to transportation, logistics and distribution markets comes at a time of dramatic and exciting changes within the industry and we are tremendously excited with how the following moves have positioned us to leverage our commercial organization and innovation and product development capabilities to lead our markets forward.\nTurning to a review of our third quarter financial results.\nConsolidated third quarter revenue was $483 million with new trailer and truck body shipments of approximately 12,455 units and 3,780 units, respectively.\nGross margin was 10.6% of sales during the quarter, while operating margin came in at 3.8%.\nOperating EBITDA for the third quarter was $33 million or 6.8% of sales.\nFinally, for the quarter, net income was $11 million or $0.22 per diluted share.\nFrom a segment perspective, Transportation Solutions generated revenue of $443 million and operating income of $26 million.\nParts and Service generated revenue of $42 million and operating income of $4.1 million.\nYear-to-date operating cash flow was negative $74 million.\nShipments that were skewed very late in the quarter caused our receivables to increase significantly from Q2.\nWe have also increased inventory in certain areas of our business to help buffer supply chain interruptions.\nWe would expect Q4 to have a significant amount of free cash generation.\nOur current target for 2021 capital spending is approximately $50 million which is higher than normal as we catch up on projects that were deferred during COVID and prepared for our strategic capacity expansion and the conversion of our Laveya-base south plant from reefer capacity to drive an capacity.\nWith regard to our balance sheet, our liquidity or cash plus available borrowings as of September 30 was $259 million with $49 million of cash and cash equivalents and approximately $220 million of availability on our revolving credit facility.\nIn late September and early October, we upsized our revolving credit facility by $50 million to $225 million and closed an issuance of $400 million in senior notes, respectively.\nAfter repaying our previous senior notes and term loan, our improved debt structure will result in $3 million of annual interest expense savings and more importantly, create a reasonably priced patient debt structure that allows us to invest in our business and enhances our opportunities to create value with a lower cost of capital.\nWith regard to capital allocation during the third quarter, we utilized $14 million to repurchase shares and our quarterly dividend of $4 million and invested $9 million in capital projects.\nOur capital allocation focus continues to prioritize reinvestment in the business through growth CapEx while also maintaining our dividend and evaluate opportunities for share repurchase alongside bolt-on M&A opportunities.\nThinking about the next 3 to 5 years, I expect our capital allocation to continue to support our internal opportunities for organic growth.\nWe have exciting opportunities to generate rates of return well in excess of our cost of capital as we progress with initiatives on our Transportation Solutions and Parts and Services segment.\nOur dividend also remains an important element of returning capital to shareholders.\nGiven that we expect our future free cash flow profile to remain robust, we will continue to provide an opportunity to repurchase shares when we consider that to the under value.\nWhile we will continue to evaluate smaller acquisition opportunities that would easily fold into our existing operations, I believe any large deal will be a lesser priority compared to the internal opportunities we have in front of us.\nMoving on to our outlook for 2021.\nWe do expect Q4 to represent peak pain for estimate margin perspective.\nThis will be the quarter while the price cost most heavily works against us as we produce for orders that were booked in late 2020, after which material costs have run substantially.\nWe expect revenue in the range of $490 million to $520 million and earnings per share of $0.10 to $0.15 for the quarter.\nAs Brent mentioned, our record backlog allows us to offer an initial outlook for 2022 of $1.70 per share.\nI'd like to be clear about the assumptions behind our 2022 outlook.\nPricing recovery from commodity headwinds experienced in 2021 have been effective and we expect average selling prices for trailers to increase in the range of $5,000 to $6,000 year-over-year.\nThis would represent a $0.60 tailwind in the bridge from our anticipated $0.52 of earnings per share in 2021 to our guide of $1.70 in 2022.\nI'd like to emphasize a modification to our pricing construct for 2022, where we have implemented pass-through commodity pricing with many trailer customers.\nWe have targeted a certain margin and have agreed to pass through commodity costs.\nWe feel this provides more certainty around our forward financial expectations and we hope to continue with this framework in future years.\nWe're also assuming over $0.90 from improved build rates which are based on the ramp in factory floor associate count we've been able to achieve to date.\nWe expect to gain a total of $0.10 from the combination of reduced year-over-year share count as well as lower interest expense.\nFixed overhead and SG&A will partially offset the significant gains as a result of the impact from the current inflationary environment.\nWe are assuming no improvement in supply chain in our guidance.\nClearly, we hope that as time goes on, the supply chain situation improves but we're not building that level of optimism into our outlook.\nHowever, this clearly would provide upside opportunity should the present state of supply chain improve.\nOperating margins are expected to be approximately 6% at the midpoint and we are well on our way to achieving our 8% operating margin target by 2023.\nWe are excited about our opportunity to meaningfully expand the company's profitability and earnings per share year-over-year and about the strong underpinning of the demand for our products driven by both strong demand conditions and structural changes in the market.\nIn conclusion, the announcements we've made today are the culmination of work that has been going on behind the scenes for the last 3 years.\nOur strategic focus is well set to leverage the company's strength as our organizational structure improvements proactively position us to drive innovation at a time when the market most needs it.\nAdditionally, while our new segment structure provides visibility to our important parts and service business, I'd like to reinforce that our parts and services team is working on initiatives meant to holistically benefit Wabash which means we're thoroughly flowing through the lifetime value of our equipment for customers, further enhancing Wabash's value to our industry-leading dealer network and effectively leveraging our carefully curated supplier partnerships.\nWe are building something exciting by filling in the white space around our traditional first to final mile portfolio of transportation solutions.\nAll told, nearing our strategy to focus on transportation, logistics and distribution restructuring our organization around these customers and going to market as One Wabash to most effectively leverage the breadth of our portfolio of solutions as building a new identity for our company.\nThis new identity is underlined by the modification of our company's name.\nOur ticker will remain WNC but Wabash will stand for changing how the world reaches you.\n", "role": "user" }, { "content": "q3 non-gaap earnings per share $0.22.\nsees fy earnings per share $0.60 to $0.65.\nq3 earnings per share $0.22.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Couple of items before we get started.\nI'll now hand it over to Brent for his highlights.\nAs eager as everyone is to move on to 2021, we will start today's call by providing some perspective on 2020.\nAs we all know, we learn the most about ourselves and the organizations from the challenges we encounter.\nIt is also through these challenges that we prove what we are capable of.\nFirst and foremost, our employees came through for us in 2020.\nOur team was able to see through the disruption caused by the pandemic and worked through near term challenges like modifying our shop or environments and managing a disrupted supply chain to safely keep our manufacturing running for our customers.\nAt the same time, our employees remained focused on our purpose to Change How the World reaches You and executing on our First to Final Mile strategy.\nTogether, we are creating a new Wabash environment where we are prioritizing ease of doing business for our customers, creating a growing portfolio of innovative engineered solutions that span from First to Final Mile and a culture that continually seeks for better process that creates value for our customers, our employees and our shareholders.\nSecondly, we learned about the resilience of our product portfolio we've created over the last decade and the processes we've embedded within our businesses.\nOur process discipline enabled Wabash National to observe a notable reduction in volume, while minimizing the impact to operating income as shown through 14% decremental margins for the full year of 2020.\nWe generated $104 million of free cash flow during 2020, which enabled us to maintain our dividend through the cycle, a feat never remotely accomplished during a significantly challenging environment in the history of Wabash National.\nI hope our strong financial performance during 2020 indicates the structural improvements that have taken place within our company over the last decade, but especially over the last two years.\nWe aim to continue this improvement in financial performance as we leverage our customer-centric organizational structure, along with our opportunities for strategic growth.\nThere is something special brewing at Wabash National and we are starting to see that this leadership team, our employees are vying into a new way to operate.\nThis is a good point to circle back to our broader strategy.\nOur refreshed purpose to Change How the World Reaches You positions us with a renewed focus on being the innovation leader within the transportation, logistics and distribution markets.\nThis clarification has our team pulling in the same direction and we took action to streamline our portfolio by selling assets that do not offer strong strategic threat.\nAs we finished pruning our portfolio, we are also setting the stage to backfill the adjusted revenue by continuing the diversification of our company with both expanded and new revenue streams within this transportation, logistics and distribution markets.\nOur customers are some of the most dynamic participants in the industry who will be responsible for shaping future trends.\nThis is another benefit of our customer-centric org structure, as we seek to capture customer pain points to feed into our innovation efforts and develop unique solutions that add value to -- for them.\nWe have proven that we have enhanced our ability to operate.\nNow we will show we can profitably grow this business in a more sustainable and interesting manner.\nMoving on to specific efforts to grow and diversify our revenue streams and product development.\nI'd like to start with an update on Molded Structure Composite technology.\nMSC or Molded Structural Composite technology was developed as a revolutionary new material with lighter weight and improved thermal properties for the refrigerated van market.\nAs carriers continue to pilot this technology to assess the value created by lower operating costs and reduced emissions, we have found interesting applications for MSC within the refrigerated truck space.\nIn 2020, we worked with a major grocery that piloted MSC truck body, designed specifically for home delivery of groceries.\nWe believe that this is likely to be a rapidly expanding market segment where MSC continues to offer unique value to customers with its durability, reduced weight and improved thermal efficiency.\nOur expertise in composites will be a competitive differentiator within the electric chassis space as well.\nOur ability to innovate with lighter weight composite materials for truck bodies and trailers are all the more meaningful in the EV space where total vehicle weight has a direct impact on vehicle range and payload.\nWhen you combine MSCs lightweight properties with its superior thermal efficiency, this composite technology will be intriguing for customers looking for innovative and sustainable solutions in the refrigerated space.\nConsistent feedback from interested parties is that our technology offers benefits they have been unable to find elsewhere.\nAdditionally, within our cold chain efforts, we have completed an agreement to manufacturer Gruau refrigerated inserts for the Ford Transit within the United States to serve their rapidly expanding routes [Phonetic] like grocery home delivery market.\nWhile traditionally constructed refrigerated cargo vans are insulated using spray foam, which can be subject to off-gassing and mold intrusion, Gruau inserts are engineered to fit specific manned models and provide a superior finish with 30% to 50% thermal efficiency than standard refrigerated body construction, thus improving total cost of ownership, reducing spoilage and improving food safety.\nThis is an important space for Wabash to participate in with our technology as it sets us up to better serve the smaller light-duty upgrade market compared to our larger more traditional truck body product models.\nWe expect that the rapid progress made in the home delivery of groceries and within the refrigerated home delivery will remain after the pandemic, and we're excited about how products like MSC and Gruau inserts position us to add value for customers in this space.\nThis provides a natural transition into corporate responsibility or, as some may say, ESG strategy, with particular focus on the environmental segment, because it ties in so much with our discussion on the benefits of our new products.\nRemoving weight and improving thermal efficiency are not the only ways we allow our customers to reduce their operating costs.\nThey also reduce our customers' environmental impact in a world that is becoming aware of carbon net zero thinking.\nWe are developing Tech Net [Phonetic] technology that not only reduces carbon impact by the use of our products, but it also creates numerous opportunities to reduce our impact on the natural resource consumption within our manufacturing processes.\nWe have seen many of our customers increase their commitment to ESG in recent years and I'd like to echo our own commitment to these principles.\nWhether it's innovating with environmental impact in mind, ensuring diversity of backgrounds and viewpoints on our Board of Directors or simply standing up for what we believe is right on social issues like racial equality, for example, I believe our ESG focus sets us apart and uniquely positions us as a desirable supplier to customers who value ESG principles.\nWe are a company well positioned, well read and with the values that align with the changing world.\nOn that note, I want to take the time to reflect on the highly unfortunate assault on our nation's Capitol.\nFirst, I would say that lawlessness, rioting and destruction of property and affronts to personal safety are unacceptable across the board.\nHowever, the events that occurred at the Capitol were especially appalling to me and I've ensured both internally at Wabash and externally that my position is clear; it was wrong, an embarrassment to our country and for our democracy to be so specifically assaulted while a peaceful transition of power was under way.\nCEOs and value-minded companies have an opportunity to lead on social issues and we choose to do so.\nNow we'll move on to market conditions and backlog.\nFreight rates remained at strong levels for carriers throughout the peak season and it continue to remain elevated into 2021.\nAs such, industry reports have shown strength in new trailer order activity and we have clearly benefited from the recovery of demand in the marketplace.\nOverall, backlog ended the fourth quarter at approximately $1.5 billion, up sequentially by approximately $500 million from the end of Q3.\nOur backlog reflects a normal split within our businesses, which is to say that the backlog build was primarily Commercial Trailer Products.\nOrder to shipment cycles tend to be much more compact in both DPG and particularly FMP and conversations with customers in those segments continue to indicate constructive market conditions for 2021 in these businesses.\nWe mentioned on our last call that the availability of labor could be a headwind as we look to ramp our operations in 2021.\nWhile I believe this to remain true based on our own experience and feedback from suppliers, customers and peers, I do want to call out that we were able to successfully hire approximately 600 new employees across our business during the fourth quarter.\nThis hiring activity equated to adding to our workforce by about 15%.\nWe fully expect to add another 900 employees during the first half of 2021 based on our progress to date.\nI will now address our outlook for 2021.\nWe are initiating our full year revenue outlook at just under $2 billion.\nIn this environment, we are seeing earnings per share of approximately $0.75 at the midpoint.\nWhile early to talk about 2022, we believe that structural changes occurring across the industry as a result of asset and balance, forthcoming regulations with a new administration in Washington, as well as the further pace of logistics and supply chain disruption brought on by the current pandemic will positively impact our revenue outlook beyond 2021.\nI'd like to conclude my comments by saying that I couldn't be more proud of how our employees responded to the challenges that confronted us this year.\nBut I'm excited to turn the page on 2020 and begin to talk about what comes next.\nWith early and significant wins with our new organizational structure reducing friction for customers, allowing us to think in new and interesting ways, our purposed vision mission that provides common direction throughout our organization, and the growth of a culture shaped by our Wabash Management System, we are ready to act with a growing strategic purpose.\nThe future is bright for Wabash National.\nWith that, I'll ask Mike to provide additional color on both our 2020 financial performance and our 2021 outlook.\nTurning now to Slide 4.\nOn a consolidated basis, fourth quarter revenue was $404 million.\nConsolidated new trailer shipments were approximately 10,600 units during the quarter.\nWe achieved our strongest shipments and revenue of the year during Q4 as a result of increasing customer demand.\nIn terms of operating results, consolidated gross profit for the quarter was $45.5 million or 11.3% of sales.\nThe company generated operating income of $10 million and operating margin of 2.5% during the fourth quarter.\nConsolidated decremental margins were 12% during the fourth quarter, which is a performance we're very proud to have achieved.\nOur strong financial performance was bolstered by our cost savings efforts and has structurally reduced our SG&A footprint.\nCompared to Q4 of last year, SG&A expense was lower by about $5.6 million or 16%.\nOperating EBITDA for the fourth quarter was $25.2 million or 6.2% of sales.\nFinally, for the quarter, GAAP net income was $5.5 million or $0.10 per diluted share.\nLet's move on to look at the segments, beginning with CTP.\nFrom a segment perspective, Commercial Trailer Products performed very well with revenue of $283 million and non-GAAP adjusted operating income of $23.3 million.\nAverage selling price for new trailers within CTP was about $27,000 in the fourth quarter, which is roughly flat with the same quarter of last year.\nDiversified Products Group generated $75 million of revenue in the quarter with non-GAAP adjusted operating income of $3.3 million.\nAs a reminder, we completed the sale of a niche business in our Tank Trailer portfolio at the end of Q4.\nThis business is responsible for approximately $20 million during 2020, which is revenue that will not be part of DPG's results going forward.\nThis is a business that manufacture a narrow specification of aluminum tank trailers with a low center of gravity that were geared toward the train in the Pacific Northwest.\nWith returns not met in our threshold and limited opportunity to grow the business, we felt it was best to redeploy the resources into more scalable opportunities.\nWe continue to see our remaining Tank Trailer businesses that began to bolster our overall portfolio of First to Final Mile transportation.\nAs we discussed on our last earnings call, Final Mile Products continues to operate below breakeven volumes as COVID has impacted demand in this segment differently than other end markets.\nFMP generated $52 million of revenue during the quarter with an operating loss of $4.5 million.\nDue to the burden of depreciation and increasing amortization in the business, it's important to point out that FMPs fourth quarter EBITDA was a loss of only $600,000.\nWe expect this part of our business to begin showing positive EBITDA in the first half of 2021 and to be solidly EBITDA profitable full year 2021, and around breakeven on the OI line.\nSlide 8 shows the walk to year-to-date free cash flow for 2020.\nWith operating cash flow of approximately $124 million, roughly $20 million was reinvested to be a capital expenditure, leaving $104 million of free cash flow.\nWe are extremely pleased with the work the team did to register $104 million of free cash flow during a pandemic.\nTo put that number in a little bit of perspective, it is a higher level of free cash flow than the average of 2018 and 2019, which were peak years for the trailer and truck body markets.\nWhile we benefited from a reduction of working capital due to declining revenues, we do believe our organizational structure has allowed us to permanently improve working capital efficiency, which will help enable continued strong free cash flow performance in the future.\nDuring 2020, we made solid progress on our efforts to free resources from non-core assets.\nWe successfully closed the sale of our Columbus, Ohio branch location.\nWe also closed the sale of the Beall brand of Tank Trailers.\nStreamlining our portfolio has positioned us to align internal talent around strategic growth initiatives, which include cold chain, home delivery and parts and services.\nWith regard to capital allocation during the fourth quarter, we utilized $11.2 million to pay down debt, $8.7 million to repurchase shares and invested $6.4 million in capital projects and paid our quarterly dividend of $4.2 million.\nMoving now to Slide 9 with our outlook for 2021.\nWe expect revenue of approximately $1.9 billion to $2 billion.\nCTP is clearly poised for a meaningful bounce in activity.\nWe also expect to see substantial rebounds in revenue, particularly for FMP and, to a lesser extent, DPG, as a result of the absence of divested revenue.\nSG&A as a percent of revenue is expected to be approximately 6.5% for the full year and we remain positioned to sustain the reduction in our cost structure by $20 million from 2019 with around $15 million of that cost-out residing within SG&A.\nOperating margins are expected to be 4% at the midpoint.\nWhile we've talked about both incremental and decremental margins for the company being in the 20% range on a normalized basis, the base on which we're calculating incremental margins for 2021 have considerable furlough savings included, which does temporarily serve to depress incremental margins.\nWe had approximately $25 million to $30 million of one-time reductions in areas such as furloughs and incentive compensation in 2020 that will return in 2021.\nWith that in mind, we would expect decrementals to be closer to the low-teens in 2021.\nBut we would expect 20% incrementals from 2021 to calendar year 2022.\nLastly, I'd like to make on the full year calendar -- consolidated P&L is that amortization of the tangibles does step up again in 2021 by about $2 million.\nOn a segment basis, the step-up in amortization will be seen entirely within FMP, bringing this segment's full-year amortization to $12.4 million.\nFull-year capital spending is expected to rebound in 2021 compared to the prior year as we catch up on project that were deferred during COVID.\nIn total, we estimate 2021 capital spending of between $35 million and $40 million.\nAs we return to normal seasonal patterns, I'd like to remind everyone that Q1 tends to be our lowest quarter in terms of revenue and earnings per share generation.\nCombining those seasonal trends with the massive capacity ramp we are undertaking to keep up with the demand, that has us adding roughly 1,500 hourly employees from September 30 to March 31, and we would expect Q1 to be pressured.\nWe should see increasing quarterly revenue, margins and earnings per share as we move through 2021, however.\nOur expectation is for first quarter revenue to come in between $390 million and $420 million with new trailer shipments of 9,500 to 10,500 and to be approximately breakeven from an earnings per share perspective.\nFrom a cash perspective, working capital will become a use of cash, given the volume growth we're expecting throughout the business as inventory expands and accounts receivable increase.\nWe continue to look for opportunities to drive structural improvements to working capital, though, in the short term and we do expect in 2021 to consume upwards of $50 million of cash, most of which will occur in the first half of the year.\nOn long-term targets, I'd like to circle back and discuss what was laid out in our 2019 Investor Day.\nWe had outlined targets that centered around achieving a consolidated operating margin of 8%.\nWhile the world has obviously changed immensely since we initially released these targets, I do want to reiterate that the team still see the 8% operating margin as a reasonable goal in the medium term.\nGiven our longer-term planning, I believe the 8% operating margin is achievable over the next two to three years.\nIn closing, I'm proud of the actions are employees took to deal with short-term challenges and also progress our longer-term plans.\nI'm also excited by the financial results we've achieved this year.\nExcellent decremental margins, positive full year earnings per share and exceptional free cash flow generation, [Indecipherable] 2020 financial performance has raised the floor relative to prior troughs.\nJust as critical, however, it is important to note that we did not slow down our growth initiatives or compromise our business in any way during the downturn and we are poised to recover rapidly during the cyclical bounce back, while also developing sustainable revenue streams for years to come.\nOur organization is excited to move forward with our One Wabash approach to the customer and our strong backlog helps to provide visibility well into 2021.\nWe look forward to ramping up capital expenditures to support our growth initiatives, while maintaining our dividend and becoming more active with debt reduction and share repurchases.\n", "role": "user" }, { "content": "q4 earnings per share $0.10.\nsees fy 2021 earnings per share $0.75.\nbacklog as of december 31, 2020 was approximately $1.5 billion as new order activity remained strong during q4.2021 earnings per share outlook initiated at $0.75 per diluted share; range of $0.70 to $0.80.\nissued guidance of $1.9 billion to $2.0 billion in sales for 2021.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Today's call is being recorded and a replay will be made available later on our www.\nIn Q3, we reported earnings of $1.27 per share versus $0.27 in the prior year quarter.\nThere were a few unique items in the current and prior year quarters to call out that includes the following.\nWe incurred pre-tax restructuring and impairment charges of $28 million or $0.16 per share in Q3 primarily related to the exit of our unprofitable oil and gas business, which we divested at the end of January.\nThis compares to charges of $0.48 per share in the prior year quarter.\nWe recognized a net pre-tax benefit of $4 million or $0.07 per share on our investment in Nikola Corporation during the quarter.\nThis benefit was primarily due to a selling our remaining shares of Nikola for $147 million.\nIn total, we realized cumulative pre-tax cash proceeds of $634 million from our investment in Nikola and contributed $20 million in shares to the Worthington Industries Foundation establishing a charitable endowments supporting worthwhile community costs.\nThe prior year quarter included $0.11 per share benefit related to a gain on the consolidation of our Worthington Samuel Coil Processing JV combined with the lowering of the reserve associated with a tank replacement program within Pressure Cylinders.\nExcluding these items, we generated a record $1.36 per share in earnings in Q3 compared to $0.64 in Q3 a year ago.\nConsolidated net sales in the quarter of $759 million were relatively flat compared to $764 million in the prior year quarter.\nOur reported gross profit for the quarter increased by $49 million from Q3 last year to $164 million and our gross margin increased to 21.6% from 15.1% as we had inventory holding gains this quarter and losses in the prior year quarter.\nAdjusted EBITDA was $126 million up from $79 million in the prior year quarter and our trailing 12 month adjusted EBITDA is now $364 million.\nOur adjusted EBITDA through the nine months ended February is $297 million.\nWe had a very strong quarter with solid demand across most of our end markets and our teams continue to execute very well and are focused on delivering value to our customers.\nTaking a look at the business units.\nIn Steel Processing, net sales of $504 million were up 3% from Q3 of 2020 due to higher average selling prices, which were partially offset by lower total volumes.\nDirect tons were flat year-over-year against the tough comp.\nOur total ship tons were down 11% from last year's third quarter driven by a decrease in total tons caused by furnace and mill outages.\nDirect tons made up 48% mix compared to 44% in the prior year quarter.\nUS steel market remains extremely tight as demand has recovered more rapidly than supply.\nWe believe that we had gained share in key markets and in Q3 continue to see solid demand across our major end markets.\nThe automotive, construction, and agriculture markets all continue to show strength and we are starting to see improvements in heavy truck.\nSteel generated record operating income of $63 million in the quarter, which is up $44 million from $19 million in Q3 last year.\nOperating margins increased significantly from 3.9% to 12.5%.\nThe large year-over-year increase was primarily driven by increased direct spreads, which benefited from inventory holding gains estimated at $31 million or $0.44 per share in the quarter compared to losses of $6 million or $0.08 per share in Q3 of last year.\nCurrent quarter also benefited from arbitrage gains we were able to generate given the rise in steel prices.\nBased on current steel prices, we expect that we will have significant inventory holding gains in Q4 of this year as well.\nIn our Pressure Cylinders business, net sales were $255 million down 6% from the prior year quarter, primarily due to lower sales in our recently divested oil and gas business, where sales declined year-over-year by $24 million.\nSales were up in both industrial products and in consumer as we continue to see strong demand for our consumer-facing products and our European business while still facing headwinds is starting to show signs of recovery.\nCylinders operating income excluding impairment and restructuring charges and the benefit we had last year from the reserve adjustment I mentioned earlier was $13 million up $1million from the prior year quarter, while operating margins increased to 5% from 4.4%.\nThe current quarter results include losses on the oil and gas business through January and losses in Structural Composites Industries or SCI for the entire quarter as well as one-time charges related to our acquisition of General Tools and Instruments, GTI in January.\nCollectively, these headwinds totaled roughly $4 million.\nAs you may have seen in addition to the divestiture of the oil and gas business, we sold our SCI business earlier this month.\nIncluding the divestiture of our CryoScience operations in Alabama, which we completed in Q2.\nWe've now divested three unprofitable businesses in the last six months and made two strategic acquisitions GTI and PTEC Pressure Technology.\nGTI significantly expands our presence in specialty tools and gives us new sourcing and supply chain expertise.\nThe PTEC acquisition complements our recent investments and sustainable mobility enabled by hydrogen and CNG.\nThese investments include the expansion of our composite cylinder facility in Poland and the construction of a new Type 3 and Type 4 hydrogen cylinder production facility in Austria.\nWe believe these strategic transactions and investments position cylinders very well for future growth and will be additive to our profitability.\nWith respect to our JVs, equity income during the current quarter was $32 million compared to $25 million last year.\nWe saw year-over-year improvements from all of our JVs with the exception of WAVE.\nWAVE's results were down slightly because of increased partner allocations, but improved on a sequential basis as the commercial construction market continues to recover.\nDuring the quarter, we received $18 million in dividends from our unconsolidated JVs.\nTurning to the cash flow statement in the balance sheet.\nCash flow from operations was $9 million in the quarter and $234 million for the first nine months of our fiscal year with free cash flow totaling $169 million in the same period.\nFree cash flow for the quarter was actually negative by $7 million due primarily to increase in steel prices that caused our working capital levels to increase by $71 million.\nDuring the quarter, we generated $147 million in pre-tax proceeds from the sale of Nikola stock.\nWe completed two acquisitions totaling $130 million, invested $16 million on capital projects, paid $13 million in dividends and spent $52 million to repurchase $1 million of our common stock on the shares of our common stock at an average price of $52.37.\nLooking at our balance sheet and liquidity position.\nOn the debt at quarter end of $709 million was relatively flat sequentially and interest expense of $8 million was in line with the prior year quarter.\nAnd in Q3, with $650 million in cash and are well positioned to continue our balanced approach to capital allocation that focused on growth and rewarding shareholders.\nEarlier today, the Board increased the authorization on our stock repurchase program to an aggregate of $10 million shares and declared a dividend of $0.28 per share for the quarter, a 12% increase over last quarter, which is payable in June of 2021.\nThis marks the 11th consecutive year we have increased our dividends and we are very pleased to be able to reward our shareholders with this increase.\nOur fiscal third quarter was a record financial performance.\nWe faced some lingering operational challenges, including steel supply shortages, staffing issues related to COVID quarantines and some extreme weather, all of which impacted production schedules, but our teams did a terrific job and we delivered outstanding results.\nThe good news is that demand is excellent across most of our end markets and there does not appear to be any signs of let off.\nWe continue to be grateful to our mill partners who are working hard to ensure that we receive steel in a timely manner.\nThe rapid rise in steel prices over the past two quarters created large inventory holding gains in our Steel Processing business.\nWe have been raising prices in our downstream manufacturing businesses to offset increased raw material cost.\nI want to give yet another shout out to the dedicated employees of Worthington Industries who have come together in inspiring ways to keep our operations running safely and effectively in this trying time.\nWithout question our people deserve recognition for these exceptional financial results.\nSo with our core business is performing well and the cleanup of our underperforming operations largely complete, our focus has shifted to accelerating our strategic growth initiatives.\nWe continued to have sizable cash balance in a growing pipeline of attractive M&A opportunities that will accelerate our growth.\nOur lean transformation playbook and new product development and innovation will augment our M&A to drive shareholder value.\nOur opportunistic and balanced approach to capital allocation has served us well over the years.\nThat approach led us to raise our quarterly dividend by 12% today, a reflection of our strong financial position and performance, further rewarding our shareholders.\nWith the vaccine rollout under way, we are hopeful that a normal business environment is only months away.\nWe need to stay vigilant until such time as we can all come together again, but we are well positioned to come out of this pandemic stronger and more nimble than before.\nWe have learned a lot this past year including how to adapt quickly to changing rules and safety protocols, to manage and work remotely and perhaps most importantly to be flexible in our daily activities to do what it takes to help get the job done.\nWe will now take any questions.\n", "role": "user" }, { "content": "worthington industries inc - net sales for q3 of fiscal 2021 were $759.1 million, down 1% from comparable quarter in prior year.\nworthington industries inc - qtrly earnings per share attributable to controlling interest $1.27.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: On our call today, we have Andy Rose, Worthington's president, and chief executive officer; and Joe Hayek, Worthington's chief financial officer.\nToday's call is being recorded and a replay will be made available later on our worthingtonindustries.com website.\nOur teams executed very well in the quarter, and the result was a strong financial performance.\nFor Q3, we reported earnings of $1.11 per share versus $1.27 in the prior-year quarter.\nExcluding a small restructuring and impairment charge, we generated $1.13 in the quarter versus $1.36 in the prior year, after adjusting for restructuring and a small gain on our investment in Nikola.\nIn the quarter, we had inventory holding losses estimated to be $25 million or $0.37 per share.\nIn the prior-year quarter, we had inventory hoarding gains of $31 million or $0.44 per share.\nConsolidated net sales in the quarter of $1.4 billion were up significantly compared to $759 million in Q3 of last year.\nThe increase in sales was primarily due to higher steel prices, the inclusion of our most recent acquisitions, and higher average selling prices in both consumer and building products.\nGross profit for the quarter decreased to $143 million from $164 million in the prior-year quarter, and gross margin was 10.4% versus 21.6%, primarily due to the swing from inventory holding gains to losses, which were partially offset by increases in both consumer, and building products.\nAdjusted EBIT in Q3 was $112 million, down slightly from $126 million in Q3 of last year, and our trailing 12 months adjusted EBIT is now $662 million.\nAnd I spend a few minutes on each of the businesses, In steel processing, net sales of $1.1 billion more than doubled from $504 million in Q3 of last year, are mainly due to the average selling prices being higher, and the inclusion of both Tempel Steel and Shiloh BlankLight business.\nTotal ship tons were down 2% compared to last year's third quarter despite the recent acquisitions which contributed 80,000 tons during the quarter.\nExcluding the impact of acquisitions, total ship tons were down 9% year over year.\nDirect tons in Q3 were 51% in mix compared to 48% in the prior year.\nDespite the decrease in ship tons, underlying demand during the quarter was healthy.\nVolumes were impacted by COVID-related production challenges, last shipping days due to weather, the US Canada bridge closings, and the ongoing semiconductor chip shortage that continues to impact automotive schedules.\nAutomotive volume increased from the prior-year quarter, but demand was below seasonal norms and is still difficult to predict as production levels demands remain choppy.\nConstruction demand continued to be solid, but our volumes decreased slightly from the prior year, as we had reserved some capacity for automotive demand that did not materialize.\nAnd market demand is good, and the war in Ukraine, and its impacts on the steel supply chain pricing, and end-market demand are difficult to predict.\nOur teams are best in class and continue to navigate market volatility, and supply chain challenges exceptionally well as they remain focused on taking care of each other, their customers, and our partners.\nIn Q3, steel generated an adjusted EBIT of $7 million compared to $62 million last year.\nLarge year-over-year decrease was driven by the inventory holding losses I mentioned earlier, estimated to be $25 million in the quarter compared to inventory holding gains of $31 million last year.\nAn unfavorable swing of $56 million.\nInventory holding losses for the current quarter included a $16 million charge to write inventory down to net realizable value, and to the expected future decline of steel prices at year-end, at quarter-end.\nSteel prices have since risen, but based on current steel prices, we believe we will have higher inventory hoarding losses in Q4 than we did in Q3.\nIn consumer products, net sales in Q3 were $162 million, up 41% from $115 million in the prior year.\nThe increase was driven by higher average selling prices, combined with higher volumes across the board, and the inclusion of GTI.\nAdjusted EBIT for the consumer business was $27 million and the EBIT margin was 16.5% in Q3, compared to $15 million and12.7% last year.\nYear on year growth in margin is a credit to the exceptional job our consumer team is doing managing through the current inflationary environment, and this quarter we realized the price, the benefit of price increases that were implemented late in Q2.\nDemand remained strong across the board for our consumer business, and while inflationary pressures, shipping, and supply chain issues will likely persist, we're confident in our team's ability to continue growing the business, and delivering value to our customers with a focus on increasing production while developing new, and innovative offerings.\nBuilding products generated net sales of $133 million in Q3, which was up 38% from $96 million in the prior year.\nThe increase was driven by higher average selling prices.\nBuilding products adjusted EBIT was $50 million, and adjusted EBIT margin was 37.3%, up significantly from $27 million and 28.4% in Q3 last year.\nOur wholly owned building products business generated a nearly five-fold year-over-year increase in EBIT during the quarter, due to healthy demand combined with higher average selling prices.\nClarkDietrich's results improved by $15 million year over year, while WAVE was down slightly from a year ago.\nClarkDietrich and WAVE contributed equity earnings of $21 million and $19 million respectively.\nThe building products team has done a great job navigating a very challenging environment by continuing to focus on serving our customers.\nGoing forward, we believe that strong demand in the commercial and residential building markets that we serve will persist, though inflationary conditions will also persist.\nIn Sustainable Energy Solutions', net sales in Q3 were $31 million, down slightly from $32 million in the prior year, despite significantly lower volumes through the divestiture of our LPG gas business.\nExcluding the divestiture, net sales were up 31% in Q3 versus last year.\nBusiness reported an adjusted EBIT loss of $3 million in the quarter compared to break-even results in the prior year, as higher average selling prices were more than offset by the impact of significantly increased input costs.\nThis business is in the early stages of repositioning itself to serve the global hydrogen ecosystem, and adjacent sustainable energies like compressed natural gas, and will benefit as those volumes ramp at the European market remains challenged, and the ongoing war in Ukraine has caused business conditions in Europe to deteriorate further, with materially increased energy prices and demand uncertainty.\nHowever, longer-term, the conflict may accelerate Europe's planned adoption of hydrogen and alternative fuels.\nNow, our plan is to be prepared to be a leader in serving that market.\nWith respect to cash flows and our balance sheet.\nCash flow from operations was $74 million in the quarter, with free cash flow totaling $51 million.\nWe started to see our operating working capital levels decrease during the quarter, primarily due to lower steel prices, which added $49 million cash flow.\nDuring the quarter, we received $29 million in dividends from our unconsolidated JVs', spend $270 million on the acquisition of Tempel, invested $24 million in capital projects, paid $14 million in dividends, and spent $54 million to repurchase a million shares of our common stock at an average price of $54.26.\nFollowing the Q3 purchases, we have slightly over $7 million shares remaining under our share repurchase authorization.\nLooking at our balance sheet and liquidity position.\nFunded debt at quarter end of $813 million increased $111 million sequentially, primarily to fund the acquisition of Tempel.\nInterest expense of $8 million was up slightly due to higher average debt levels, and we ended Q3 with $44 million in cash and $396 million available under our revolving credit facility.\nYesterday, the board declared a $0.28 per share dividend for the quarter, which is payable in June of 2022.\nWe had another very good quarter despite the continuation of a difficult operating environment and the emergence of inventory holding loss headwinds.\nI'm not surprised, but continue to be humbled, and grateful for the commitment of our employees to doing what it takes to deliver for our customers.\nAnd market demand remains strong across most of our product lines.\nBut operating challenges remain, including labor availability, supply chain disruptions, transportation shortages, and an extremely volatile steel pricing environment.\nOur commercial purchasing and supply chain teams have done an excellent job reacting quickly, and effectively to higher input costs by passing through price increases as appropriate.\nOur experts in steel processing continue to prove that they are world-class at managing through this volatility without compromising customer quality and service.\nThe benefit of higher selling prices was particularly noticeable in the year-over-year improvement in consumer products, in building products this quarter.\nClarkDietrich had another strong quarter, and an exceptional calendar year, but we expect their business to gradually return to more normalized levels in 2022.\nSustainable Energy Solutions' are struggling due to lower automotive demand in Europe, and higher input costs.\nWe continue to be very bullish on the future of all these business segments as we refine and execute more dynamic growth strategies that will continue to leverage innovation, transformation, and M&A.\nMost of you on the call know there was a precipitous decline in steel prices during the quarter from an all-time high for hot roll of $1958 per ton.\nDuring the quarter, it fell briefly below $1 thousand per ton.\nHowever, the recent events in Ukraine have reverse this trend significantly, as hot roll now sits around 1300 in upward pressure.\nThe decline during the quarter helped us achieve a modest level of working capital relief, although this may be short-lived.\nBut we've yet to establish specific targets, so this is in process.\nWorthington today has many products and solutions that enable emissions reductions, and we intend to increase our focus on these products to capitalize on the growth opportunity in those businesses.\nWe believe firmly that we have a huge opportunity to play a central role in building the bridge to a cleaner environment.\nWe are positioning our businesses to maximize this opportunity.\nSeveral of these areas include laser welding, lightweight applications, electrical steel eliminations for batteries and transformers, and gas systems for the hydrogen ecosystem.\nMany other of our existing products already offer cleaner fuel alternatives that can bridge us to a future dominated by wind, solar, hydrogen, and hydroelectric.\nThe business environment continues to be very challenging.\nOur teams continue to go above and beyond to manage through these difficulties and deliver for our customers and shareholders.\nWe are well-positioned for whatever the market brings us next.\nWill now take questions.\n", "role": "user" }, { "content": "q3 sales rose 82 percent to $1.4 billion.\nq3 earnings per share $1.11.\nqtrly adjusted earnings per share $1.13.\nsteel price volatility is expected to remain a headwind for co.\noverall, our businesses are performing well, and underlying end market demand remains healthy.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: On the call, in addition to myself, you also have Bill Berkeley, our Executive Chairman; and Rich Baio, Group Chief Financial Officer.\nWe're going to follow a similar agenda to what we've done in the past.\nRich is going to do the initial heavy lift and walk us through the quarter and some of the highlights.\nI will follow him with a few comments and then we'll be opening it up for Q&A and happy to take the conversation anywhere participants would like to take it.\nSo with that, Rich, if you want to get us going please.\nThe headline in this quarter is a record underwriting profit with premium growth of more than 11% and solid net investment income in gains, which resulted in a return on beginning of year equity of 14.5%.\nThe company reported net income of $230 million or $1.23 per share.\nThe breakdown is operating income of $202 million, or $1.08 per share, and after-tax net investment gains of $28 million or $0.15 per share.\nBeginning with underwriting income and the components thereof, gross premiums written grew by more than $250 million, or 11.4% to almost $2.5 billion.\nNet premiums written grew 11.1% to more than $2 billion, reflecting an increase in both segments.\nThe insurance segment grew approximately 10% on this $1.75 billion in the quarter, with an increase in all lines of business with the exception of workers’ compensation.\nProfessional liability led this growth with 37.6%, followed by commercial auto with 21%.\nOther liability of 13.1% in short tail lines of 5.6%.\nAll lines of business grew in the reinsurance and monoline access segment, increasing net premiums written by 18.2% to more than $300 million.\nCasualty reinsurance led this growth with 21.9% followed by 13.8% in property reinsurance, and 13.6% in monoline access.\nThe compounding rate improvement in excess of loss cost trends has partially contributed to the expansion of underwriting income.\nOther contributors have included lower claims frequency and non-cat property losses, along with growth in lines of business that are generating the best risk adjusted returns.\nUnderwriting income increased approximately 250% to $183 million.\nThe industry continue to experience above average catastrophe losses in the quarter, including the winter storms in Texas.\nAnd we have again, been able to demonstrate our disciplined management to cat exposure.\nOur current accident year catastrophe losses were approximately $36 million or 1.9 loss ratio points, including 0.8 loss ratio points for COVID-19 related losses.\nThis compares with the prior year cat losses of $79 million or 4.7 loss ratio points, which included three loss ratio points for COVID-19 related losses.\nThe reported loss ratio was 60.6% in the current quarter, compared with 65.5% in 2020.\nPrior year loss reserves developed favorably by $3 million or 0.2 loss ratio points in the current quarter.\nAccordingly, our current accident year loss ratio excluding catastrophes was 58.9% compared with 61% a year ago.\nThe expense ratio was 29.5%, reflecting an improvement of 1.9 points over the prior year quarter.\nThe growth in net premiums earned continues to outpace underwriting expenses by a margin of almost 7%, significantly benefiting the expense ratio.\nAlthough we continue to benefit from reduced costs associated with travel and entertainment due to the pandemic, we are implementing initiatives that will enable us to operate more efficiently in the future.\nSumming this up, our accident year combined ratio excluding catastrophes was 88.4%, representing an improvement of four points over the prior year quarter.\nShifting gears to investments.\nNet investment income for the quarter was approximately $159 million.\nThe alternative investment portfolio including investment funds, and arbitrage trading account provided strong results.\nThe fix maturity portfolio declined due to the lower interest rate environment and the higher cash and cash equivalent position we've maintained over the past few quarters.\nWe did begin to reinvest cash as interest rates rose in the quarter, however, continue to maintain a defensive position with more than $2 billion in cash and cash equivalents.\nOur duration remains relatively short at 2.4 years, enabling us to further benefit from future increases in interest rates and at the same time, our credit quality remains strong at AA minus.\nPre-tax net investment gains in the quarter of $35 million is primarily made up of realized gains on investments of $76 million, partially offset by a reduction in unrealized gains on equity securities of $24 million, and an increase in the allowance for expected credit losses of $17 million.\nThe realized gain was primarily attributable to the sale of a private equity investment in real estate assets.\nCorporate expense partially increased due to debt extinguishment costs of $3.6 million relating to the redemption of hybrid securities on March 1.\nIn line with our plans to benefit from the low interest rate environment, we've pre funded for a redemption and a couple of maturities in early 2022.\nTo this end, you will have seen that we announced the redemption of our hybrid securities for June 1, which will result in debt extinguishment costs in the second quarter of approximately $8 million pre-tax.\nStockholders' equity increased more than $100 million to approximately $6.4 billion, after share repurchases and dividends of $51 million in the quarter.\nThe company repurchased approximately half a million shares for $30 million in 2021 at an average price per share of $63.82.\nOur net unrealized gain position in stockholders equity declined by $90 million due to the rise in interest rates in the quarter.\nHowever, this was partially mitigated by our decision to maintain a relatively short duration.\nBook value per share grew 2.4% before share repurchases and dividends.\nAnd finally, cash flow from operations, more than doubled quarter-over-quarter to over $300 million.\nI noticed that there's a correlation here that, the better the quarter, the less you leave for me to comment on.\nSo I guess I should be pleased and grateful that there's not much left for me.\nHaving said that, let me offer a couple of comments that try not to be too repetitive on the heels of Rich's comments.\nBut I really would like to flag a couple of things.\nFirst off, there is no doubt that there is a meaningful tailwind that exists in the commercial lines marketplace.\nAnd certainly this organization is benefiting from that.\nAnd to that end, our top line, I think this is the highest growth rate we have seen since which I think you have to go back to 2013.\nYou had mentioned to me when you look back in the history books.\nAnd not only the growth and market conditions attractive, I think what's even more encouraging is that there is a growing amount of evidence that the momentum is going to grow from here and that there is a fair amount of runway still before us.\nSo again, I think that bodes well for not just how we see the coming quarters unfold, but quite frankly the next several years.\nTo that end, clearly the domestic economy and certainly parts of the global economy are improving.\nAnd that without a doubt is going to benefit our top line.\nWe are seeing the health and wellness of our insureds continuing to improve.\nIn addition to that perfect comment a moment ago, we continue to see the opportunity to push rate further.\nYou may have noticed that we got approached in 13 points of rate in the quarter, excluding workers’ compensation.\nI did have a little bit of a discussion internally and we dug into it as to how do you compare this approaching 13 points of rate with what we saw on the fourth quarter.\nAnd after digging into it, really what this is a reflection of is, there are parts of the portfolio where rate adequacy has gotten to the point where we are so encouraged by the available margin, that we are more interested in pushing harder on the exposure growth, and not as preoccupied and pushing harder on the rate front.\nAnd again, we view that as a real plus.\nThis is we are coming up for some of the major product lines on a third year in a row where we are getting meaningful rate increases.\nAnd at this stage, we are seeing as Rich suggested rate on rate and in many product lines where we have been getting rate on rate in excess of loss cost trend.\nAgain, we think that is very encouraging for what that means for margin.\nBefore I offer a couple of thoughts on the loss ratio, couple other quick data points that I've referenced on occasion in the past.\nRenewal retention ratio, in spite of what we're pushing on with rates.\nAnd all of the other underwriting actions that we are taking, is still hanging in there at approximately 80%.\nAnd our new business relativity metric, which is another data point we've shared with many of you in the past came in at 1.024%, which effectively what that means is on as much of an apples to apples basis as we are able to create in comparing a new account versus a renewal account, we are effectively surcharging a new account by 2.4% more.\nWhy, because a new piece of business unless about, then obviously, it's part of your portfolio that you've been on for some period of time.\nAnd I think it's important because people need to understand when you look at the growth, yes, it is rate, but it's also exposure growth.\nBut we are not compromising in that growth in the quality of the portfolio.\nRich gave you some detail which complemented the relief on the loss ratio.\nClearly, as he suggested, we're benefiting from the higher rates, couple other data points, I would suggest, we are not taking a lot of credit for shift in terms and conditions, when we come up with many of our loss picks.\nWe will take some oftentimes, but certainly we are never taking full credit for it.\nWe want to see how that comes into focus.\nSo more to come on that front.\nThe other piece, and I suspect that there has been some other discussion around the impact on frequency due to COVID.\nAgain, that is something that we have been reluctant to declare victory on.\nThere certainly are some lines of business where you have more immediate visibility as to what the impact of that reduction in frequency there are other product lines, where there is less visibility.\nOn that topic, I did want to offer a couple of quick comments on workers compensation, which is the one outlier as we've discussed in the past couple of quarters as far as the marketplace and where things are going.\nClearly workers compensation has been a product line where competition has been on the rise.\nWe've seen the action of state rating bureaus.\nAnd ultimately we'll have to see how that unfolds over time.\nOne is, from our perspective, it is likely that the pendulum will swing too far in a certain direction.\nAnd as a result of that, as we have shared with people in the past, it continues to be our view that we expect the workers’ comp market to likely begin to bottom out more visibly, by the end of this year or perhaps the first half of next year.\nCould it be a quarter or two later?\nYes, but generally speaking, that's how we see things coming into focus.\nThe other comments on workers comp that I would like to flag because there's been an observation or two shared around the last picks that we are carrying for the 2020 year and given how benign the frequency has been in 2020.\nWhy have we not done anything with that pick, and it's very simple.\nWe do not want to declare victory prematurely.\nAs we have in the past, start out with what we believe is a measured pick and as that seasons, we will adjust as we see, fit and appropriate.\nSo, the last comment on comp which I will offer, and I think I've made the comment in the past, is that, I think that the lack of frequency that has existed recently in the comp line due to COVID, as to a certain extent, perhaps subsidize a severity trend, which looks pretty ugly in the comp line.\nAnd certainly it is possible that the marketplace is setting itself up for a disappointment, if there is not an appropriate level of attention paid to loss cost trend, and really unpacking what is going on with severity, what is going on with frequency and what one should expect as frequency returns to a more traditional norm.\nI will leave it there as far as comp, that's perhaps more than people were looking for.\nExpense ratio, again, Rich touched on.\nAs we've mentioned in the past, COVID is offering effectively a benefit of about 50 basis points, the expense ratio.\nSo when he and I sort of do the back of the envelope math, that's what we're back in to the expense ratio.\nHaving said that, it's also worth noting that we have some meaningful investments that are going on in the business, in particular on the technology as well as the data analytics front.\nAnd these are big lifts, which we think are clearly going to make us a better business more efficient, and will allow us to be able to be making better, more insightful decisions.\nAnd let me just move on briefly to investment portfolio, I'm not going to get into much detail here because Rich really covered it.\nI would just say that our approach to focus on total return, our emphasis on alternatives, continues to pay off.\nAnd quite frankly, it is helping to compensate and then some the discipline that we are exercising with how we're managing the fixed income portfolio.\nAs Rich mentioned, we continue to maintain the duration on the shorter end at 2.4 years.\nAnd the quality is not something that we have or will be compromising on sitting there at AA minus.\nThat being said, we are being rewarded for that discipline, as you can see where our book value ended up at the end of the quarter.\nAnd while we were not completely insulated, we were far less impacted than those that have decided to take duration out farther.\nI just want to offer a couple of quick comments on what I'll refer to as cycle management.\nFrom our perspective, cycle management is the name of the game.\nKnowing when to grow, knowing went to shrink.\nWe as a team are very conscious of the fact that we cannot control the market, we are very conscious of the fact that this is a cyclical industry and we are very aware of the reality that what we are able to control is what we do.\nOftentimes people will ask the Chairman or Rich or myself, where are the best opportunities?\nAnd the answer we give because we do not want to get into the details is, look at our business, look at our public information, look at where we are growing.\nWe grow where the margins are, we grow where the opportunity is.\nAnd we are not shy or scared or intimidated to let the business go, when we don't think it is a good use of capital.\nYou can see that very clearly in our numbers.\nRight now you can see the discipline that our colleagues are exercising in the workers comp line.\nYou can see in other parts of the business, whether it be the primary insurance, professional liability line, or what's happening in parts of our reinsurance portfolio.\nWe are in the business of managing capital and we are going to deploy it where we think it makes sense.\nAnd again, we have our eyes wide open.\nAnd that is a bit of recognition, for where we are.\nThis business, from my perspective is particularly well positioned for the market conditions we are in, and likely what the market conditions will be tomorrow.\nWe are here because we have a fabulous team.\nWe have 6543 people that work together as a team in the interest of all stakeholders.\nAnd we were able to achieve this quarter because of their efforts in spite of the challenges that exists in the world, particularly over the past 12 years.\n", "role": "user" }, { "content": "compname reports net income per diluted share $1.23.\nqtrly net income per diluted share $1.23.\nqtrly operating income per diluted share $1.08.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: So in addition to me on this end of the phone, you also have Bill Berkeley, our Executive Chair; as well as Rich Baio, Executive Vice President and Chief Financial Officer.\nWe are going to follow our typical agenda where in a couple of moments, I'm going to hand it over to Rich, who is going to walk us through the highlights from the quarter.\nI will follow him with a couple of brief sound bites or reflections.\nAnd then in pretty short order, we will open it up for Q&A and happy to take the conversation in any direction where people would like to.\nBut before I hand the mic to Rich, I did want to flag with folks one sort of macro observation.\nWe were chatting internally earlier and how it seems like the quarterly calls oftentimes turn into an every 90-days session talking about certain numbers, which oftentimes go out of certain number of basis points.\nAnd while those discussions are worthwhile and productive from our perspective, it's also important that people not lose sight of the macro.\nAnd it is something that we spend a lot of time every day thinking about.\nAnd that is what is the goal of the exercise, what we are trying to do.\nAnd clearly one of the cornerstone goals is building book value.\nBuilding book value is an important thing for a whole host of reasons, including building book value allows the organization to live up or meet the needs of the various stakeholders.\nWhen we think about building book value, we approach it with an idea that we'll refer to as risk adjusted return that many of you have heard us talk about in the past.\nWe take this approach and apply it to both our investing, as well as our underwriting activities.\nAnd while you probably hear more companies did not in their own words talk about these concepts, I think one of the differentiating, excuse me, ways that we approach this idea is how we think about volatility as a component of risk.\nAnd again this is something that we've discussed in the past, but I think it's particularly -- timely particularly relevant when we have a quarter for the industry for society like we saw in Q3.\nThis idea of volatility as a component of risk adjusted return, we certainly grapple with on both the investing and underwriting side of the business.\nYou can see it on the investment side, for example, and how we have thought about duration and how we have been willing to keep our duration short and even though that comes at a cost, we do not think the risk adjusted return is there to justify going out on the curve and extending that duration.\nWe do not believe you get paid enough for that potential risk.\nIn addition to that, again as it once again crystallized in the third quarter when we think about underwriting activities.\nAnd we think about volatility as a component of risk.\nClearly the industry is feeling the challenges that come along with cat activity.\nFrom our perspective, cat activity is there on a regular basis.\nAnd why people choose to back it out on a regular basis, it doesn't make a whole lot of sense to us.\nOur view is that volatility is real -- it is a real component of risk.\nWhen we think about running the business, it is of great priority to us and how we think about deploying capital.\nSo I'm going to pause there, but before I do, I guess one last comment.\nI know that there are a lot of people that will look at our numbers and Rich will walk you through it and you'll do the math and you'll come up with an ex-cat accident year loss ratio.\nAnd what does that mean, it is on a combined ratio and that will probably get you to approximately an 86.9%.\nBut from our perspective, if one chooses to slip off the rose colored glasses for a moment, we generated 90.4%.\nThat is reality from our perspective.\nBut in spite of the cat and the impact, we did achieve a very healthy underwriting result.\nAnd in the process, we achieved a 16.6% return on equity.\nUltimately, when one thinks about building book value, you can't just think about the steps forward that you take, you need to think about how you avoid the steps backwards.\nAnd when you think about compounding book value over an extended period of time, when you think about value creation for shareholders among other stakeholders.\nNot taking those steps backwards is a big part of the puzzle.\nSo with that, Rich, I will hand it over to you.\nIf you would please walk us through.\nOperating income increased by more than 100% to $247 million or $1.32 per share, which is compared with $121 million or $0.65 per share.\nThe increase is primarily attributable to strong underwriting results, net investment income and foreign currency gains.\nThe company built upon the strong first half of the year with continued growth in premium and expansion in underwriting profits.\nFrom a production perspective, gross premiums written grew by $525 million or 23.2% to a record of almost $2.8 billion.\nNet premiums written grew by $446 million or 23.7% to another record of more than $2.3 billion.\nThis session rate was fairly consistent at 16.6% in the current quarter.\nBreaking down the results further, the Insurance segment grew net premiums written by 23.3% to more than $2 billion, reflecting increases in all lines of business.\nProfessional liability led this growth with 58.7% followed by commercial auto of 28.1%, other liability of 25.3%, short tail lines of 8.6% and workers compensation of 7.7%.\nThe Reinsurance & Monoline Excess segment grew 26.7% to $318 million with an increase in casualty reinsurance of 36% and Monoline Excess of 27.4%, partially offset by a small decline in property reinsurance of 1.4%.\nThe increase in net premiums written on a year-to-date basis was more than 20%, resulting from growth in exposure and compounding rate improvements that will continue to earn through in the coming quarters.\nThis was evident by the increase in net premiums earned of 19% in the current quarter.\nIncluded in the quarter were current accident year catastrophe losses of $74 million or 3.5 loss ratio points, compared with $73 million or 4.2 loss ratio points in the prior year.\nAs a result, quarterly underwriting profits increased 80% to $200 million, slightly off the record quarterly underwriting results in the second quarter of this year.\nThe reported loss ratio improved 1.3 loss ratio points to 62.4% from the prior year, primarily driven by rate improvement in business mix.\nPrior year loss reserves developed favorably by approximately $1.5 million in the current quarter.\nThe expense ratio improved 2 points to 28% in large part due to the growth in net premiums earned, which is outpacing underwriting expenses by approximately 7.5%.\nThis improvement is evident from an operating cost, as well as acquisition cost perspective.\nWe continue to highlight the partial benefit from reduced travel and entertainment, which is slowly coming back.\nClosing out the underwriting performance, our current accident year combined ratio, excluding catastrophes, was 86.9% for the quarter, compared with 89.8% for the prior year quarter.\nNet investment income increased 26.1% to $180 million, driven by strong results in investment funds.\nThis significant contribution in investment funds represents three consecutive quarters of outperformance and we feel it's important to highlight that the investment fund results are not necessarily representative of future earnings.\nDespite the ongoing growth in invested assets, the fixed maturity portfolio represents 69% of the total invested assets and the associated investment income declined quarter-over-quarter, due to the persistent low interest rate environment.\nStrong operating cash flows of more than $825 million in the quarter contributed to the increased cash and cash equivalents as of September 30th.\nThis resulted in a slightly shorter duration of 2.3 years in the current quarter, compared with 2.4 years in the second quarter.\nThe credit quality of the fixed maturity portfolio remains high at AA minus.\nPre-tax net investment gains in the quarter of $20 million is primarily comprised of realized gains on investments of $36 million, partially offset by a reduction in unrealized gains on equity securities of $19 million.\nThe realized gains was largely driven by the sale of real estate properties in the Southeast.\nThe effective tax rate was 19.6% in the quarter, which largely benefited from equity based compensation that predominantly vests in August of each year.\nOverall strong performance resulted in annualized return on beginning of year equity of 16.6% as Rob alluded to.\nStockholders equity increased by $70 million to approximately $6.6 billion in the quarter after regular dividends of $23 million and share repurchases of $93 million.\nThe company repurchased approximately 1.3 million shares at an average price of $72.03 per share in the quarter.\nBook value per share increased 1.5% in the quarter and book value per share before dividends and share repurchases increased 2.5%.\nSo a couple of quick thoughts from me just following on Rich's comments.\nFor starters, by virtually any measure is pretty attractive and healthy quarter, top line, bottom line and pretty much everything in between the two bookends.\nAs far as the top line goes, obviously the growth is shy of the 24%.\nRich and I were doing a little bit of math together earlier.\nWhen you think about that growth, sort of, this shy of 40% of the growth is coming from rate, about 59% is coming in some form of exposure whether it's new policies or autopremiums or whatever.\nAnd then there is a de minimis amount coming from some other stuff.\nIt's just a good moment for the P&C space quite frankly ex most of the workers comp market, which continues to feel a bit of a growing headwind.\nObviously property felt some pain in the quarter, but just general, market conditions are reasonably attractive and we don't see that trend changing.\nMore specifically, it is a good moment for specialty writers, particularly casualty related specialty writers and even more so the E&S market.\nWe continue to see a growing flow of opportunities both in specialty and even more so in E&S and there is nothing that leads us to believe that, that tide is going to reverse anytime soon, so that's definitely encouraging.\nOn the loss side, we're trying to be thoughtful and measured as we've discussed in the past.\nClearly there is inflation out there.\nWe spent years talking about social inflation.\nIt's still there from our -- at least through our lens.\nAnd in addition to that, the realities of financial inflation clearly are having an impact on loss costs.\nAnd those are two very leveraged assumptions.\nSo when we look at our book, we believe the rate increases that we are getting in virtually all P&C lines with the exception of workers comp are outpacing trend, we are paying close attention to trend and as suggested a moment or two ago trying to be very thoughtful and measured around that.\nOn the expense side, Rich pretty much covered it.\nI would just sort of take a half of pace back for those that have followed the company for some period of time.\nThis is an organization where we have not made many acquisitions.\nWe have been much more of a subscriber to the de novo model.\nWe have started 47 of the 54 operating units from scratch.\nSome of those businesses have not gotten to critical mass and -- but they are on their way to getting to critical mass.\nAnd a tailwind as far as market conditions is allowing that to happen.\nSo when you look at the leverage that we're getting on the expense ratio as that earned premium continues to build, a lot of that is, yes, market conditions which is allowing some of our more mature businesses to scale, but it's also some of our smaller operations that are now seeing the window of opportunity to put more meat on the bones.\nNot much to add on the investment portfolio, obviously, the duration as I had referenced and Rich covered is sitting there at 2.3, book yield is about 2.3.\nIt comes at a cost to have that discipline and to have that optionality going forward.\nFrom our perspective, inflation is here.\nAnd there is likely for it to be around for some period of time.\nI think, I am going to pause there and I will save a couple of comments for the tail end, but actually before I do that, since most people after the Q&A just hang up, I will just again make the comment that when we not just look at our results, but when we look at the front windshield, there is really nothing that we see in front of us that is going to derail the momentum that we are enjoying today.\nIt's a cyclical business.\nThis will not go on forever, but for the moment, the momentum continues.\nSo Emma, why don't I finally stop there and let's see what the participants would like to talk about.\n", "role": "user" }, { "content": "qtrly net premiums written increased 23.7%.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I think we're well on our way to our Safe Harbor statement being the longest component of our call, but perhaps that's just a reflection of the sign of the times.\nOn the call, in addition to me, you also have Bill Berkley, Executive Chairman; as well as Rich Baio, Executive Vice President and Chief Financial Officer.\nWe're going to follow a similar agenda to what we have in the past, where Rich is going to lead us through some highlights for the quarter.\nSo with that, Rich, do you want to lead off, please?\nThe company reported record quarterly net income of $312 million or $1.67 per share.\nDespite the heightened catastrophes experienced by the industry, and slowdown in the economic environment due to global pandemic, our financials significantly improved in the quarter.\nThis improvement was evidenced in our current accident year combined ratio ex-cats of 88.8% and strong investment income and net investment gains, which contributed to an annualized quarterly return on equity of 20.6%.\nStarting first with our top line.\nGrowth in our gross premiums written accelerated through the year, with fourth quarter representing growth of 9.3%.\nSimilarly, net premiums written grew by 8.2% to approximately $1.8 billion in the quarter.\nAll lines of business grew in the insurance segment, with the exception of workers' compensation, increasing net premiums written by 7.2% to approximately $1.6 billion.\nProfessional liability led this growth with 29.6%, followed by commercial auto of 20.6%, other liability of 10.6% and short-tail lines of 2%.\nGrowth in the reinsurance and Monoline Excess segment was 16.8%, bringing net premiums written to $205 million.\nCasualty reinsurance led this growth with 21.2%, followed by 9.3% in property reinsurance and 6% in Monoline Excess.\nRate improvement, along with lower claims frequency and non-cap property losses contributed to our improvement in underwriting income of 44.2% to $165 million.\nOffsetting this improvement were higher catastrophe losses resulting from natural cats and COVID-19 related losses.\nWe recognized $42 million of total catastrophe losses in the quarter or 2.3 loss ratio points, of which, 1.5 loss ratio points relates to COVID-19.\nThe current quarter's natural cat losses compare favorably with the prior year quarter of $20 million, or 1.2 loss ratio points.\nThe reported loss ratio was 61.3% in the current quarter, compared with 62.4% in 2019.\nPrior year loss reserves developed favorably by $4 million or 0.2 loss ratio points in the current quarter.\nAccordingly, our current accident year loss ratio, excluding catastrophes, was 59.2% compared with 61.4% a year ago.\nRounding out the combined ratio, we benefited from an improving expense ratio of 1.3 points to 29.6%.\nWe continue to benefit from growth in net premiums earned at 5.6%, which outpaced an increase in underwriting expenses of 1.2%.\nIn addition, the expense ratio is benefiting from reduced costs impacted by the global pandemic, including travel and entertainment.\nThis contributes a benefit of more than 50 basis points to the expense ratio.\nNet investment income for the quarter increased 32% to approximately $181 million.\nThe increase was driven by investment fund income of $53 million due to market value adjustments and arbitrage trading income of $26 million, in large part coming from investments in special purpose acquisition companies.\nInvestment income from the fixed maturity portfolio declined due to lower reinvestment yields compared with the roll-off of securities due to maturities, calls and pay downs.\nIn addition, we continue to maintain a cash and cash equivalent position of approximately $2.4 billion, enabling us to maintain a relatively short duration of 2.4 years and significant liquidity.\nPre-tax net investment gains in the quarter of $163 million is primarily attributable to realized gains of $127 million and changes in unrealized gains on equity securities of $36 million.\nAs previously announced, the realized gain was largely driven by the sale of a real estate investment in New York City, which resulted in a gain of $105 million.\nForeign currency losses in the quarter were driven by the weakening U.S. dollar.\nTwo items of note.\nFirst, you'll see that on a year-to-date basis, we were about breakeven; second, the loss in the quarterly income statement is offset considerably by the increase in stockholders' equity.\nIn the quarter, our unrealized currency translation loss improved by $66 million, resulting in a net equity pick up of approximately $47 million.\nAs a reminder, expenses included a non-recurring cost of $8.4 million relating to the redemption of our $350 million subordinated debentures in the quarter.\nStockholders equity increased 5.3% in the quarter and book value per share before share repurchases and dividends increased 6.1%.\nWe ended the year with more than $6.3 billion in stockholders equity, after share repurchases of approximately 6.4 million shares for $346 million at an average price per share of $54.43 and ordinary dividends totaling $84 million.\nThat brings total return to shareholders of $430 million in the year.\nFinally, the company had strong cash flow from operations in the quarter of $480 million and more than $1.6 billion for the full year, an increase of more than 41%.\nVery complete, you leave me nothing to say.\nBut I'll come up with something to babble on about for a relatively brief amount of time.\nSo, from my perspective, and I believe from our perspective, the market is clearly in the throes of firming.\nWhen we look at the marketplace, is it what we saw at least at this stage in ‘86.\nThere is not a vacuum when it comes to capacity.\nBut clearly, there is a recognition within the industry among carriers that capacity is not going to be build out in such a casual manner as it has been done in the past.\nAnd when it is provided, it will be with a lens towards a more appropriate rate associated with that.\nWhen we look at the marketplace, overall, we think this is very appropriate.\nAnd whether it will prove to be similar to what we saw in sort of late 2001 and 2002 and 2003, we’ll only see with the time, but the reality is no cycle looks like any other cycle.\nAll that being said, when we look at Q4 and when we think about our own business, every product line at this stage with the exception of workers compensation, we believe is achieving rate in excess of loss cost.\nAnd quite frankly, that is appropriate and necessary.\nWhen you think about where trend is and in addition to that, when you think about the realities of what one can expect from the investment income portfolio, particularly around the fixed income, we do need to be pushing full rate and driving down the combined ratio further in order to achieve a sensible risk adjusted return.\nJust as far as different product lines go, at this stage we are seeing meaningful firming continuing in the much of the PL market, also, the excess and umbrella market is quite firm as well.\nProperty continues to be notably hard and auto, I would suggest, is also quite firm.\nOne of the laggards has been primary GL, and we've been pleased to see over the past couple of quarters that seems to be building some momentum.\nAnd we think that's really important given what's going on, on the social inflation front and again as well as the realities of investment income.\nAnd as mentioned in prior calls and just a couple of moments ago, workers' comp does continue to be the outlier.\nHaving said that, we continue to believe that's in the early stages of bottoming out, and would expect that to be reversing direction by the end of -- or later part or end of 2021.\nJust on the topic of rate.\nFrom our perspective, we think that there are many market participants that have a good deal of catching up to do.\nWhen we think about the past several years, there have been moments where, quite frankly, it's been a little bit lonely when we've been pushing for rate.\nAs you may have picked up in the release ex-comp, we got 15.5-ish points of rate.\nIn the quarter, if you go back a year earlier to Q4 2019, we were getting just shy of 9 points of rate, Q4 2018, 4 points of rate, Q4 2017, 2.3, Q4 2016, we got a point of rate.\nWe think that there are many market participants that have not been pushing for rate for an extended period of time.\nAnd again, we are going to see them needing to catch up, and they are going to need to catch a moving target.\nOne other comment that I would just make on this front related to rate and loss costs and how people think about rate adequacy.\nIt would appear as though there are some market participants that may be thinking about loss costs slightly differently than how we think about loss costs.\nWhen we look at the current circumstance, I think it's very clear that severity is on the rise for much of the liability market.\nAnd recently, as a result of COVID-19, there are certainly many parts of the market that had experienced somewhat of a benign period when it comes to frequency.\nAnd our observation is that some may be in for a little bit of a route awakening hopefully, sooner rather than later when COVID is somewhat behind us, we see frequency return to a more traditional normal and that severity trend continues to take off like a rocket ship for the foreseeable future as we've been discussing.\nTurning to our quarter, as Rich referenced, pretty healthy growth on the top-line, the growth was up about 9%, the net was up about 8%.\nAnd, obviously, the rate increase that we mentioned earlier is a big contributor to that.\nWe've gotten the question from time to time from folks to saying, hey, help me do the math.\nSo you're getting 15 points a rate in this quarter or so.\nBut you're only growing a smaller amount?\nAre you shrinking your business from an exposure perspective?\nAnd the answer to the question is, yes and no.\nAnd what I mean by that is our policy count is actually up a bit.\nBut what's actually going on is that our insurers, while we may be selling more policies and that number is growing, many of the insurers business activity are particularly measured in their revenue, which we price the policies off of is down as a result of this economic activity in the industry.\nSo when we look at the situation, here's sort of the short version.\nPolicy count is up a little bit.\nRate is up, but the number -- the amount of revenue or a number of widgets, if you will, that our insurers are producing is down.\nSo what does that mean?\nThat means that we are reasonably well positioned for growth when the economy starts to open back up.\nAnd you will see in all likelihood, from my perspective, a notable catch up in audit premiums, as the revenue begins to pick up, even with those policies that we've already issued, because again, there is a catch up in our audit activities.\nJust a couple of other things quickly, the expense ratio, again Rich, covered this pretty thoroughly, I would just offer a couple of quick sound bites.\nOne, the 15 basis points benefit, if you will, that the expense ratio is getting as a result of a reduction of activity on our end with travel and entertainment, and so on.\nThat will one of these days come back but we are actively looking at what does return to work look like for us, we certainly expect that people will be back in the office.\nBut will the travel be the same?\nOr were there opportunities to learn through this period of time where maybe travel will not have to return to it what it once was.\nThat all being said, the reality is that we envision the business growing considerably more as the economy opens back up.\nAnd in addition to that, these higher rates which will also contribute to the higher earned premium coming through, will help out on that front.\nAnd on the loss ratio front, obviously, there was some improvement there.\nWe also have heard some commentary from some really asking, given all the rate increases, why are we not seeing more improvement in the loss ratio?\nShort answer is that, we're trying to be as always very measured and not declaring victory prematurely.\nAs we've shared with some in the past, the simple reality is, we do not know what the legal system is going to look like and what that is going to mean for loss costs activity once the economy opens back up, and we see the legal system, particularly the courts, operating at more of a traditional level.\nHaving said all this, let me share with you just a quick observation.\nIf one were hypothetically, to look at our loss ratio that we had in 2020.\nAnd one were to apply a healthy level of trend, just to pick a number arbitrarily a handful of points.\nAnd then one were to apply that type of rate increases earnings through that we have been achieving.\nI think that gives you a reasonable indication as to what the math may look like.\nOne other piece that one could factor in hypothetically speaking, would be it is perhaps reasonable assumption, I should say, that a pandemic will not happen every year.\nAnd obviously there's significant loss associated with the pandemics and our 2020 numbers.\nSo some might suggest that we're being a little bit optimistic, but quite frankly, when the dayis all done, it’s pretty simple, straightforward math.\nJust on the investment portfolio, again, I'm not going to repeat what you already heard from Rich, but again, it was a strong quarter both as far as the gains.\nWe have shared with people in the past that on the realized gain front, it's going to be lumpy.\nAnd quite frankly just our alternative returns are going to be lumpy.\nPenciling in on average, give or take 25 million a quarter is what we've suggested to people in the past.\nWe still think that's appropriate.\nAnd they're going to be moments in time where it may feel like there's a bit of a drought.\nAnd there's going to be moments in time where it feels like it's raining money but on average, we think we get great risk adjusted returns.\nAnd again, the same thing applies to the funds.\nAs we have suggested to people there are going to be moments when the funds do great, there are going to be moments where the funds are lagging a little bit but on average, we suggested that people pencil in high teens, call it 20 million a quarter.\nRich mentioned and I know we've talked about this last quarter how the duration is sitting there at about 2.4 years.\nWe continue to have a view, that one does not get rewarded for taking the duration out or going out on the yield curve.\nWhen we look at -- when we do the math, when we look at the numbers, yes, we could take it, the duration back out of it.\nBut the simple fact is that if you move rates up, call it our modeling 100 basis points or so, the impact on a quarterly basis, we will pick up after-tax give or take maybe $5 million.\nBut if you move rates up 100 basis points, the impact on book value will be approximately $160 million.\nSo, we are, at this stage, prepared to live with a slightly lower book yield and maintain the flexibility, the high quality and the liquidity and we think that makes sense.\nOne last topic for me is Lifson Re, you may have picked up the announcement we made just in time for the one-one.\nThis is a vehicle that we created to sit side-by-side with our traditional reinsurance partners.\nWe remained very committed to traditional reinsurance, but we felt as though that this was a good platform to sit side-by-side.\nWe're very fortunate to have two outstanding partners in Lifson Re and while there certainly are plenty of people to partner with these two institutions, not only are financially well heeled, but they are two organizations that are both thoughtful, sophisticated, with tremendous expertise in the insurance industry, and they are truly partners.\nIn addition to that, it was very important to us that there's a shared view around the topic of risk adjusted return, and a shared sense of obligation and duty to capital.\nSo, since people tend to unplug right after the Q&A, I'll just tuck in my parting comments now.\nAnd that is while some might suggest that, I found a bit optimistic and some might even suggest that it is a genetic flaw being overly optimistic.\nI think the simple reality of the situation is all you need to do is look at the facts and do the math.\nAnd if one were to go down that path and look at the facts and do the math, I think it paints a pretty clear picture for what the next several years look like for this organization.\n", "role": "user" }, { "content": "compname reports q4 earnings per share $1.67.\nq4 gross premiums written grew 9.3% and return on equity of 20.6%.\nqtrly earnings per share $1.67.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We refer to certain of these risks in our SEC filings.\nParticipating in today's call with me will be Paul McDermott, President and Chief Executive Officer; Steve Riffee, Executive Vice President and Chief Financial Officer; Drew Hammond, Vice President, Chief Accounting Officer and Treasurer; and Grant Montgomery, Vice President and Head of Research.\nLast evening, we released our second quarter earnings results Core FFO was at the top end of our guidance range and above consensus expectations.\nWe will, of course, discuss those results, but we know our transformation that we announced on June 15 is top of mind for investors and the key focus of this management team.\nToday I will update you on the progress of our strategic commercial portfolio sales and our research-led Southeastern markets expansion.\nI will also address the strengthening Washington Metro multifamily market as well as Southeastern markets, and the status of our value creation opportunities.\nSteve will discuss recent multifamily performance and trends, our views on strategic differentiators that we believe will continue to help us succeed, our second quarter results, and our strengthened balance sheet as we execute our transformation.\nThen, I will wrap up by recapping our priorities for the balance of 2021 as we complete our transformation and move forward as a multifamily REIT.\nLet me start with our progress on our strategic transformation.\nSince our mid-June announcement of the transformation, we have completed the sale of our office portfolio.\nExcluding our best office asset, Watergate 600, for which we believe we can drive even greater value for $766 million.\nWe have also given notice that we are redeeming the $300 million 2022 notes and expect to complete that redemption in late August.\nWe also are now under a binding agreement to sell our remaining retail assets to a single buyer for $168.3 million and expect that transaction to close in the third quarter.\nI'd like to turn now to our progress on multifamily capital deployment.\nAs you know, we are in the final stages of a strategic transformation that has taken place over several years.\nWe went from four asset classes to one, and we are moving forward as a multifamily REIT with proven research driven strategies, a solid pipeline of investment opportunities, and a good economic backdrop.\nFollowing these transactions, not only will we have recycled only -- over $5 billion of assets to improve our portfolio, but we also decreased leverage, increased liquidity, and lengthened our debt ladder.\nThese actions increased our financial flexibility and unencumbered the right side of our balance sheet to position us for growth.\nIn office, we were facing challenging and increasing headwinds, including increase in capital requirements and we expect those headwinds to continue.\nThis contrasts in growth prospects boosts our confidence that will create more values for our investors going forward through our portfolio recalibration.\nWe understand that these transactions are dilutive to earnings and FFO yet we believe they are initially NAV neutral and offer a far greater opportunity to increase NAV, not only in the near-term, but over the long-term as well.\nBecause of this, we have enough capital to execute these transformative steps and have access to capital beyond that.\nAdditionally, we have a road map to continue to grow and create value for our shareholders.\nWe are focusing on middle-income renters, which is a strong, underserved, and growing cohort in Southeastern markets that we are targeting, as well as here in DC where we have successfully been executing our affordability based investment and operational strategies.\nOver the past several months, we have been actively underwriting deals in the Southeastern markets where we believe our strategies can successfully achieve long-term rent growth and outperformance.\nThese markets include Atlanta, Raleigh/Durham, and Charlotte.\nWe are positioning ourselves to acquire assets that have the targeted renter cohorts and growth opportunities by Vintage to allow us to execute our Class A Minus, Class B Value-Add, and Class B portfolio strategies.\nWe are targeting submarkets with attributes that we believe are most likely drive rent growth and channelling our specific investment strategy to best create value, just as we've done in the Washington Metro region.\nOur pipeline has been active, and while we have passed on some deals that do not fit our strategies, we see opportunities ahead that make us confident we can allocate this capital appropriately over the balance of this year.\nAt this point, we have an initial asset under contract in suburban Atlanta and are in the process of acquiring additional assets that fit our strategies and our submarkets, where we expect to be able to grow rents.\nWe will provide more color through ongoing updates as we close on asset acquisitions.\nThe markets that we are targeting are projected to be among the best in the nation in population growth and net migration over the next decade, and the already strong rent growth that we've been tracking accelerated further throughout the second quarter.\nYear-over-year effective rents for Atlanta, Raleigh/Durham, and Charlotte grew by 14.3%, 10.3%, and 10.6%, respectively, in June as reported by RealPage.\nNew lease trade outs were even stronger, averaging 17.9% across the three markets and a 670 basis point inflection between April and June.\nAverage concessions remained in the low-single digits in each market, averaging just 5.5%, catching up slightly over the quarter from 5.1% in the first quarter.\nHowever, the breadth of the market offering concessions retreated markedly with just 15% of units across the three markets offering concessions in the second quarter, down 630 basis points over the quarter.\nAnnual demand also serves across these markets as in-migration and household formation drove record setting absorption.\nReported first quarter annual demand had already exceeded the 5-year average in each target market yet it jumped nearly 30% higher in the second quarter.\nRaleigh/Durham and Charlotte posted second quarter annual demand at 156% and 151% of their 5-year averages, respectively, while Atlanta's second quarter annual demand topped 186% of its 5-year demand trend.\nThese market data points further illustrate the rationale behind our expansion into these markets, where we believe strong demand and rent growth outperformance will continue to power our expanding portfolio over the near and long-term.\nHere in our home based markets, we also have great optimism for growth ahead.\nThe Washington apartment market also experienced a performance inflection during the second quarter with significant improvement from April through June, as reported by RealPage.\nYear-over-year effective rents turned positive in June for the first time since April 2020, with particular improvement in June as effective rents climbed 214 basis points higher than the second quarter average.\nSuburban Virginia's performance followed a similar pattern but with even stronger growth with year-over-year effective rent growth accelerating to 5.9% in June, 245 basis points better than the second quarter average.\nAverage concessions in the Washington market declined 200 basis points in the second quarter to 9.1%.\nThe breadth of the market offering concessions also declined with 19.7% of units in the Washington market offering concessions in the second quarter down 250 basis points versus the first quarter.\nOur current same-store multifamily portfolio has approximately 6,700 units, and is 96% occupied.\nOur average monthly rent is just under $1,700 per door.\nOur suburban Virginia apartments have performed well during the pandemic, and continue to do well, much like the Sun Belt markets, we have researched and analyzed the last several years.\nWe are slightly above 96% occupied in suburban multifamily assets and 95.8% overall.\nAnd effective rents continue to be strengthening.\nFurthermore, two-thirds of our current 2,800 unit renovation pipeline is in our suburban assets.\nWe have activated the renovation programs and are targeting low double-digit ROIs at a minimum.\nUrban effective rents have grown stronger every month since December buy-ins and urban blended lease rates have turned positive on an effective basis.\nMeanwhile, suburban lease rate growth has been exceptionally strong, reaching over 5% on an effective basis for July move-ins.\nWe have now fully delivered and invested in Trove which delivered only $200,000 of NOI in the first quarter and approximately $425,000 in the second quarter, but most importantly, its lease-up now has tremendous momentum.\nSince April 1, we have signed 160 leases or slightly over 40 leases per month, well above the regional average of 13 leases per month.\nThis increased demand allowed us to further push market rents by over 8% while also reducing concessions.\nWe now expect Trove to stabilize near year-end as opposed to our prior expectation of May of 2022.\nOur multifamily rent collections have remained strong at 99% throughout the pandemic as our research has led us to focus on renters with solid credit in areas that offer a higher relative exposure to the strongest employment sectors.\nThe combination of the strong spring and summer leasing seasons and the vaccination-led end of pandemic restrictions leads us to believe that further strengthening from here is underway.\nOver the long-term, our research-forward approach has positioned us with a multifamily portfolio in submarkets with strong supply and demand fundamentals.\nFrom a demand perspective, the Washington Metro region has a significant housing shortage and an affordability crisis that is only getting worse as the cost of homeownership continues to rise.\nFrom a supply perspective, our region has been under producing housing product at the price point that would address the growing demand, and therefore most matters remain underserved by new supply.\nOur ability to successfully position ourselves to benefit from a large and growing target rental market and limited competitive supply over the long-term in our Washington Metro markets sets us up well to expand the key elements of our strategy into the targeted Southeastern markets.\nWe intend to utilize the learnings from the Washington Metro market and further adapt to continue our growth as we geographically diversify.\nWe are extremely grateful to all the WashREIT team members who have diligently reshaped this company over the past several years, and while we will miss those moving on to further their commercial portfolio careers, we are also excited by the team in place to continue to build our multifamily future.\nWe are augmenting our multifamily operational leadership and team for the new markets, and we are following the road map that we have created over the last year to build on our infrastructure for the future.\nWe believe we will create efficiencies as well as further enable our ability to scale up very effectively.\nI will first cover our multifamily trends and results as well as our overall reported results for the quarter.\nI will also address our views and strategic differentiators that we believe will continue to help us succeed, recap our balance sheet focus to allow us to continue to be strong even after our initial deployment of this transformation capital.\nAnd finally, I will discuss our outlook.\nWe ended the second quarter on a positive note, and we are starting to experience the significant inflection that we had anticipated.\nAll signs point to increased demand momentum and we are seeing pricing power return.\nConcessions are pulling back dramatically, effective lease rates have turned positive, and available rents indicate further improvements throughout the summer months.\nRate growth for new lease executions has improved over 10% over the last seven weeks, on a gross basis.\nThe average concession per unit for move-ins scheduled for July and August is 70% lower than the second quarter average, representing a $630 decline in concessions per unit.\nBlended lease rate growth improved 460 basis points from the first quarter to the second quarter on an effective basis.\nYet the most significant growth occurred during the last two weeks of June.\nThe acceleration has continued into July and blended effective lease rates have already improved by another 240 basis points thus far, in July on an effective basis.\nNew lease rates has shown the most significant improvement with average new lease rate growth improving over 600 basis points from June to July on an effective basis.\nOur suburban properties continue to outperform our urban properties and average new lease rate growth increased 5% thus far in July on a year-over-year basis.\nAnd urban new lease rates have reached their inflection and turn positive on a blended basis for the first time on leases executed in late-July.\nBoth urban and suburban lease executions with August and September move-in dates indicate further improvement.\nLooking at our rents on our available homes, this upward trend is continuing into the third quarter.\nApplications and move-in activity remains strong as net applications increased 35% during the second quarter compared to the prior year.\nSame-store occupancy grew 60 basis points post quarter end to 95.8%, allowing us to continue to push rents.\nAnd on the renewal side, there have been very good demand and renewal lease rate growth is currently tracking above 3% on average, with suburban renewal lease rate growth tracking above 5% on an average.\nTrove is now fully invested, and should begin to grow with NOI contribution significantly.\nLeasing momentum continues to grow with Trove now over 76% occupied and 81% leased.\nWe expect Trove to be a key growth driver in 2022 and 2023.\nAs Paul said, two-thirds of our 2,800 unit renovation pipeline is in our suburban communities, where occupancy and effective lease rates are the strongest.\nWhen the pandemic hit, we temporarily paused our renovation program, but have since activated these programs at properties that have appropriate affordability gaps and new renewal lease rate growth.\nWe began by rolling out market test renovations, winding up the materials and contracts, and executing the renovations at certain assets on turns.\nYear-to-date, we have fully renovated our 90 units and invested capital in upgrading 80 additional units.\nWe are securing rent increases on renovated and improved units that meet or exceed our targeted ROIs and we are picking up the pace of renovations through the summer months while unit turnover is seasonally high.\nJust this month, we completed 30 renovations and we are optimistic this momentum will further increase this summer.\nNow turning to our financial performance.\nNet loss for the second quarter of 2021 was approximately $7 million or $0.08 per diluted share compared to a net loss of $5.4 million or $0.07 per diluted share in the prior year.\nCore FFO of $0.35 per diluted share was at the top end of our guidance range driven by stronger than expected results from both our multifamily and office portfolios.\nOn a year-over-year basis, Core FFO per share declined by $0.04 due primarily to the impact of the pandemic on rental and other income on the comparative period basis, and higher interest in G&A expenses.\nMultifamily same-store NOI declined 2% on the GAAP and cash basis for the second quarter compared to the prior year, primarily driven by the combination of lease rate declines and higher concessions on leases signed during the pandemic.\nWhile revenue comparisons for this quarter are still negative relative to the prior year, we have seen multifamily lease rates increase significantly and sequentially since their December lows.\nFollowing the significant inflection in lease rate growth, which started in the second half of June and into July, we expect improving multifamily same-store results during the second half of the year.\nOther same-store NOI declined 4.6% on the GAAP basis and 1.7% on the cash basis in the second quarter compared to the prior year period, primarily due to lower cost recoveries and higher utility expenses.\nTo briefly summarize commercial leasing activity we signed approximately 24,000 square feet of new office leases and approximately 88,000 square feet of renewal office leases in the second quarter.\nOffice rental rate were flat on a GAAP basis and declined 4% on a cash basis for new office leases and increased 37% on the GAAP basis, 5% on the cash basis for office renewals.\nThis renewal improvement was primarily related to the Sunrise lease at Silverline Center.\nOur multifamily collections continue to be excellent, tracking well above national averages.\nWe collected over 99% of cash and contractual rents during the first quarter, and our rent collections through July are in line with our quarterly trends.\nYear-to-date residents have and received over $1 billion of local government rent assistance.\nWe expect that number to grow as local governments continue to work through the backlog of claims and the pace of distributions ramp up throughout the second half of the year.\nThat said, our resident credit has been excellent, and this helps on the margin.\nWe have provided case studies to demonstrate how we use research to lease and executed those very same strategies successfully today, including investing in our suburban apartments ahead of the pandemic as over 70% of household formation is expected to take place in those markets over the next several years.\nOur affordability and growing mid-market renter cohort demand has been steady, not only in our current market, but also in these other markets for years.\nAnd we have confirmed that the same dynamics of housing needs for these renters exist as adjusted on a scale for income levels in those markets.\nWe have proven the importance of staying disciplined to not only compete at price levels with new supply that is beyond control but understand the importance of leading indicators for rental growth beyond broad market statistics.\nOur tools include our predictive analytics capabilities using radian [Phonetic], the proprietary model developed by us with a research firm that analyzes employment and demographic data that we correlated with real estate data.\nWe analyzed many factors to find the highest r-squared correlation predicting rent growth, which leads us to target vintages in submarkets with increasing mid-market jobs by analyzing job creation and expectancies for cohorts we target.\nOur analysis considers predicted job creation by submarket and the multiplier benefits of additional higher profile jobs, the patterns of in-migration as well as housing affordability and other factors to differentiate how we invest.\nOften the submarkets that attract the newest Class A developments in the high Class A acquisitions are far more competitive and have lower projected rate growth.\nAnd we have the capital to reinvest from our transformative sales as well as having additional value in Watergate 600 to harvest, we maintain our balance sheet strength to allow access to financing the growth and simplified our business model, making it more straightforward to attract investors who were previously concerned by our office exposure.\nWe expect to execute our strategy, create additional value, and win the supportive investors for further growth going forward.\nNow turning to our outlook for the balance of the year.\nThis represents approximately 2% of 4% same-store multifamily growth in the second half of 2021.\nTrove is expected to contribute between $3 million and $3.5 million of 2021 NOI and occupancy is now expected to stabilize near year-end.\nOnce concessions burn off that are incurred pre-stabilization, we expect Trove to contribute $7 million to $7.5 million of NOI annually, and then grow from there.\nWe have now fully invested Trove so all future lease-up increases profitability.\nFinally, as we've discussed, at least for the balance of this year we expect to retain Watergate 600, the best office asset that we had owned, an estimate that it will contribute between $12 million and $12.5 million of NOI in 2021.\nWe've also previously disclosed, we closed on the after-sales on July 26 for gross proceeds of $766 million.\nWe've given notice to redeem the $300 million of 2022 bonds and expect that reduction to occur on or about August 26.\nWe also are now under definitive agreement to sell our remaining retail assets for $168.3 million, and expect that transaction to close in the third quarter.\nWe plan to pay down $150 million of Term Loans on or about the timing of closing the retail sales.\nOver the balance of the year we expect to acquire $450 million of multifamily assets in the Southeastern markets we are targeting.\nOur expectation is we will average initial first year cap rates in the low to mid-fours, and we hope to exceed that in some of the markets.\nWe have estimated total transaction costs for the transformation to be approximately $56 million, inclusive of debt breakage costs as we also plan to pay down debt with sales proceeds.\nWe are not providing guidance on interest expense since the timing is not completely finalized, although we have provided detailed guidance on debt repayments and its timing.\nWe also are not providing guidance on G&A for the year as we are executing many moving parts over the next few quarters.\nWe expect to establish full-year guidance for 2022 on our year-end earnings call.\nFinally, we reset our dividend to levels we expect to cover in 2022 at a 75% FAD payout ratio or better.\nWe believe our strategic executions will enable stronger FAD growth going forward as we allocate capital out of office assets that have protracted downtime and a recurring CapEx to NOI burden of 20% and to multifamily assets for which we have maintained high occupancy, excellent collections, and historically required recurring CapEx to NOI of only 6%.\nOur leverage will be very low as we execute sale transactions and when we are fully reinvested, we believe we will be able to sustain operating at even lower leverage levels than our prior governors.\nWhile we may be in the mid to high-5 times net debt to adjusted EBITDA range in the first year after executing these transactions, as we progress to second and third years of multifamily NOI growth, we would aspire to operate in the lower half of the 5 to 6 times range.\nAssuming the deleverage plan, we will have very little debt maturing in the near-term, none earlier than 2023 and our equity versus debt ratio is expected to get close to 80% to 20%, which would be very strong.\nWe have no secured debt in our capital structure, which provides us with flexibility to take on some agency debt or other secured debt as we have acquire apartments.\nMoreover, we believe we will continue to have most of our line available so strong liquidity will be maintained.\nPrior to redeeming the bonds and completing the sale of retail assets, we currently have approximately $1.35 billion of liquidity, including the full availability of our $700 million line of credit.\nAs we said when we announced the transformation last month, these transactions will help us achieve the following, one, accelerate our transformation into a multifamily focused REIT, which is the strongest asset class we've operated in and further de-risk our portfolio.\nTwo, provide us with capital to prudently invest in high growth of Southeastern markets.\nThree, we set earnings growth and geographically diversified utilizing our research in the last several years.\nFour, streamline and simplify our business model to promote sustainable growth and investor returns.\nFive, improve our cash flow characteristics providing lower volatility and lower CapEx, and greater growth going forward.\nAnd finally, delever to a targeted mid to high-5 times net debt to adjusted EBITDA range, assuming the repayment of debt and the redeployment of cash in the future multifamily investments.\nWe have operated both multifamily and commercial assets, and we know from experience that multifamily of the asset class that provides the most attractive long-term growth profile, delivers stronger and steadier cash flows, has lower capital requirements, and generates more consistent returns.\nConcentrating on multifamily strengthens our growth prospects and simplifies our story for investors, making access to capital even stronger, which further improves our business and credit profiles.\nOur research-led multifamily investment strategy has led us to invest in value-oriented multifamily assets that offer both favorable, long-term supply and demand fundamentals, and expanding into the selected Southeastern markets is a natural extension of the value creation strategies that we have proven in our local markets.\nOur multifamily strategies are differentiated and our execution track record convinces us that this is the best path forward for our shareholders, despite absorbing initial FFO dilution.\nFor the balance of 2021, we are focused on allocating capital to our targeted Southeastern markets and taking steps to acquire additional talent and expand our presence in these markets, maintaining our leasing momentum at Watergate 600, scaling our renovation program, and sharpening our pencil as we evaluate our shovel ready development opportunity at Riverside, as well as others in our portfolio, as the market improves.\nWe are excited about delivering value to our shareholders in this next important phase of WashREIT.\nWe look forward to talking to many of you about our transformation over the coming weeks and months, and we plan to provide updates as we move forward.\n", "role": "user" }, { "content": "washreit q2 core ffo per share $0.35.\nq2 core ffo per share $0.35.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We refer to these risks in our SEC filings.\nParticipating in today's call with me will be Paul McDermott, President and Chief Executive Officer; Steve Riffee, Executive Vice President and Chief Financial Officer; Karen Filter, Senior Vice President and General Counsel; Drew Hammond, Vice President, Chief Accounting Officer and Treasurer; and Graham Montgomery, Vice President and Head of Research.\nWe are joining you from our corporate headquarters in Washington DC, where I've been working alongside many others from our team with social distancing and other safety protocols in place.\nWe are all very happy to be back together on a voluntary basis, and while our technology has been incredibly effective, and that's helped us be successful while working remotely, there is no substitute for in-person collaboration.\nLast evening, we released our earnings for the third quarter of 2020.\nOur results were largely in line with our expectations and our portfolio continues to demonstrate strong, stable credit performance as we absorb the near-term impact of the pandemic.\nWhile uncertainty remains regarding how protractive this economic downturn will be, we remain well-positioned to bolster our long-term strategic growth plans once the operating environment improves.\nAhead of the downturn, we reshaped our portfolio with a long-term vision and this focus has proven to be prudent from a capital allocation perspective.\nOur multifamily collections are consistently above national averages, and our suburban expansion through the Assembly portfolio acquisition is performing well.\nWhile our operating environment has changed drastically over the past seven months, we swiftly adjusted to the demands of today's market.\nWe have fully prepared our commercial properties for reentry by upgrading ventilation filters, implemented enhanced cleaning protocols and installing contactless, opening technology and protective shields in addition to many other safety enhancements.\nWe have worked diligently with tenants who have been financially impacted by COVID-19 to arrange deferral agreements that support their financial position and cash flow needs.\nFortunately, these deferral arrangements have not been material and represent a cumulative impact of less than $0.01 per share through 2021.\nWhile uncertainty remains regarding how protractive this eventual recovery will be, we are confident in our ability to absorb the near-term impact while preserving our long-term growth opportunities for three reasons.\nFirst, our portfolio and local economy continued to show resilience.\nThe impact of local job losses for office using sectors in the Washington Metro region has been limited with no office using sector losing more than 4% of the total workforce year-over-year, according to BLS data.\n45% of our multifamily residents and 56% of our office tenants are employed in professional and business services, government or information sector jobs.\nFurthermore, nearly half of our professional and business services tenants are government contractors, which is a key differentiator as they are sticky office using tenants linked to important programs, which results in significantly more stability in our region compared to other major metro areas and the US overall.\nThe second reason we are confident in our near-term outlook and long-term growth prospects is the continued stability demonstrated by our multifamily portfolio.\nOur value oriented multifamily portfolio has held up well during the pandemic and offers favorable demand and supply fundamentals over the long term.\nThe Washington Metro region has a significant housing [Phonetic] shortage that has been accumulating over many years, as well as an affordability crisis is only getting worse as the cost of homeownership continues to drive above affordable levels for median income earners.\nThus, the largest rental cohorts remain underserved by new supply.\nOver 95% of the multifamily units that have been constructed over the past seven years are unaffordable for renters who earn $75,000 per year or less.\nA segment, which comprises 57% of the Washington Metro rental base.\nOver 75% of WashREIT's units are affordable to those renters with a sustainable rent to income ratio of 30% or lower.\nAlso driving our long-term demand fundamentals is that 80% of our multifamily portfolio is located in Northern Virginia, where job growth is the strongest and job losses have been the lowest.\nNorthern Virginia has mission-critical cyber and technology jobs as government programs continue to grow and an inbound market of technology jobs compared to more expensive markets which are losing technology jobs during the pandemic.\nCBRE released its annual Tech-30 market report earlier this month, which ranks the nation's top tech markets in terms of resilience and potential for growth.\nThe Washington Metro ranks second in the nation based on the presence of the best performing large cap tech companies and the best combination of modern office rents with a growing high-tech labor pool.\nTech sector leasing activity in Northern Virginia is expected to increase in the coming quarters with more than 1.5 million square feet of active requirements in the pipeline according to CBRE.\nThe third reason we are able to absorb the near-term impact of the pandemic, while preserving our long-term growth opportunities is our research-driven approach to long-term capital allocation, which improved and derisked our portfolio ahead of this downturn.\nOur suburban multifamily portfolio, which we acquired last year has performed very well as the preference for extra space, value and access to high quality schools offered in our suburban markets combined with a reduction in the perceived benefits of city Living during the pandemic has provided the rare opportunity to continue to grow rents at our suburban assets, despite challenging market conditions.\nWe have experienced minimal credit loss to date, largely due to the sale of 75% of our retail NOI last year, including our riskiest big box retail assets.\nFor the small amount of retail we retained, we collected 95% of contractual retail rents during the third quarter including retail tenants in our office properties.\nOur retail portfolio includes a combination of assets in transit oriented locations with strong redevelopment and mixed-use densification potential, as well as highly integrated neighborhood centers and high net worth neighborhoods.\nOur office portfolio is also well positioned with a weighted average lease to maturity of 5.2 years, no exposure to co-working, no single tenant risk, strong and stable collection rates and limited near term lease expirations.\nAll of our tenants have their own private space, which has become increasingly essential during the pandemic.\nAdditionally, over half of our office portfolio is located in Northern Virginia, where commercial technology and government technology are expected to continue to fuel growth in the years ahead.\nWhile tenant decision making remains slower than normal, we are well positioned to once decision making accelerates with high quality, move-in ready space at value oriented pricing.\nMany of our speculative leasing opportunities which had excellent momentum, pre-pandemic, are in our best assets including Watergate 600, Arlington Tower and Silverline Center.\nWe believe that cost effective, healthy and adaptive space is going to win in this environment as the market recovers.\nFinally, we will soon learn the results of the federal elections and while we are not predicting the outcome, Washington has a potential catalyst if the results bring alignment between the executive and legislative branches of government.\nHistorically, if such alignment occurs, more legislation is passed, which has strongly correlated to greater office absorption for Washington DC as lobbyist and law firms ramp up for drafting and implementing changing legislation.\nWhile we are not relying on this result, it would represent a unique catalyst for the Washington DC office market on all other gateway markets.\nAll in all, we are confident in the resilience of our portfolio over the near term, growth potential over the long term, and the opportunity for further transformation going forward.\nWhile we are in the midst of a pandemic, now is not the time to take our eye off of our long-term goals.\nThe aspects of our business that define our strength as an institution over the long term are also critical to our success over the near term.\nWe were honored to be recently named the Best Corporate Responsibility Program in DC and Maryland by NAIOP.\nThis award recognizes our robust ESG program from the environmental projects that were recently implemented to WashREIT's commitment to giving back to our local communities.\nAdditionally, earlier this year, we formed the WashREIT Diversity, Equity, Inclusion and Belonging counsel to help the company continuously evolve to become an even more welcoming workplace for all individuals.\nWe look forward to updating our stakeholders as we execute our plans to continue to promote a workplace that engages the full potential of all individuals and where equity is a core value.\nI'll start off by discussing our cash collection performance before reviewing our third quarter results and outlook for the remainder of 2020, as well as recap our most recent steps to further strengthen our balance sheet.\nOur multifamily collections continue to be excellent, which as Paul outlined is a testament to our strong portfolio of credit and the resilience of the Washington Metro economy.\nWe collected 99% of cash in contractual rents during the third quarter, and our rent collections through the first three weeks of October are in line with our quarterly trends.\nWe have offered deferred payment programs to residents who have been financially impacted by the pandemic, and only $58,000 of deferred multifamily rent remains outstanding year-to-date.\nOur monthly multifamily collection performance continues to track above national averages.\nAs Paul highlighted, we attribute our outperformance in part to our high exposure to industries that have outperformed during this crisis and low relative exposure to underperforming industries.\nWe track the industries our residents are employed in and our exposure is most heavily weighted to the most resilient economic sectors and likewise less weighted to the industries that have been most impacted, which has resulted in very high collection rates and stable cash flows.\nThe impact of COVID-19 on the Washington Metro market has been contained primarily through the leisure and hospitality, education and health and retail sectors, which represent over 75% of Washington Metro job losses, but only 55% of total job losses nationally through August.\nThese three sectors comprise approximately 20% of our resident exposure, and only 8% of our office tenant exposure.\nThus we are experiencing high collection rates and cash flows, despite this crisis.\nTurning to commercial, our office and retail collections improve during the third quarter compared to already strong performance in the second quarter, primarily due to stabilizing trends.\nWe collected 97% of cash rents from office tenants during the third quarter and over 99% of contractual rents, which excludes rent that has been deferred.\nAs of October 20, our collections for October are in line with the same period in September.\nSimilarly to our multifamily resident industry mix, our office tenants are more weighted to the strong economic sectors than the US overall, which has helped us experience limited credit loss.\nYear-to-date, we've agreed to defer a net $1.4 million of rent for office tenants, and we expect to collect 80% of that deferred rent by year-end 2021, with the balance thereafter.\nThese amounts have not grown significantly since the second quarter when we had worked through most of these arrangements.\nRetail comprised 6% of NOI year-to-date, and while retail tenants have struggled the most, we collected 88% of cash rents in the third quarter.\nExcluding deferred rent, our collection rate was approximately 95% during the third quarter.\nYear-to-date, we've agreed to defer a net $1 million of rent for retail tenants, and we expect to collect 50% of that rent by year-end 2021.\nOverall, we've only deferred a small portion of rent and the expected cumulative cash NOI impact is less than a $0.01 per share through year-end 2021.\nTo date, we've not incurred material credit losses related to COVID-19.\nDuring the third quarter, we incurred approximately $0.01 per share of bad debt expense, and it was primarily attributable to COVID-19.\nTurning to the balance sheet, we are pleased to report that we've addressed upcoming debt maturity needs and further strengthened our already strong liquidity position by executing a $350 million 10-year Green Bond.\nThis transaction represents our inaugural Green Bond and further demonstrates our commitment to sustainability goals, which now includes achieving IREM [Phonetic] certification for the Assembly portfolio, as well as LEED Silver certification for Trove.\nNot only are these certifications a way to elevate operations to the WashREIT sustainability standard, but we are raising the bar for the entire value-add multifamily sector, which has often locked the investment in sustainability and efficiency opportunities.\nWe intend to be among the first in the country to achieve IREM certification for existing multifamily properties.\nAs of September 30, we have approximately $520 million of liquidity.\nFollowing the closing of the executed 10-year Green Bond this quarter, we will have no debt maturing until the fourth quarter of 2022 and a weighted average debt maturity of five years, further strengthening our liquidity.\nIn 2020, we have demonstrated access to long-term, unsecured debt markets, term loan markets and eliminated secured debt.\nWe maintain investment grade ratings of BBB Flat and Baa2 by S&P and Moody's respectively.\nWe expect to continue to remain well within our bank and bond covenants and have access to the mostly undrawn line of credit, if needed.\nAgain, we have no secured debt on our balance sheet, which allows us flexibility as we continue to improve our portfolio.\nOur third quarter financial performance was in line with our expectations given the ongoing economic disruption.\nWe reported core FFO of $0.36 per diluted share.\nCompared to the prior year, overall same-store NOI declined 4.9% and 3.6% for the third quarter and year-to-date periods on a GAAP basis, and 4.1% and 2.9% respectively on a cash basis.\nOur multifamily same-store NOI decreased by 3.8% year-over-year on a GAAP and cash basis.\nOverall, our multifamily fundamentals are holding up well, given the operating environment that we're in, our suburban portfolio continues to outperform in occupancy and lease rate growth due to high demand for spaces value oriented units.\nGross lease rates for suburban properties increased 1.1% during the third quarter on a blended basis and effective lease rates increased 0.2% on a blended basis.\nGross lease rates for urban properties declined by 2.9% on a blended basis, and effective lease rates for our urban properties declined by 4.6% on a blended basis.\nIn total gross lease rates declined approximately 1.7% on a blended basis during the third quarter and effective lease rates declined 3.1% on a blended basis.\nDuring the quarter, average same store occupancy dipped slightly but increased back to 94% at quarter end.\nWhile urban rents were generally under more pressure, our new rent declines were modest compared to national averages, another major gateway markets.\nOperating portfolio occupancy which excludes Trove, our recently delivered property that is in initial lease up was 94.6% at September 30, up from 94.3% for the end of the second quarter.\nSame-store office NOI declined 4.9% on a GAAP basis and 3.7% on a cash basis, driven by an expected decline in parking income, a couple of known and expected move-outs and credit losses related to COVID-19.\nWhile parking income increased by about 24% compared to the second quarter, as transient parking increased, we have experienced monthly parking contract cancellations as full reentry has been delayed.\nExcluding the decline in parking income and credit loss related to COVID-19, third quarter same-store office NOI would have increased slightly on a year-over-year basis.\nSame-store NOI decreased at our residual retail centers, which we report as other by approximately $300,000 on a GAAP basis and $270,000 on a cash basis driven primarily by higher credit loss, which included receivables due from retail tenants impacted back COVID-19 deemed uncollectible.\nThe combined write-off for all office and retail tenants was less than $0.01 per share and was primarily related to COVID-19.\nTurning to leasing activity, while velocity and touring was hit by the economic shut down, we signed approximately 40,000 square feet of office renewals, approximately 8,000 square feet of retail renewals, and 19,000 square feet of new office leases and 6000 square feet of new retail leases during the quarter.\nWe achieved rental rate increases of 17.6% on a GAAP basis and 3.4% on a cash basis for office renewals and 10% on a GAAP basis and negative 3.9% on a cash basis for new office leases.\nRental rates increased 16.4% on a GAAP basis and 3.3% on a cash basis for retail renewals and remained relatively flat on a GAAP and cash basis for new retail leases.\nThe impact of operational cost saving initiatives at our commercial properties reduced operating cost by approximately $680,000 net of tenant recoveries during the third quarter.\nThis step down in cost savings compared to the $850,000 of cost savings recognized in the second quarter was primarily related to higher cleaning expenses due to an increase in the number of spaces being utilized at our office properties.\nToday, approximately 50% of our office spaces are being utilized by some of the tenants personnel.\nEven though utilization by headcount remains lower, our protocols require us to clean the entire office space, even if only a few employees are using it.\nWe expect to continue to benefit from operational cost savings until office spaces return to normalized utilization.\nHowever, we anticipate operational cost savings will stabilize ahead of hitting normal pre-pandemic utilization levels.\nNow I'd like to turn to discuss our financial outlook.\nWhile uncertainty remains surrounding the magnitude of the pandemic and the durability of recovery, we are now seven months into the pandemic and feel better about our ability to forecast the impact of COVID-19 for the balance of 2020.\nThe historical economic stability of the Washington Metro region during downturns has been further demonstrated during 2020.\nHowever, the duration and extent of economic disruption in 2021 remains uncertain.\nWhile we're not providing guidance for 2021 today, we believe the growth in quarterly FFO that was originally expected in 2020 will resume in sequential quarters in 2021, from a low in the first quarter of 2021 in terms of cadence.\nFurthermore, we are still uncertain overall about the extent, impact and duration of the pandemic disruption.\nWe are reinstating full-year 2020 guidance with the core FFO per share range of $1.44 per share to $1.46 per share.\nWe expect our multifamily NOI to range from $59.25 million to $59.75 million.\nNon-same-store NOI, which includes Trove to range from $26.75 million to $27.25 million.\nOffice NOI to range from $81.5 million to $82 million and other NOI to range from $11.5 million to $12 million.\nWe previously expected significant multifamily growth in 2020 for growth is now likely going to be deferred until the second half of 2021 and thereafter.\nMultifamily occupancy increased 30 basis points during the quarter supported by strong demand for our suburban properties, which allowed us to maintain occupancy for growing rents and preserving our seasonal rent roll.\nWe continue to outperform the Washington Metro market on resident retention, as more of our residents are choosing to stay with us relative to our multifamily operators in the region.\nOur suburban retention was very strong at 63% during the third quarter, compared to the Washington Metro suburban average of 58%.\nOur urban retention was 55% during the third quarter, well above the Washington Metro urban average of 46%.\nTotal portfolio retention was 58% during the third quarter compared to the Washington Metro overall average of 54% according to RealPage.\nWhile we are experiencing more pricing power and occupancy growth in our suburban submarkets, our urban submarkets showed responsiveness to pricing strategies during the quarter.\nUrban application volumes rebounded from March lows and trended 40% above prior year levels during the third quarter and remained above prior year levels through October.\nGoing forward, we will focus on keeping occupancy as strong as possible throughout the winter months in advance of the expected lift from the spring leasing season.\nTrove continues to lease up and is on pace to add growth in 2021, and an additional growth in 2022.\nThe pace of lease-up continues to be in line with our post onset of the pandemic expectations and we just delivered Phase II of this month.\nTrove lease-up had just begun when social distancing measures drew onsite touring to a halt.\nAnd while we had much success converting virtual tours and design leases during the early summer months, we have pushed our expectations for stabilization to the first quarter of 2022 from the fourth quarter of 2021.\nWe now expect to incur a loss between $400,000 to $500,000 in 2020, and continue to expect to reach breakeven occupancy near year-end.\nNow moving on to commercial, tenant improvement build outs or near-term lease commencements have continued to progress uninterrupted.\nWe still have approximately 39,000 square feet of signed leases that have not yet rent commenced, and expect 16,000 square feet of those signed leases to commence by year-end.\nAlthough physical tours had paused, they resume toward the end of the second quarter and while traffic continue to increase throughout the third quarter, it remains well below pre-pandemic levels.\nOverall, decision making continues to be slow and the pace of Phase III entry is slower than originally anticipated.\nThey picked up in recent weeks as some tenants have reassessed reopening strategies and are signaling a near-term phased approach to reentry.\nDaycares and some local schools have reopened and if the trend continues, we expect office utilization to continue to increase at a current gradual pace.\nOur initial revenue expectations for 2020 included speculative office lease commencements that have been impacted by the current economic disruption.\nAs Paul mentioned, the majority of this leasing was expected to occur during the second half of 2020 at high-quality space where leasing momentum had been the strongest.\nWe expect the lower speculative leasing assumptions to continue to be somewhat offset by higher revenue, lease renewals and extensions, and we have minimal commercial expirations for the remainder of 2020 limiting the downside risk of our internal leasing estimates.\nWe expect occupancy to remain stable through year-end.\nCurrently, we expect to achieve additional operating cost savings of approximately $525,000 during the fourth quarter.\nThis amount is net of expenses associated with preparing our buildings for reentry and the cost savings that we expect to pass along to our tenants.\nWe expect G&A including lease expenses to range from $23.5 to $24 million and interest expense to range from $37.5 million to $37.75 million.\nAs mentioned on previous calls, we've lowered our initial capital expenditure expectations, including lowering development spending.\nWe now expect development expenditures to range from $30 million to $35 million.\nWhile our future multifamily renovation pipeline remains intact, the program remains suspended until the market allows for rent increases to deliver the appropriate ROI.\nWe are pleased that nearly all of our future renovation potential is our strongest performing suburban assets which will likely recover sooner than urban markets post pandemic.\nAnd while market conditions remain highly uncertain, we feel confident in our ability to navigate these uncertain times over the near term, while retaining the operational flexibility necessary to bolster our long-term growth once operating conditions improve.\nIn closing, while we are operating in a challenging environment, we remain confident in our ability to effectively manage through this period of uncertainty, while preserving the embedded growth of our assets.\nWhile we like others are dealing with an unprecedented pandemic, we have kept on executing, diligently strengthening the balance sheet, maintaining value, as well as preserving long-term growth opportunities.\nAt our current stock price, we believe that we offer a compelling value proposition for investors, with a 7% dividend yield on a dividend that we are covering, a strong liquidity position, our development and renovation pipeline that can and will be reactivated once conditions improve, and a solid long-term growth story.\n", "role": "user" }, { "content": "compname reports q3 core ffo per share $0.36.\nq3 core ffo per share $0.36.\nq3 ffo per share $0.36.\nsees fy 2020 core ffo per share $1.44 - $1.46.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: They can be accessed at ir.\nFollowing our prepared comments, we will open up the call for our question-and-answer session.\nWe describe these risks and uncertainties in our filings with the SEC, including our 10-K for the fiscal year ended September 30, 2020.\nThe extent of these impacts, including the duration, scope, and severity, is highly uncertain and cannot be predicted with confidence at this time.\nWe will also be referencing non-GAAP financial measures during the call.\nI'm going to start with an overview and update on the ransomware attack that we reported on Monday.\nWe're following strict protocols laid out by industry-standard incident response directives.\nBecause of this, we're being careful not to share certain details around the incident at this time.\nHowever, following is information that I can share with you today.\nOn Saturday, January 23, our systems identified what we've quickly determined was a ransomware attack.\nWe immediately implemented our business continuity processes and initiated our response containment protocols.\nThese processes have been supported by cybersecurity experts, and these include Dell SecureWorks, a global instant response leader.\nThese actions included taking preventative measures, including shutting down certain systems out of an abundance of caution.\nWe've been in active communication with law enforcement.\nWhile our incident response is still ongoing, we currently have no evidence that our customers' or teammates' data has been compromised.\nIn addition to our containment, recovery, and remediation efforts, we've taken steps to supplement the existing security monitoring, scanning, and antivirus protocols already in place.\nWe're committed to completing a full forensics investigation, and we're taking all appropriate actions in response to our findings.\nWestRock maintains a broad set of insurance coverages that provide protection for the business operations and assets of the company.\nThroughout this entire incident, we've been in constant communication with our customers to share with them the impact on their business.\nWe've been very appreciative of their understanding and support as we work through this challenging situation.\nOur teammates and third-party experts have literally been working day and night to respond to this attack and safely restore our systems.\nOur response is varied by operating the location.\nMost of our mills and converting locations have continued to produce and deliver.\nIn locations where we've had systems issues, we have been and are using alternative and, in many cases, manual methods to process and ship orders, and this has limited our shipments.\nThe full restoration of the administrative processes of our business will take time, and we're implementing workarounds, including manual processes.\nWe're doing all that we can throughout our company to respond to our customers' needs.\nWe're only five days into this, and we're in the middle of our response.\nWhat I've shared with you represents the information that we can share at this point given where we're at in the stage of our response.\nWe'll provide additional detail on the impact of the attack at the appropriate time.\nNow, let's turn to the quarter.\nWestRock remains very well-positioned for long-term success, as demonstrated by our strong results in the quarter.\nOur markets continue to be shaped by changing customer habits and preferences that are driving increased demand for sustainable fiber-based packaging.\nThese trends fit well with our strategy of increasing our participation in high value-added packaging solutions and away from sales of lower-margin commodity paper products.\nOur overall packaging volumes increased by 5% in the first fiscal quarter, including e-commerce volume growth of 23% on a per-day basis.\nNorth American corrugated box shipments increased more than 11% per day in December and over 8% for the quarter.\nConsumer shipments of packaging were also very strong, up 2.4% year over year.\nWe executed our strategic projects during the quarter, despite immense challenges that the pandemic has presented for large construction projects.\nOur teams that are completing the projects at our Florence and Tres Barras mills have made tremendous progress.\nWe successfully started up our 710,000-ton paper machine at Florence that has replaced three older obsolete paper machines.\nWe successfully completed a major outage at our Tres Barras mill during the quarter, and this sets us up to complete our major expansion project in the spring.\nOur company generates strong free cash flow over the long term.\nThis quarter's cash flow was exceptional.\nWe generated $562 million of adjusted free cash flow in the quarter.\nWe used the vast majority of this cash flow to reduce our net funded debt by $489 million.\nOur net leverage ratio declined sequentially from 3.03 times to 2.86 times.\nWe expect that fiscal '21 will be the sixth consecutive year of strong free cash flow.\nWe have increasing line of sight toward returning to our targeted leverage ratio of 2.25 to 2.5 times.\nAll of this performance is being delivered in very challenging circumstances by the incredibly resilient WestRock team.\nWe recognized each one of our teammates in the quarter with a one-time payment that accumulated to a total of $22 million.\nSales of $4.4 billion, adjusted segment EBITDA of $670 million, and adjusted earnings per share of $0.61 per share in the quarter were all in line with the prior-year quarter.\nOur packaging business has proven to be resilient throughout the pandemic.\nPackaging volumes measured in tons were 5% higher compared to the prior year.\nOffsetting this were declines in shipments of export containerboard, especially SBS and pulp, that totaled 470,000 tons.\nThis was a decline of approximately 180,000 tons or 27% lower than last year.\nThe increase in sales of higher value-added packaging more than offset lower corrugated pricing from previously published index reductions.\nRISI has published higher prices in multiple grades during the fiscal -- first fiscal quarter.\nThis includes containerboard, specialty kraft, CNK, and CRB that we expect will benefit our results during the balance of the fiscal year.\nCost inflation was driven primarily by higher OCC prices and ongoing wage and healthcare cost increases and was offset by continued productivity gains and KapStone synergies.\nOur free cash flow was unusually strong in the first fiscal quarter, and this was aided by WestRock's pandemic action plan.\nWe remain focused on increasing our share of higher value-added packaging and reducing our dependence on sales of paper to less attractive markets.\nWe made progress during the quarter.\n73% of our sales were packaging sales, an increase of 5% or approximately 100,000 tons compared to last year.\nThe growth in packaging was driven by higher e-commerce demand, strong industrial shipments, including our Victory distribution channel, as well as growth across our food, beverage, beauty, and healthcare markets, with customers further utilizing our innovative solutions.\nShipments of paper declined by 10% or 180,000 tons compared to last year.\nThis included a reduction of 125,000 tons in shipments of export containerboard.\nHigher box demand in North America required us to shift production to serve higher-value integrated box and domestic containerboard customers.\nIn Consumer, we had similar demand trends.\nStrong volumes in our domestic food and beverage packaging and paperboard business led to a production shift to those higher-value markets.\nThe pricing environment has improved and record a RISI published pricing increases across several of our major grades, including a $50 per ton North American containerboard price increase in November and a $40 per ton unbleached kraft price increase in December.\nWe're in the process of implementing these published price increases in our business.\nOur integrated mill converting distribution and machinery capabilities provide us the platform to provide our customers with value-added packaging solutions.\nWe placed more than 100 machinery solutions in the quarter, bringing our total machinery replacements to more than 4,150.\nCustomer demand for machinery solutions continues to grow, as they seek ways to improve their productivity and navigate the challenges caused by the pandemic.\nFor instance, a number of large retailers are implementing our Pak On Demand and Box On Demand systems to grow their ship-from-store business.\nOur vision is to be the premier partner and unrivaled provider of sustainable winning solutions for our customers.\nSustainable fiber-based packaging is a key component of the circular economy.\nWe're partnering with our customers to help them achieve their sustainability goals.\nWe've collaborated with The Home Depot to develop custom packaging for plants and horticulture products.\nThis example highlights our ability to solve our customers' critical challenges and enhance their ability to participate in the e-commerce channel.\nWe've collaborated with Kraft Heinz to launch the new Heinz eco-friendly sleeve multipack in the United Kingdom.\nBy replacing plastic with fully recyclable fiber-based packaging, Kraft Heinz will remove over 500 tons of plastic from supermarket shelves and reduce their CO2 footprint by 18%.\nThis innovative project has incorporated the carton design, paperboard science, and machinery capabilities of the WestRock Enterprise team.\nFor Titan Farms, Enterprise team has developed attractive folding carton containers for peaches that provide both ventilation and product protection.\nWe're replacing plastic clamshells with fiber-based packaging and helping our customers meet their sustainability goals.\nAnd for General Motors, we supplied them with a complete portfolio of packaging to rebrand their ACDelco product line, including very valuable counterfeit protection.\nThis is an enterprise win that leverages our digital platform capability to bring our customers' connected packaging solutions.\nThe pandemic has brought many challenges and forced business to operate differently and through different channels.\nWe're well-positioned to support our customers with the packaging and supply chain solutions that help them succeed in their markets.\nCorrugated Packaging segment delivered adjusted EBITDA of $458 million in the first quarter.\nCorrugated box demand was strong across most end markets, highlighted by e-commerce year-over-year growth of 23%, as well as strength in beverage, industrial, and distribution through our Victory Packaging business.\nHigher box demand has allowed us to shift our containerboard shipments away from lower-margin export markets to serve our higher-value box and domestic customers.\nOur export shipments fell by 125,000 tons compared to the prior year, and our integration rate increased to 80% in the quarter.\nOffsetting this favorable business mix was the continued flow-through of the total of $40 per ton of containerboard index price declines that occurred in late 2019 and early 2020, as well as the $36 per ton increase in recycled fiber cost as compared to last year.\nWe've been implementing the $50 per ton containerboard index price increase that PPW published in November.\nOur mill system operated well, with no economic downtime taken in the quarter.\nWe completed the KapStone acquisition just over two years ago and have achieved our target of $200 million in annual run-rate synergies.\nThis includes our reconfiguration of the North Charleston mill.\nWhen we acquired KapStone, we saw that we would be able to improve their operations and fill out the geographic footprint of our North American corrugated mill and box plant system to better serve our customers.\nThis has worked well.\nVictory Packaging, our distribution business, has worked out better than we anticipated due to our ability to integrate supply chain solutions into our service offerings.\nThis has been even more important during the pandemic.\nIn Brazil, mill outage reduced total mill production by approximately 48,000 tons.\nThe production, sales, and earnings decline was a direct result of the outage as market conditions remained strong in the region.\nThe Consumer Packaging segment's adjusted EBITDA in the first quarter was $234 million, so a $50 million increase from the prior year.\nAdjusted segment EBITDA margins increased by 270 basis points to 14.7% compared to the prior year.\nStrong demand across our core food, beverage, and healthcare packaging end markets drove 2.4% higher converting shipments and $18 million higher EBITDA by shifting shipments away from lower-margin SBS and pulp markets.\nOur mill and converting system ran well in the quarter.\nCost reductions and efficiency improvements contributed $40 million of productivity and operational improvements in the quarter.\nWhile SBS demand in the foodservice and commercial print markets was lower compared to the prior year, we saw a sequential improvement in both markets compared to our fiscal 2020 fourth quarter.\nWe took 39,000 tons of economic downtime primarily in the first two months of the quarter.\nThis compares to 87,000 tons in our fiscal 2020 fourth quarter.\nAs we noted previously, we restarted our idled paper machine at Covington in the quarter due to increased demand.\nBacklogs increased in the quarter to between four and six weeks across all of our consumer grades, including SBS, and inventories remained steady.\nWe're developing alternatives to capture more value from our current assets, and we made significant progress during the quarter.\nIn addition to running containerboard at the Evadale mill, we're qualifying CNK from Evadale to serve our customers' growing CNK needs while reducing SBS production.\nWe're still in the process of trialing the board with our customers, as well as working through the engineering needed to ramp up production.\nSo we're in our fiscal second quarter.\nWe see strong demand across our core packaging markets.\nWe're implementing the PPW paperboard price increases that were published during our fiscal first quarter.\nTurning to Slide 10.\nThe pandemic action plan has been an important component of our ability to pay down debt.\nOver the past three quarters, the plan has contributed an additional $600 million in cash.\nWe are on track to achieve our goal of approximately $1 billion in additional cash available for debt reduction through the end of calendar year 2021.\nWe started the year with a strong first quarter.\nGoing forward, we see opportunities to grow earnings given the strong demand for paper-based packaging, along with implementing the previously published price increases and recognizing the benefits of our strategic capital projects.\nWe have a strong track record of generating free cash flow.\nEach of the past five years, we have generated more than $1 billion of adjusted free cash flow, and we have generated over $1.6 billion of adjusted free cash flow during the past 12 months.\nWith our ability to generate strong free cash flow, we have a road map to return our net leverage ratio to the targeted range of 2.25 to 2.5 times.\nAnd as Steve mentioned, we continue to work on remediation and recovery from the ransomware attack.\nWe will provide additional detail on the financial impact of the attack and provide an outlook for the quarter and the year at the appropriate time.\nTurning to Slide 12.\nWe've been very clear about our near-term focus on paying down debt, investing in our business, and returning capital to our stockholders through our dividend.\nOver the past 12 months, we've reduced our adjusted net debt by more than $1.3 billion, and our net leverage ratio has improved from 3.01 times to 2.86 times.\nCapital investment plans remain unchanged, and we still expect fiscal 2021 capital investments of $800 million to $900 million.\nOur Florence paper machine started up this past quarter, and we expect the Tres Barras project to be completed during the spring and begin ramping up in the second half of the fiscal year.\nThese strategic investments, combined with our KapStone synergy realization, will contribute approximately $125 million of EBITDA in fiscal year '21 and a similar amount in fiscal year '22.\nLonger term, we expect normal capital investment levels will be between $900 million and $1 billion.\nOur cash flows are resilient.\nWe will continue to pay a competitive and growing dividend, and we also expect the potential for M&A opportunities that help us grow our packaging business and our integration rate.\nWestRock continues to operate from a position of financial strength and is supported by our significant cash flow generation.\nWe have minimal near-term debt maturities and approximately $3.4 billion of liquidity, and a road map to return our leverage to our targeted range of 2.25 to 2.5 times.\nWhile the ransomware attack on WestRock is receiving our immediate attention and urgent response, I remain very optimistic about WestRock for the long term.\nWestRock provides sustainable fiber-based packaging.\nIt's a market that's benefited from recent trends in consumer preferences and buying behavior that we expect to continue in our favor.\nWe're remarkably well-positioned to meet our customers' needs.\nWe see strong supply and demand conditions in almost every major grade, as well as strong demand for our converting and machinery solutions.\nExport markets are tightening.\nThe need for packaging to serve the stay-at-home economy, as well as sustainable fiber-based packaging to replace plastic is growing.\nThe investments that we've made on our box plant system, our mill system, and our capabilities are benefiting our results and will continue to do so as we bring our strategic projects online over the next year.\nWe're generating very attractive free cash flows that, over the near term, will be used to reduce debt and our leverage ratio and, longer term, will be used to return capital to our stockholders and grow our business.\nAll of our success is due to the incredibly resilient WestRock team that has dealt with and is dealing with changing market conditions, COVID-19, and our ransomware attack.\nOur resilience gives me confidence in our ability to succeed and to create value for our customers, communities, and stockholders.\nJames, we're ready for Q&A.\nAs a reminder to our audience to give everybody a chance for a question, please limit your question to one with a follow up as needed.\nAlso, we're not able to give any further information on ransomware attack.\nWe'll get to as many questions as time allows.\nOperator, can we take our first question, please?\n", "role": "user" }, { "content": "q1 sales $4.4 billion versus refinitiv ibes estimate of $4.41 billion.\nq1 adjusted earnings per share $0.61.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: They can be accessed at ir.\nFollowing our prepared comments, we will open the call for a question-and-answer session.\nWe describe these risks and uncertainties in our filings with the SEC, including our 10-K for the fiscal year ended September 30, 2021.\nWe will also be referencing non-GAAP financial measures during the call.\nWe have a lot of new and exciting updates to communicate this quarter.\nFirst, I'll provide a high-level overview of fiscal first quarter results.\nAfter that, I'll walk through our new segment reporting structure, which went into effect this quarter and explain the rationale for this change.\nLastly, I'll update you on our broad-based transformation approach, which is underway and provide examples of the significant opportunities we see to deliver a step change in performance for the business.\nFollowing that, our new CFO, Alex Pease, will provide a deep dive into our quarterly performance for our newly organized segments and other critical financial performance.\nWe will then move to Q&A and answer any questions you may have.\nWe started our fiscal year off with a solid quarter that was in line with our expectations and within our guidance range.\nDespite continued supply chain disruptions, higher inflation and increased absenteeism related to COVID, we executed well.\nFor the fiscal first quarter, sales were $5 billion, up 13% year over year.\nWe delivered consolidated adjusted EBITDA of $680 million, up 2% over the same period and adjusted earnings per share came in at $0.65 per share, up 6.6%.\nDuring the quarter, we also continued to aggressively buyback stock, repurchasing roughly $100 million worth of stock while maintaining net leverage of 2.4 times, well within our desired range of two and a quarter to two and a half times.\nAs a reminder, the first quarter was a record maintenance quarter for WestRock.\nWe had a number of projects delayed from previous quarters due to COVID and the ransomware incident last year and I'm pleased to report we completed all scheduled maintenance projects safely.\nCOVID continues to cause disruptions, impacting labor at our mills and box plants as well as further contributing to ongoing supply chain challenges.\nDespite these challenges, we are resilient and continue to execute well, as demonstrated by our strong results.\nFinally, demand for our products across consumer, corrugated, machinery and other product lines remain strong and our backlogs are near record levels.\nLet me now provide an update on our new reporting structure.\nI'm on Slide 4.\nAs a reminder, WestRock previously reported in two segments: corrugated packaging and consumer packaging.\nWe are now reporting in four segments to provide greater visibility into the integrated performance of our packaging businesses, while we focus our merchant paper business on critical strategic markets as well as providing material for the packaging converting businesses.\nThis new structure will help us highlight the performance of all elements of our portfolio.\nWe reorganized into the following segments.\ncorrugated packaging, which includes integrated corrugated converting operations and represented 44% of first quarter sales.\nConsumer packaging, which includes integrated consumer converting operations and accounted for 23% of first quarter sales.\nPaper, which includes all third-party paper sales and made up 27% of first quarter sales and distribution which includes our distribution business, which is roughly 6% of sales.\nPerhaps more importantly, this new structure will further enable an enterprise sales approach to drive growth as well as greater efficiency and synergy to improve profitability.\nI will describe this in more detail shortly.\nLet me now spend a few minutes on where WestRock is today and where we are headed.\nWe have been driving a comprehensive strategic review of our markets and our go-to-market approach.\nIn parallel, we have taken a hard look at all our assets to evaluate their merits and their position in the portfolio while also evaluating our ability to drive to a greater level of operational excellence and profitability.\nAnd we're already making progress.\nWe've made significant strides in the integration of our consumer business and have implemented productivity improvement plans across the company.\nAnd the restructuring of our mill assets into one organization is already providing greater production flexibility across our footprint.\nI will share a more fulsome perspective in the future, but suffice it to say, we have significant opportunity.\nWe have not fully integrated many of the acquisitions we have made.\nWe need to turbocharge our digital strategy, not just in the back office, but also in manufacturing and innovation.\nWe have elements of the portfolio that are noncore to our integrated strategy and we have inefficiencies that must be addressed.\nOur profitability and our ROIC are not where they need to be.\nThis is going to change as we implement our transformation plan.\nImportantly, our senior leadership team is aligned and is mobilized to drive this change.\nTogether, we have developed this transformation plan and have shifted into execution.\nAt a high level, our plan includes three overarching priorities.\nSecond, drive a step change in our margins through pricing excellence, productivity, mix management and cost control.\nWe are implementing our new WestRock operating system that standardizes our systems and utilizes our digital tools to identify options to drive efficiency and do things even better.\nAnd third, generate consistent ROIC in excess of our cost of capital through disciplined investment, operational excellence and portfolio optimization where appropriate, while maintaining strong free cash flow, significant balance sheet strength and prudent capital allocation.\nLet me provide an update on each of our three strategic priorities.\nOur growth agenda is designed to maximize the value of the complete packaging solutions only WestRock can provide.\nOur combination of consumer and corrugated packaging, paper, machinery and access to distribution is unique in the industry and a strategic differentiator.\nIt enables us to sell integrated solutions that are valued by our customers and partner with them to ensure that they are responsive to macro trends such as sustainable packaging.\nWith our portfolio, we have the capability to deliver full packaging solutions that are unmatched in our industry.\nGeneral Motors is a great example of this and we were just recognized as our supplier of the year.\nWith GM, we have partnered to provide options for brand security that help combat counterfeiting issues in the supply chain process, we produced their primary parts packaging and secondary corrugated packaging using our global manufacturing footprint to ensure they have the right supply and the right place when they need it.\nInnovation and plastic replacement continues to be a growth driver.\nWe also can anticipate customer needs and introduce new products that support enhanced sustainability.\nThis quarter, we announced a partnership with Grupo Gondi in Mexico to provide our CanCollar product to ABI Mexico Grupo Modelo.\nThis expansion of CanCollar is an exciting development and one that demonstrates the growth potential of our sustainable products.\nOur integrated one enterprise approach is driving value and we are continually working to maximize this value while minimizing our exposure to lower-value markets.\nTo that end, we've completed the first phase of our portfolio analysis and I look forward to sharing more about this soon.\nLet's now turn to how we are going to drive margin improvement.\nHistorically, our margins in corrugated have been 18% and 16% in consumer, improving both as a key priority.\nAs we begin our journey of developing an enterprisewide operating system, our first focus has been quantifying the opportunity and identifying areas to tackle.\nIn recent months, we have standardized the measurement methodology in our operations and have identified significant opportunity to expand capacity without adding capital.\nWe have evaluated our asset footprint and see warehousing and logistic opportunities that we are optimizing.\nWe are also investing in our business to increase our level of integration and introduce automation, predictive analytics and other cutting-edge digital capabilities into our network.\nTo that end, we are constructing a state-of-the-art corrugated converting plant in the Pacific Northwest that will be cutting edge in efficiency and throughput.\nThis is just one example of many that we are excited to share.\nWe are aggressively focused on improving our ROIC in excess of our cost of capital.\nWhile improving our productivity is an important part of the equation, capital deployment and capital utilization are equally important.\nThrough our initial diagnostic work, we have identified opportunities to expand capacity without adding capital.\nWe have looked at our portfolio and identified noncore assets that don't meet our return thresholds and we have implemented a disciplined approach to capital deployment that directs our resources to only the highest return projects.\nWe are focused on ongoing efforts to drive best-in-class returns in our portfolio.\nAnd lastly, our senior leadership team now has an explicit ROIC component to our long-term compensation program.\nAdditionally, we are laser-focused on generating strong and consistent free cash flow and maintaining substantial financial flexibility in our balance sheet.\nThis strength enables us to invest in our business through all business cycles and also reward shareholders consistently.\nTo that end, we have aggressively paid down debt over the past several quarters and have increased the dividend twice in the past year.\nOur intent is to reinforce our commitment to a stable and growing dividend while also continuing to aggressively repurchase WestRock stock.\nAs a reminder, in Q4 of 2021 and Q1 of 2022, we have repurchased approximately $223 million of stock as an initial down payment on this strategy.\nWith our very strong free cash flow generation and our current valuation level, we intend to get more aggressive on our stock buybacks and are targeting repurchases up to $500 million over the next several months.\nWe will continue to monitor short-term fundamentals that provide the best return opportunities for our capital allocation.\nA lot of exciting change is underway at WestRock and I'm convinced about the significant value creation opportunities ahead for our company.\nWe are committed to executing our plan to drive enhanced shareholder value and our team at WestRock is motivated and enthusiastic about what is ahead.\nWe are focused on growing through innovation with new sustainable products and digital engagement tools that our customers and our consumers need in today's marketplace.\nWe have a new transformation office in place that is driving rigor in all that we are doing, including standardizing key operating and performance metrics across the asset base.\nWe have brought in a new supply chain leader, Peter Anderson, who is aligning our supply chain operations across the company with a focus on greater productivity and cost savings.\nAnd finally, I'm excited to have Alex Pease join us as CFO, effective November 2021.\nWith over 20 years of experience in corporate strategy, M&A, capital markets, portfolio optimization and broad-based business transformation as well as extensive public company experience, Alex has already proven to be a strong partner.\nI'll now ask Alex to provide the detailed rundown on our performance.\nI'm excited to be here for my first earnings call as CFO.\nBefore I review first quarter results in detail, I want to reiterate the diversity of opportunity that David described and reinforce the commitment to a fundamentally different level of performance.\nThe opportunities to drive a step change in margin as well as significant ROIC improvement are real.\nAnd rarely have I seen the team is aligned behind the vision for the future is this one.\nWhile it's early in the process, I have every conviction that we'll be successful and look forward to supporting David and the team in the journey.\nAnd with that, let's cover results.\nFiscal first quarter sales were up 13% to $4.95 billion and consolidated adjusted EBITDA increased 2% year over year to $680 million.\nConsolidated adjusted EBITDA margin was 13.7%.\nPrice and mix positively impacted earnings by $600 million year over year.\nThis higher pricing was mostly offset by $520 million in higher costs, including higher fiber, transportation and labor as well as the impact of the previously discussed high planned maintenance conducted in the quarter.\nAs a reminder, the first fiscal quarter is the highest maintenance quarter of the year.\nIn addition, we faced challenges with COVID related to freight and raw materials, which impacted our production output.\nTurning to Slide 12.\nSales in corrugated packaging, excluding white top trade sales were up 11.5% year over year to $2.1 billion.\nAdjusted EBITDA declined 17% to $289 million giving the segment an adjusted EBITDA margin of 13.5%, also excluding white top trade sales.\nPrice drove an additional $277 million in adjusted EBITDA year over year.\nHowever, this was more than offset by $230 million in inflation due to labor challenges with COVID-related absenteeism and logistics issues as well as $63 million of lower productivity and $43 million of lower volume.\nThe impact of the high level of downtime, both planned and unplanned, drove much of the volume decline.\nFollowing a strong first fiscal quarter of 2021, we experienced significant supply chain challenges in 2022.\nAnd as well as cost inflation in most input costs and the higher fixed cost impact of the record planned downtime for the scheduled maintenance in our mill system.\nThis was further impacted by lower productivity due to high COVID absenteeism and the introduction of inexperienced labor into our factories.\nWe are actively working to address each of these issues and are anticipating that the business will return to more historical levels of profitability over the balance of the year with additional upside as we deploy the WestRock operating system that David discussed.\nDuring the quarter, our North American box shipments were 3.7% lower year over year, driven by our record mill maintenance levels, COVID-related slowdowns and continued disruptions in the supply chain.\nHowever, backlog for the corrugated packaging business remains very strong.\nIf we could have made more, we certainly would have sold it.\nOver the next two quarters, we expect additional pricing to flow through our corrugated packaging business from the previously published price increases.\nAs a reminder, this only includes pricing that has already been published in pulp and paper week.\nTurning to the consumer packaging business on Slide 13.\nSales were up 7% year over year to $1.1 billion, though adjusted EBITDA declined 3.4% to $169 million in the quarter.\nAdjusted EBITDA margins were 14.9% for the segment.\nAs in corrugated, better price and mix added $50 million to adjusted EBITDA.\nAlso, improved productivity and better volume drove $14 million and $6 million of higher adjusted EBITDA, respectively.\nHowever, higher fiber, transportation and labor costs as well as the high maintenance level negatively impacted earnings with total inflation of $76 million, more than offsetting the other improvements.\nConsumer backlog remains very strong at five to seven weeks and we continue to implement the previously published price increases across all consumer grades.\ngovernment to offer free COVID test kits to every household in the country.\nTurning to Slide 14.\nRevenue for our paper business came in at $1.4 billion, up 24% year over year.\nAdjusted EBITDA was $232 million with an adjusted EBITDA margin of 17%.\nAdjusted EBITDA was up an impressive 53% year over year due to price and mix improvements with the flow-through of previously published price increases.\nExport markets were also very strong.\nWhile we face some headwinds with lower production levels and freight inflation, the paper business performed very well this quarter.\nLooking forward, demand and profitability for our paper products remain strong, both in the independent domestic and export markets, highlighting the importance of certain strategic markets and the value of our diversified portfolio.\nBacklogs continue to be at historically high levels and for the remainder of the year, we expect to achieve significant pricing as recently published pricing flows through our contractual business.\nOn Slide 15, we show our distribution results.\nThose sales were up 7% to $325 million.\nAdjusted EBITDA margins fell to 2% from 5.4% last year, mainly due to supply chain issues and the higher cost to service customers driven by higher fuel and labor costs.\nDemand remains strong for our distribution business and is outpacing our ability to supply customers due to labor and supply chain challenges.\nOur free cash flow for the quarter was down significantly year over year, but much of this change was due to the reversal of the pandemic action plan that we had in place during the first quarter of fiscal 2021.\nSpecifically, we were negatively impacted by the payment of short-term incentive compensation in cash versus the stock payment made in the previous year.\nCompounding that pressure, our strength in fiscal year 2021 led to a larger bonus payment as compared to the previous year when short-term incentive compensation was paid at threshold level.\nFinally, we had negative impact from the 401(k) match returning to cash payments rather than stock and the required repayment of the deferred payroll tax as part of the CARES Act.\nThough the quarter was highly impacted, we still expect to generate cash flows in excess of $1.3 billion as we progress through the year.\nTurning to Slide 17 and our financial guidance for the second quarter of 2022.\nWe continue to implement all previously published price increases.\nWe expect roughly flat sequential cost inflation as improvements in energy and OCC costs should be offset by higher freight, wage and other expenses.\nThough we are past the highest maintenance quarter due to delays in mill maintenance earlier in fiscal 2021, along with our originally planned outages, we still have approximately 128,000 tons of scheduled downtime across our system in the coming months.\nThese assumptions result in forecasted consolidated adjusted EBITDA of $780 million to $830 million and adjusted earnings per share of $0.94 to $1.08 per share.\nAs a note, this guidance does not include any potential benefit from the $70 per ton price increase across our containerboard grades that we have communicated to our customers.\nSome additional assumptions behind our outlook include OCC costs down $10 to $15 per ton, natural gas costs down sequentially.\nLabor expense up sequentially due to normal Q2 merit increases, continued inflation in freight and logistics expense, a tax rate of 23% to 25% and diluted shares outstanding of approximately 267 million.\nIn closing, we're in the process of transforming WestRock into an industry leader that delivers consistent, strong results to shareholders through all operating environments.\nWe are in the beginning phases of our journey to optimize our portfolio through operational efficiency, footprint optimization and growth investments.\nWe've made substantial progress on these efforts already, made decisions about our path forward and continue to hire and develop key talent to help us advance our vision.\nWe look forward to providing a deep dive overview of WestRock, our WestRock operating system and long-term targets at our 2022 investor day, which was previously scheduled for February.\nGiven the current situation with COVID, we have decided to move this important event to May with the hope that we can meet in person.\nWith that, let's move to Q&A.\nOperator, may we take our first question, please?\n", "role": "user" }, { "content": "compname reports q2 sales of $5 bln.\nq1 adjusted earnings per share $0.65.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: They can be accessed at ir.\nFollowing our prepared comments, we will open up the call for a question-and-answer session.\nWe describe these risks and uncertainties in our filings with the SEC, including our 10-K for the fiscal year ended September 30, 2020.\nThe extent of these impacts, including the duration, scope, and severity, is highly uncertain and cannot be predicted with confidence at this time.\nWe will also be referencing non-GAAP financial measures during the call.\nIt's great to be joining you all today on my first earnings call as WestRock CEO.\nI've been in this role now for seven weeks and spent that time meeting with our customers, our business leaders, and teammates.\nWith every interaction, I'm impressed with the capability and strength of the WestRock team and couldn't be more excited about our future prospects.\nIt's still early in this process, but what I'd like to do today is share with you my initial observations since joining and my priorities going forward.\nBefore doing that though, let me touch briefly on our performance in the second quarter which Ward will discuss in more detail shortly.\nFaced with dual issues of the ransomware incident and significant weather disruption, the team focused, executed, and delivered for our customers, generating revenue of $4.4 billion, adjusted segment EBITDA of $641 million, and adjusted earnings per share of $0.54 per share.\nThe ransomware and weather incidents lowered our adjusted earnings per share by $0.23.\nWard will provide additional detail about our performance.\nI am pleased to say that we have fully restored our IT systems with all sites up and running, and we continue to make excellent progress on restoring our supply chain and customer service levels.\nDuring the time we were dealing with this incident, we prioritized serving our customers and incurred additional costs that impacted earnings in the quarter.\nWe are accelerating investments that were on our IT development timeline to further strengthen our infrastructure.\nThroughout these events, the WestRock team demonstrated incredible resiliency and dedication, and we have made a remarkable recovery.\nWith all of this now behind us, I am confident in our team, our markets, and our path forward.\nI mentioned at the start that much of my time over these first seven weeks has been spent getting to know our company.\nI toured 12 facilities, met virtually or in-person with hundreds of teammates, and spoken with many of our top customers WestRock has built a unique portfolio, successfully integrating acquisitions, and investing to create a differentiated set of capabilities with incredible opportunities for growth.\nI've seen firsthand how the consumer, corrugated, and machinery businesses work together, and believe we can do even more to maximize the performance of our platform.\nWe serve, diversify, and grow in packaging end markets and the demand for fiber-based paper and packaging continues to gain momentum.\nKey markets that we serve such as food and beverage, e-commerce, and healthcare continue to grow.\nFor example, the demand from customers for safe and secure e-commerce solutions has only been accelerated by the pandemic, and I believe this remains a significant opportunity that WestRock Solutions are well-positioned to address.\nOne of my visits was to our high-quality, low-cost facility in Florence, South Carolina, and it was great to see the new state-of-the-art paper machine up and running.\nThis slide includes a QR code you can use to view a video of the mill and the new equipment.\nThis machine produces high-performance containerboard grades at low basis weights and replaces three machines in our system.\nThis mill is well-positioned to serve a diverse set of customers seeking these low basis weights to drive more sustainable packaging solutions.\nThis investment makes Florence one of the lowest-cost virgin containerboard mills in North America.\nWe expect Florence to ramp up to full capacity by the end of our fiscal fourth quarter.\nThe Florence mill is a great example of a strategic capital investment that improves our capabilities, lowers our costs, and expands margins.\nLooking forward, there are a few key priorities that I want to focus on.\nWestRock has a unique portfolio of sustainable fiber-based packaging and great opportunities to leverage the enterprise and help our customers win in their markets.\nThe path to long-term shareholder value creation is through a focus on attractive markets where our differentiated portfolio and combination of products and services are valued and rewarded.\nWe will also focus on improving our productivity and operational excellence across the enterprise, which are both important levers to grow earnings and margins.\nI believe strongly in the leadership role that WestRock can play in improving the circular economy and helping our customers improve the sustainability of their products.\nWe recently refined our sustainability platform to focus on people and communities, bettering the planet and innovating for our customers and their customers, whether it's developing new fiber-based packaging solutions that enable our customers to meet their sustainability goals, initiatives to reduce our own environmental impact, or our work to improve the diversity inclusion of our company, WestRock has substantial capabilities and opportunities to help drive a more sustainable future.\nAnd a more sustainable future means that we must focus on innovation to develop new fiber-based packaging that meets the needs of customers and consumers.\nRemoving plastic from packaging and developing more sustainable packaging solutions through design, material science, digital, and automation continue to be growth drivers in our industry.\nWestRock has a capability to create new, recyclable fiber-based solutions that are good for our customers and the environment.\nNext, I'd like to share my initial thoughts on capital allocation.\nI believe that disciplined, balanced capital allocation is a key factor in creating sustainable shareholder value.\nI'm impressed by the strength and stability of West Rock's cash flows and believe this is a positive attribute for the company and our investors.\nWe will invest in our business to maintain and improve our assets, and investments and acquisitions and strategic capital projects will be tightly aligned to our strategy and deliver returns above our cost of capital.\nWe will remain committed to returning capital to our dividend and intend to steadily increase it every year.\nWe've already taken the first step today with the announcement of a 20% increase to our quarterly dividend.\nToday's increase reflects our confidence in the outlook and cash flow generation of our business.\nIn addition, we will evaluate share repurchases in the future as another way to return capital to shareholders.\nWe remain committed to our investment-grade credit profile and believe that our leverage target of 2 in a quarter to 2.5 times is appropriate.\nAnd in the coming months, I'll share more detail about my priorities and vision for WestRock's future.\nWe were able to serve our customers, deliver solid earnings, and continue to reduce our leverage despite the challenges in the quarter.\nWe generated revenue of $4.4 billion, adjusted segment EBITDA of $641 million, and adjusted earnings per share of $0.54 per share.\nThese results were impacted by both the ransomware incident and winter weather.\nThe two events negatively impacted revenue by $189 million, adjusted segment EBITDA by $80 million, and adjusted segment EBITDA margins by approximately 110 basis points.\nAdjusted earnings per share was $0.23 lower as a result of these events.\nIn addition to the impact of the ransomware incident that we show on the adjusted segment EBITDA bridge, we also incurred $20 million in ransomware recovery costs.\nThe $20 million of recovery costs were excluded from our adjusted segment EBITDA and adjusted earnings per share.\nWe estimate that the total insurance claim will be approximately $75 million, and we expect to recover the claim from our cyber and business interruption insurance coverage in future periods.\nIt's important to look beyond the events in the quarter to see the underlying trends in our business.\nDemand is strong and we continue to focus on improving our business mix.\nIn addition, we are currently implementing the published price increases across all of our paper grids.\nThe implementation of these price increases and improved business mix drove $88 million in year-over-year earnings improvement.\nNotably, we had record second-quarter North American box shipments which increased 5.5% year over year on a per-day basis.\nCost inflation was driven by a $43-per-tonne increase in recycled fiber from Q2 of the prior year, coupled with higher chemical and energy costs resulting from the winter storm.\nTransportation costs were also higher due to tight availability across all modes.\nWe did not exercise the option to purchase an additional 18.7% equity interest in Grupo Gondi.\nAs a result, we recorded a charge of $22.5 million that we excluded from adjusted EPS.\nAs we indicated earlier in the quarter, the lag in customer invoicing from the period when our systems were down negatively impacted our working capital in Q2.\nAs expected, accounts receivable increased in the second quarter and we expect receivables to normalize in the third quarter.\nDespite this, our net funded debt declined $74 million from Q1 and our net leverage decreased to 2.8 times.\nDue to the decisive actions we have taken over the past year to strengthen our balance sheet, we have reduced our adjusted net debt by $1.6 billion.\nDemand continues to increase for sustainable fiber-based packaging, and we sell into an attractive set of end markets.\nOur overall packaging volumes increased by 3% in Q2, including e-commerce box volume growth of 18.4% on a per-day basis.\nOur paper sales represent 27% of our total revenue in the company and we are focused on reducing our participation in the export containerboard and specialty SBS markets.\nThe pricing environment has improved across our paper and packaging grades.\nWe are implementing published increases across our paper and packaging businesses as expected.\nTurning to segment results, our corrugated packaging segment reported revenue of $2.9 billion and adjusted segment EBITDA of $438 million.\nNorth American adjusted segment EBITDA would have been $54 million higher and margins approximately 140 basis points higher without the events in the quarter.\nCorrugated box demand is very strong across most of our end markets, and we reported record per-day shipments for the second quarter.\nAs I said earlier, corrugated box shipments were up 5.5% per day year over year.\nExcluding the impact of the ransomware and weather incidents, per-day box shipments would have increased approximately 8%.\nWe lost approximately 121,000 tons of containerboard production and revenue due to the disruptions in the quarter.\nThis directly impacted our external containerboard channel sales as we could have sold all of the lost production.\nWe highlighted the primary drivers of cost inflation earlier, higher recycled fiber, energy, chemical, and transportation costs.\nHowever, we offset this inflation in the quarter through higher pricing and volume, excluding the impact of the events.\nWe also continue to implement the previously published price increases and expect the benefit of these increases to more than outweigh inflation.\nInventory levels remain low as we head into our peak mill-outage quarter in Q3 with 112,000 tons of planned maintenance outage downtime.\nFinally, we are making great progress on our strategic capital projects.\nThe Florence mill continues to increase its production and operate well.\nAs David commented earlier, we expect the mill to be at full production levels at the end of the fourth fiscal quarter.\nThe margins in Brazil have been lower in the past two quarters as a result of the maintenance and capital outage related to the Tres Barras expansion.\nDemand is strong in the Brazilian market, and we expect margins to improve in the second half of the fiscal year.\nTurning to consumer packaging.\nThe segment reported revenue of $1.6 billion and adjusted segment EBITDA of $212 million.\nEBITDA would have been $26 million higher and margin's approximately 100 basis points higher without the events in the quarter.\nOur sales mix is improving by shifting to higher-margin food and beverage packaging sales.\nFood and beverage packaging revenues were up 4.7% year over year, driven by improved mix to quick-service restaurants and beverage packaging.\nWe lost approximately 46,000 tons of production and corresponding revenue due to the disruptions in the quarter.\nIn addition, we had approximately 20,000 tons of consumer paperboard shipments that were deferred into the third quarter due to these disruptions.\nBacklogs have increased across all substrates and are currently at six to eight weeks.\nWe are in the process of implementing the previously published price increases.\nThe increased pricing improvement in our business mix and productivity more than offset inflation in the quarter.\nWe continue to produce containerboard at our Evadale, Texas mill, given the strong demand and low inventory levels.\nIn addition, we are making progress with CNK production at the Evadale mill and are on track to deliver 25,000 tons of CNK production in FY '21 and 50,000 tons of production in FY '22.\nWe are able to flex the CNK and containerboard capacity from SBS with no additional capital investment.\nHere are some things to consider for our fiscal third quarter.\nWe expect adjusted segment EBITDA of $775 million to $805 million and adjusted earnings per share of $0.88 to $0.97 per share.\nThe primary drivers of our sequential increase include the implementation of the previously published price increases, continued strength in packaging demand, and the return to normal operations for the third quarter.\nThese items are partially offset by modest sequential inflation across recycled fiber, chemical, and transportation costs.\nIn addition, we will take approximately 112,000 tons of scheduled maintenance downtime across our North American containerboard mills.\nFinally, we expect higher incentive accruals due to a stronger earnings outlook.\nWe want to share with you our current outlook for fiscal 2021.\nWe expect the continued flow-through of the previously published price increases, as well as packaging growth across our primary end markets.\nAs a result, we expect full-year adjusted segment EBITDA to be approximately $3.05 billion.\nGiven our earnings outlook and continued strong cash flows, we fully expect to be within our leverage target of 2.25 to 2.5 times by the end of the fiscal year.\nWe will provide additional details on our next earnings call.\nAnd now, I'll hand it back over to David for closing remarks.\nI'm excited about the future of WestRock.\nWe have great opportunities to grow our company and provide value to our customers, our teammates, and our shareholders.\nWe have a broad portfolio of products that is uniquely positioned to meet our customers' needs, and we will further leverage the power of the enterprise to create value.\nWe intend to lead in sustainability by being a valued partner to our customers to help them achieve their sustainability goals as we work to achieve ours.\nTo do this, we will focus on accelerating innovation, creating products that enhance the performance and sustainability of our products and services, and we will continue to be disciplined in our capital allocation strategy.\nWe have confidence in our future, evident by the increase in our dividend this quarter.\nAs recovery picks up momentum, we are well-positioned with significant financial flexibility to pursue our goals.\nThe future is bright at WestRock, and I am proud to be part of the team.\nJames, we are now ready for Q&A.\n[Operator instructions] Operator, may we take our first question, please?\n", "role": "user" }, { "content": "westrock increases quarterly dividend.\nq2 sales $4.4 billion.\nq2 adjusted earnings per share $0.54.\nquarterly dividend of $0.24 per share declared by board of directors, an increase of $0.04 per share, or 20%.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: They can be accessed at ir.\nFollowing our prepared comments, we will open the call for a question-and-answer session.\nWe describe these risks and uncertainties in our filings with the SEC, including our 10-K for the fiscal year ended September 30, 2020.\nWe will also be referencing non-GAAP financial measures during the call.\nIn a moment, I'll walk you through our performance in the quarter, full year and our outlook for fiscal 2022 as we currently see it.\nBut first, I would like to make some personal observations as we approach the end of the calendar year.\nIt's clear that WestRock is a great company with 50,000 dedicated employees who work tremendously hard every day.\nSince I joined WestRock, I've had the opportunity to dig into the business and now have a much clearer picture of both the challenges and substantial opportunities for our company.\nWe will outline our vision for the future in greater detail at our investor day on February 24th, and we'll be taking a number of important steps between now and then to set us up for greater success in the future.\nAlready, there are a number of things that are clear to me.\nTo start, our business has been and remains very strong.\nWestRock serves customers in a wide range of end markets with the broadest portfolio of packaging solutions in the industry, and this provides us with greater opportunity and flexibility to focus on growing markets where our differentiation is valued.\nLooking forward, we have to be more efficient.\nWe have to accelerate our innovation efforts, and we have to move faster and focus on our core strategy, and we are doing just that.\nNow turning to the fourth quarter.\nWe achieved record sales growth in a dynamic environment.\nIn the quarter, sales of $5.1 billion were up 14% year over year.\nAdjusted segment EBITDA also improved significantly, rising to $878 million or 22% year over year, and adjusted earnings per share of $1.23 increased 68% compared to prior year.\nIn the quarter, we realized higher volumes along with higher pricing which more than offset the year-over-year inflation.\nWe updated our guidance in September for the fourth quarter and achieved a bit better than we said we'd do.\nPackaging sales increased by 8% year over year, driven by the implementation of price increases across our business.\nPackaging volumes were down 1.6% year over year, with box volumes down 1%.\nLabor shortages and supply chain issues caused disruption in our production and shipments to our customers.\nWe are making all possible efforts to improve these conditions where we can.\nPaper volumes increased 13% year over year on strong demand across all grades.\nOverall inflation was higher across the industry than widely anticipated, and therefore, results came in at the low end of our guidance.\nThis inflation was driven by increased costs for recycled fiber, virgin fiber and natural gas.\nOur Corrugated adjusted segment EBITDA margins of 18.4% increased sequentially and year over year.\nThe Brazil business generated 35% EBITDA margins driven by strong demand and the positive impact of the ramp-up of our Tres Barras Mill after the completion of the expansion project.\nOur Consumer Packaging segment performed very well with adjusted segment EBITDA margins of 15.9%, up 220 basis points from prior year and 40 basis points sequentially.\nOverall, WestRock adjusted segment EBITDA margins of 17.2% were up 110 basis points versus prior year and 40 basis points sequentially.\nThis adjusted segment EBITDA includes $5 million of proceeds from business interruption insurance.\nIn the quarter, we generated adjusted free cash flow of $372 million.\nAs part of our balanced capital allocation strategy, we repurchased $122 million of stock and redeemed $400 million of bonds that would have matured in March 2022.\nCost inflation increased at higher-than-normal levels throughout the year.\nOur implementation of the previously published price increases more than offset inflation for fiscal 2021.\nThe latest August containerboard published price increase is currently being implemented.\nWe are also in the process of implementing published price increases in craft paper and realizing higher pricing and export containerboard.\nConsumer price flow through throughout and across all grades will continue into fiscal 2022, including the implementation of the most recent published price increases in October.\nAs a result, we expect price realization to more than offset inflation to an even larger extent in fiscal 2022.\nFiscal year 2021 was a year of opportunities, as well as challenges.\nDemand was very strong across most of our end markets, and our team stepped up to meet the needs of our customers.\nNet sales for the year increased to $18.7 billion, and we reported adjusted segment EBITDA of $3 billion.\nNet sales and adjusted segment EBITDA were both up an impressive 7% year over year.\nAdjusted earnings per share of $3.39 was up 23%, and we generated record adjusted free cash flow of $1.5 billion.\nWe also hit our net leverage target of two and a quarter times to two and a half times ending the year at 2.38 times.\nLooking forward, we have momentum entering fiscal 2022.\nWe have a strong balance sheet and our strategic investments are now ramping up and are set to generate significant benefits in 2022.\nOur innovation pipeline continues to grow, and we have reached an annual run rate of more than $280 million of sales from plastic replacement opportunities.\nWe are well positioned to help our customers with integrated packaging solutions that help them grow their sales, reduce their risk and improve their sustainability.\nNow turning to Slide 6.\nWe generated $1.5 billion in adjusted free cash flow in fiscal 2021, the sixth straight year that WestRock has generated more than $1 billion in free cash flow.\nAs we have shared before, our core capital allocation principles are very clear.\nWe plan to reinvest in our business and maintain a sustainable and growing dividend.\nWe will opportunistically repurchase shares and consider strategic investments and acquisitions when there is a clear line of sight to generate attractive returns on invested capital.\nAnd our actions align with this strategy.\nDuring fiscal 2021, we invested $816 million into our business through capital investments that maintained our assets and support our growth in the future.\nGiven our consistent cash flow generation over multiple business cycles, we increased our dividend, raising it 20% in May, and then again, as announced in October, for a total increase of 25% since February.\nWe further strengthened our balance sheet as we reduced adjusted net debt by $1.3 billion to $7.7 billion and returned to our targeted leverage ratio.\nWe repurchased $122 million of stock or 2.4 million shares.\nAs noted earlier, we completed our investments at our Florence and Tres Barras Mills in fiscal 2021.\nWe will continue to realize increasing benefits of these investments as we move into fiscal 2022.\nAnd as we enter the new year, we remain disciplined in our capital allocation strategy and are committed to retaining an investment-grade credit profile.\nOverall demand remains strong.\nAs we have highlighted, supply chain challenges negatively impacted our production and sales volumes.\nLooking at our markets, our demand for food and beverage products make up almost half of our packaging volumes.\nWithin food and beverage, retail food demand continues to be strong with COVID-related market gains continuing.\nFoodservice trends are improving, especially in quick serve and fast casual, although these channels are experiencing ongoing labor challenges, which are impacting total consumption.\nVolumes in the retail and the e-commerce channel were stable year over year.\nThis channel makes up approximately 13% of our packaging volume, and our e-commerce remains a key driver of overall box demand.\nThe holiday buying season should be lengthened due to supply chain disruptions.\nWe anticipate total projected growth rates to be in line with our overall fiscal 2022 expectation.\nSales to the beauty and healthcare markets are 12% of our packaging volume.\nThese markets were significantly impacted by the pandemic, and they continue to recover as markets reopen.\nOur broad mix of end market participation enables us to remain resilient in the face of uncertainty, and our capabilities and manufacturing footprint allows us to quickly pivot to meet our customers' needs.\nWe will continue to grow our packaging business, driven by our unique innovation portfolio and our ability to design solutions for our customers that optimize primary, secondary and tertiary packaging.\nMoving to Slide 8.\nOne of the biggest challenges many of our consumer brand customers face is a demand for more sustainable packaging.\nWestRock is helping these customers meet this demand through our innovative material science and design capabilities.\nThis slide includes a few of our most recent customer partnerships, which range from designing plastic-free packaging to machinery that produces shelf-ready recyclable packaging that helps reduce labor costs and meet sustainability goals.\nTim Hortons recently announced our partnership to test a recyclable and compostable hot beverage cup.\nWe look forward to this work with a valued customer to move the recyclability of cups forward.\nAnd these are just a few examples that have generated our current $280 million run rate of incremental sales from plastics replacement.\nWe continue to believe this opportunity is in excess of $500 million incremental sales annually.\nI'd like to highlight a few of our award-winning packaging designs on Slide 9.\nThe Paperboard Packaging Council recently held their annual awards, and I'm pleased to share that we won the Sustainability Award of the Year for our partnership with Coca-Cola Europacific Partners on their use of WestRock's can collar and the product packaging.\nCan collar is a durable paperboard-based multipack solution for cans and it performs incredibly well throughout the supply chain.\nWe also won 12 additional awards for sustainability, innovation and design.\nThese awards are great recognition of the outstanding work of the WestRock team.\nTurning to Slide 10 and our financial guidance for the first quarter 2022.\nWe continue to successfully implement all previously published price increases.\nWe expect sequential cost inflation driven by higher natural gas, diesel and recycled and virgin fiber costs.\nThis commodity cost inflation combined with our seasonal increase in healthcare cost is forecasted to be approximately $100 million higher than the fourth quarter.\nHowever, the good news is that we expect the flow-through of the price increases that we are implementing to more than offset this inflation.\nAnd due to delays in mill maintenance earlier in fiscal 2021, along with our originally planned outages, we have approximately 200,000 tons of scheduled downtime across our system that will negatively impact earnings by approximately $75 million.\nWe have 10 major mill maintenance outages in the first fiscal quarter, one of the largest amounts in one quarter in WestRock's history.\nThese assumptions, combined with three fewer shipping days and the normal seasonality in our consumer business, results in forecasted adjusted segment EBITDA of $660 million to $700 million and adjusted earnings per share of $0.56 to $0.67 per share.\nIn fiscal 2022, we expect solid demand across most of our end markets and continued flow-through of the previously published price increases.\nWe expect a record fiscal year in sales and adjusted segment EBITDA.\nWe anticipate some offset as a result of continued commodity input cost inflation.\nWe fully anticipate the implementation of previously published price increases to outpace inflation.\nWe also expect productivity to be unavoidably affected by ongoing supply chain challenges and higher labor costs that may persist through the fiscal year.\nOur planned mill maintenance outage schedule declines throughout the fiscal year, but will still be approximately 100,000 tons higher than in fiscal 2021.\nGiven these assumptions, we forecast adjusted segment EBITDA to be in the range of $3.3 billion to $3.7 billion.\nThis range is driven by varying levels of commodity inflation.\nSince the formation of WestRock, we have been able to grow sales, earnings and adjusted free cash flows across various business cycles at attractive compounded annual rates.\nWe have a resilient business model, which was reinforced with record adjusted free cash flows in fiscal 2021 in the face of many challenges.\nOur outlook for fiscal 2022 continues the remarkable trend of growth in sales and adjusted segment EBITDA, as well as strong cash flow.\nWith the industry's broadest portfolio of paper and packaging solutions, we can bring unique value to our customers and our shareholders.\nAs we turn to fiscal 2022, I've decided to update our reporting structure into three new segments: Packaging, Paper and Distribution.\nAs we move forward with our strategy, this new structure will better align our reporting to the way we will be running our company and provide clarity into the performance of each area.\nOur Packaging segment will include our converted packaging businesses that serve diverse end markets with attractive margins.\nThis segment is well positioned for future growth, fueled by WestRock's unrivaled capabilities.\nWestRock has an unmatched portfolio of sustainable packaging solutions and the ability to drive innovation that helps our customers' critical challenges.\nAs market trends evolve in this dynamic environment, WestRock is uniquely positioned to adapt to these trends and our customers' changing needs.\nThe Paper segment will be comprised of our external paper sales.\nWe have strong customers in our attractive domestic containerboard and paperboard businesses, and we will continue to partner with these customers.\nAnd as we do this, we will seek to reduce our exposure to the export containerboard and specialty SBS markets.\nWe are focused on driving cost reductions across our newly integrated supply chain and investing to improve the competitiveness of our mill system.\nAnd finally, the Distribution segment will be made up of our Victory Packaging business.\nThis differentiated service solution is an important channel for WestRock's products.\nThe business provides local warehousing and distribution services that enhance efficiency and provide flexibility in serving our customers.\nWe believe these new segments more closely align with our strategy and the way we will run our business going forward.\nI look forward to sharing more information on these segments when we report in this format in the first quarter.\nAs we look to the future, we are investing in innovation with expansion of our research and development teams to bring an enhanced focus on innovation such as improvements in material science, converting and machinery and automation.\nGrowth in digital technology and how smart packaging can drive sales and brand engagement is also an area on ongoing development at WestRock.\nWe are also building a sales excellence platform that leverages our broad and differentiated portfolio that will bring all of these solutions to customers in a way that fully leverages the power of the WestRock enterprise.\nThe opportunities for WestRock are unrivaled in the industry, and I look forward to all that is ahead.\nAs CFO, Ward has been instrumental in the growth and development of our company, overseeing more than 20 mergers and acquisitions, including the merger of MeadWestvaco and RockTenn, the spinoff of Ingevity, the sale of our Home, Health and Beauty Plastics business, and the disposition of our land and development business.\nI have benefited from his assistance as I joined the company greatly and know we will all miss him here at WestRock.\nWard, I wish you the very best in your retirement.\nAlex, I look forward to working with you as well.\nWe have great opportunities to grow our company and improve margins while providing value to our customers, teammates and shareholders.\nWe are working to leverage the power of the enterprise and making the investments needed to lead in sustainability and accelerate our innovation platform.\nAs we do this, we remain disciplined in our capital allocation strategy, and we'll look to use our strong cash flow to create shareholder value.\nAs we implement our strategy, we have multiple levers to create value and grow sales and earnings.\nWe are excited about the opportunities ahead and look forward to further discussing our strategy and long-term goals at our investor day in New York on February 24th.\nFiscal 2021 was a great year for WestRock.\nJames, we are now ready for Q&A.\nOperator, may we take our first question, please?\n", "role": "user" }, { "content": "compname reports fiscal 2021 fourth quarter results: record net sales of $5.1 billion up 14%.\nq4 sales rose 14 percent to $5.1 billion.\nqtrly adjusted earnings per share $1.23.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Although we believe these statements reflect our best estimates and all available information, we cannot make any assurances that these statements will materialize, and actual results may differ significantly from our expectations.\nThe company undertakes no obligation to publicly update or revise any of these statements to reflect events or circumstances that may arise after today's call.\nAdditionally, we will refer to certain non-GAAP financial measures.\nThese measures should not be considered replacements for and should be read together with our GAAP results.\nWe're thrilled to deliver a strong finish to fiscal 2021, driving record results with a Q4 comp of 10.8% and operating margin expansion of 310 basis points.\nThese results reflect the resilience in our business model as we successfully navigated unprecedented challenges within the supply chain, material and labor shortage and capacity limitations from our incredible consumer demand.\nThis resilience, coupled with continued execution in our growth initiatives, fueled an annual comp of 22%, operating margin expansion of 350 basis points, and earnings per share growth of 64% to $14.85 per share.\nOur three key differentiators, our in-house design, our digital-first channel strategy, and our values, continue to provide the framework for execution both in our core business and in our growth areas like B2B, marketplace, cross-brands, and our global business, which excitingly have all gained traction faster than predicted and demonstrate to us that we are well-positioned to continue to take share in this industry.\nFirst, let's spend some time on our top-line performance in the fourth quarter.\nThroughout fiscal 2021, we continued a deliberate reduction in our sitewide promotional cadence in all of our brands.\nInstead, we shifted our focus on delivering aspirational and inspirational content, and our customers clearly responded.\nThis pricing power is entirely a function of our differentiated and sustainable product offering that our customers know and love.\nAnd further, despite the highly promotional environment in the fourth quarter, we made a conscious decision to maintain this pricing integrity and not pursue incremental top line at the cost of our merchandise margins.\nIn fact, we delivered gross margin expansion of 290 basis points in the quarter.\nFurther, this pricing power has allowed us the flexibility to absorb supply chain costs and aggressively fund marketing efforts.\nOur bottom-line performance in the fourth quarter speaks for itself.\nWe drove operating margin of 21% and a 37% increase in EPS, both of which demonstrate the durability of our earnings power through execution in our core and growth initiatives, which I'm excited to update you on now.\nOur B2B business continues to outperform, building its book of business to $753 million in 2021.\nB2B is an underserved and fractured industry as we continue to take share in this white space, servicing businesses that need high-quality, sustainable furnishings at good price points.\nFurthermore, our in-house design capabilities offering the wide breadth of aesthetics across our brands, coupled with our industry-leading global sourcing and supply chain operations, allows us to take this service to the next level.\nOur B2B business has tremendous potential to contribute to our results.\nOur growth targets continue to climb as we unlock new opportunities.\nAnd not only is our B2B business model accretive to our gross margin but even more accretive to op margin as a result of the fixed operating costs.\nWe continue to exceed our own expectations for this business.\nAnd longer term, we believe this is one of our biggest opportunities.\nAnother contributor to our success has been our global strategy.\nWe're franchise first with strong retail and digital execution.\nDuring 2021, global achieved record revenue up 23% over last year with strong earnings growth.\nCore company-owned markets of Canada and U.K. achieved record results for the year and the quarter.\nFranchise continues to be a growth vehicle with the critical markets of the Middle East, Mexico, and India providing a large diverse growth base.\nWith our systems investment in our new digital platform and large cost reductions in warehousing, transportation, and delivery, we expect to exceed our record results in 2022.\nMarketing is another component that sets us apart and drove results in FY '21.\nCustomers who shop across our brands generate three to four times more revenue than the single brand customer.\nAnd we've seen incredible results this past year due to our continued marketing efforts.\nIn fiscal '21, approximately 60% of our sales came from cross-brand customers, a record high in terms of percent to total.\nAnd our cross-brand customer counts grew faster than those of the single-brand customer.\nWhile new customer acquisition is always a priority and continues to grow, we believe we have even more upside by increasing our share of wallet with our existing customer base.\nCore to this strategy are three things.\nFirst, our cross-brand loyalty program, The Key.\nWe continue to see record levels of customer engagement and an all-time high membership.\nSecond, our recently launched cross-brand credit card.\nThis card reached its six-month anniversary, producing cardholder spend and cross-brand activity that has exceeded our expectations.\nAnd third, we are focused on personalization efforts in our digital marketing.\nWe continue to leverage our in-house managed first-party data across our brands, which positions us for the cookieless future that is rapidly approaching.\nRemember, our multifaceted loyalty program generates benefits across our portfolio and is a clear competitive advantage a few of our peers offer.\nAs a digital-first company, we are in constant pursuit of incremental improvement to our customers' shopping journey online.\nWe've improved several product finding and purchasing experiences on our website, from improved room styling, native registry applications, and the removal of friction in the checkout process.\nAdditionally, we relentlessly focus on continued optimization and automation in our DCs and logistics networks to improve our service time.\nOn the sustainability front, we take great pride in the progress we are making with our impact initiatives and ESG leadership across the home furnishings industry.\nNotable accomplishments in this quarter included our second annual inclusion in Bloomberg's Gender-Equality Index, being recognized as No.\n21 on Barron's 100 Most Sustainable Companies, and receiving an A rating from CDP for leadership in supplier engagement and our work with suppliers on tackling climate change.\nThese commitments are reflected in the high-quality sustainable products that we offer our customers and continue to distinguish our company and our brands.\nOur values are both central in our actions and embedded in our products.\nWe always want to provide our customers with transparency.\nAnd each day, we commit ourselves to maintaining the highest level of integrity and ethical standards.\nWe are deeply saddened by the war in Ukraine, and we stand with Ukrainians and all people who oppose war and its atrocities on family and the home.\nRelated to product and business with Russia, we have no operations in Russia.\nAnd as the situation between Russia and Ukraine escalated, our team identified a handful of products of Russian origin, which we are no longer selling.\nAnd now let's turn to the performance of our brands.\nWest Elm delivered an 18.3% comp in the fourth quarter with all categories driving strong growth.\nCustomers responded well to new products, including best-sellers in bedroom, dining, storage, and occasional categories.\nAdditionally, new categories such as bath, kids, and kitchen also contributed to incremental growth.\nOn the full year, West Elm delivered a comp of 33.1%, building to a 48.3% on a two-year basis and continuing to build velocity in its mission to become a $3 billion brand.\nPottery Barn delivered another high-performance quarter with a 16.2% comp, driven by strong core franchises in key categories.\nQ4 results were enhanced by a strong seasonal decorating business and inspiring seasonal bedding and entertaining.\nOn the full year, Pottery Barn celebrated a record year with a comp of 23.9%, building to a 39.1% on a two-year basis.\nAlso, we're delighted to report that Pottery Barn has surpassed the halfway mark on its commitment to plant 3 million trees in three years to restore vulnerable forests.\nOur partner, Arbor Foundation, follows the best practices and the latest science to ensure maximum impact and promote biodiversity.\nAnd even better, based on the tremendous success of this program, our other brands have joined the effort, doubling our commitment to planting 6 million trees by 2023.\nWe couple this with commitments to responsibly harvest wood and a robust sustainability story.\nNow I'd like to talk about Pottery Barn Kids and Teen.\nAs we indicated during our third quarter call, we were not entirely immune to the ripple effect from delays resulting from the supply chain disruption around the world.\nIn particular, the shutdown in related backlogs from Vietnam had a larger impact on our children's home furnishings business, which ran a negative 6.1% comp for the quarter.\nUnfortunately, we expect to feel this impact at least through the second quarter this year.\nDespite the supply chain pressure, strength in the business includes our baby business, which is delivering growth through our offering of GREENGUARD Gold furniture, along with additional volume from our in-store and online baby registry.\nAlso, we delivered record results in our seasonal trim business as customers enjoy the holidays.\nPottery Barn Kids and Teen delivered a full year comp of 11.6%, building to a 28.2% on a two-year basis.\nOur Williams-Sonoma business drove a fourth quarter comp of 4.5% on top of a 26.2% comp last year, with growth driven by demand for entertaining at home and gift-giving.\nWe continue to focus our strategy on expanding our exclusive product and Williams-Sonoma branded product to drive growth.\nWe are pleased with improvements in the digital experience on the website that are driving conversion, and our store optimization strategy is working.\nOur high-impact store remodels and our market consolidation efforts are driving improved operating margins.\nOn the full year, Williams-Sonoma delivered a comp of 10.5%, building to a 34.3% on a two-year basis.\nOne of our key components of growth is our Williams-Sonoma Home business.\nGiven the strength of the Williams-Sonoma brand name, our expertise in the furniture category, and the clear opportunity in the high-end home market, we believe that Williams-Sonoma Home is one of our biggest growth opportunities.\nIn summary, we're immensely proud of our accomplishments and record results this fiscal year.\nI am confident that we will continue to raise the bar and extend this momentum in fiscal 2022.\nSo far, in the first quarter, we continue to see strong sales and margins.\nWe have a robust lineup of growth initiatives and operational improvements planned for this year.\nAnd as we look further, we are confident in our long-term outlook, driving at least mid- to high single-digit comps with top-line growth to $10 billion by 2024 and operating margins relatively in line with fiscal 2021.\nI'm endlessly grateful for their outstanding work, their creative energy, and their relentless focus.\nI am privileged to work alongside this talented group of people.\nWe are pleased to report another quarter and fiscal year of outstanding financial results with revenues and profits at the highest levels we have seen.\nThe demand for our proprietary products remains strong.\nOur growth strategies continue to thrive.\nOur operating model, which is difficult to replicate, continues to set us apart from the competition.\nAnd all of these, plus our proven ability to dynamically operate in a complex macro environment, continues to demonstrate that we are well-positioned to succeed long term in this industry.\nMoving to our fourth quarter results in more detail.\nNet revenues surpassed $2.5 billion with another quarter of double-digit comparable brand revenue growth at 10.8%.\nThese strong top-line results were across both channels, including retail at a 20% comp and e-commerce at a 7.2% comp on top of last year's 47.9% for a 55.1% two-year stack.\nBy brand, West Elm delivered an 18.3% comp on top of 25.2% last year.\nPottery Barn accelerated from the third quarter to a 16.2% comp.\nWilliams-Sonoma drove a 4.5% comp on top of last year's 26.2%.\nAnd our emerging brands accelerated to a 30.3% comp.\nIn the children's home furnishings businesses, Pottery Barn Kids and Teen, comps were a negative 6.1%.\nThis is below their third quarter year-to-date trend of approximately 20% as these brands were the most impacted during the fourth quarter by the supply chain issues from the COVID-related closure of Vietnam.\nMoving down the income statement.\nGross margin came in at a record 45%, a 290-basis-point expansion over last year.\nThe strength of our merchandise margins drove almost all or 270 basis points of this expansion.\nOur strategic decision to preserve our pricing integrity by eliminating sitewide promotions was once again a clear success.\nThis pricing power enabled us to absorb increased freight and product costs while still delivering strong, profitable merchandise sales.\nOccupancy costs at 7.7% of net revenues leveraged approximately 20 basis points, resulting from another quarter of higher sales and lower occupancy dollar growth.\nOccupancy dollars increased 6.7% to approximately $193 million, which includes a full quarter of incremental costs from our new East Coast distribution center to further support our customer demand, partially offset by our ongoing retail optimization efforts from additional store closures and reduced rent.\nIn fiscal year '21, we closed an additional 37 stores and are on track to close approximately 25% of our total retail fleet.\nSG&A also leveraged 20 basis points to a historical low of 24% despite absorbing higher year-over-year advertising costs from our reduced spend last year.\nLeverage was driven by employment and general expenses, which includes lower incentive compensation during the quarter due to timing and the year-over-year benefit from our ongoing retail recovery, various operational efficiencies during the holiday season, and overall strong financial discipline throughout.\nAs a result, we delivered another quarter of record profitability with operating income growth of 28% to $525 million and our highest ever operating margin at 21%, expanding 310 basis points over last year and approximately 500 basis points higher than our last three quarters this year.\nThis resulted in diluted earnings per share of $5.42, up 37% from last year's record fourth quarter earnings per share of $3.95.\nThese fourth quarter results, combined with our outperformance we have seen throughout 2021, allowed us to deliver another year of substantial growth and outperformance.\nOn the top line, these full year highlights include an additional $1.5 billion in net revenues, growing to over $8.2 billion, including comparable brand revenue growth of 22% on top of last year's 17% or a 39% two-year stack; e-commerce growing to a 14.3% comp and a 58.8% two-year comp with our e-commerce mix at 66% of total revenues; retail growing at a 43.2% comp despite traffic levels at negative 16% to 2019; a second consecutive year of double-digit growth across all brands with significant acceleration across our two largest brands, with West Elm at a 33.1% comp, Pottery Barn at a 23.9% comp, Williams-Sonoma at a 10.5% comp on top of last year's 23.8%; our emerging brands, Rejuvenation and Mark and Graham combined, delivering another year of accelerating double-digit growth; our global business growing 23% to over $425 million; and our cross-brand initiatives outperforming with our business-to-business division growing 109% to over $750 million in demand and contributing approximately 500 basis points to our total company comp.\nOn the bottom line, this top-line strength and strong financial discipline throughout enabled us to grow 2021 operating income to $1.5 billion, over $0.5 billion and 52% higher than last year.\nOperating margin at 17.7% on the year expanded 350 basis points over last year and was more than two times higher than our 2019 and prior operating margin levels.\nThis was driven by gross margins expanding to record levels or 500 basis points above last year to 44% despite increased costs associated with supply chain disruptions throughout the year.\nThis operating income strength resulted in earnings per share of $14.85, which was $5.81 or 64% above last year and drove our return on invested capital to an all-time high at 57.9%.\nOn the balance sheet, we ended the year with strong liquidity levels with a cash balance of $850 million and no debt or amounts outstanding on our line of credit.\nThe strength of our business generated operating cash flow of almost $1.4 billion during fiscal year 2021, which has allowed us to fund the operations of the business, to invest over $225 million in capital expenditures primarily in technology and supply chain, and to return nearly $1.1 billion to shareholders in the form of $188 million in dividends and 900 million in share repurchases.\nThese decisions reflect our confidence in the sustainability of our growth and our commitment to maximizing returns for our shareholders.\nMoving down the balance sheet.\nMerchandise inventories were $1.246 billion, increasing 24% over last year, which includes inventory in transit.\nInventory on hand increased 14.8% but was still negative 13% on a two-year basis.\nGiven the significant macro supply chain disruptions throughout the year and the ongoing strong customer demand, we are still below optimal levels.\nAs a result, we expect to see elevated back-order levels continue until the back half of 2022.\nNow let me turn to our expectations for the future.\nAs Laura said, we remain very optimistic in the long-term outlook of the business.\nOur business remains strong as we enter Q1 with momentum in our core businesses and our growth initiatives continuing.\nAs a result, for both fiscal year 2022 and beyond, we are reiterating our previously provided financial outlook of mid- to high single-digit comp growth with operating margins relatively in line with fiscal year 2021.\nWe estimate revenues will reach $10 billion by fiscal year 2024, with our brands accelerating or reaching our prior committed targets faster, including Pottery Barn expanding to $3.5 billion in revenues; West Elm adding $1 billion in revenues to over $3.3 billion; Williams-Sonoma will reach almost $1.6 billion in revenues, and our Pottery Barn Kids and Teen businesses will grow to $1.4 billion.\nThis expected top-line growth will also be fueled by growth across our strategic initiatives, such as our B2B business doubling to $1.5 billion in revenues, our marketplace business growing 20% annually to nearly $700 million, our emerging brands expanding to a combined revenue of over $600 million, and our global operations continuing to expand in size to $700 million.\nAnd we are confident we can drive this top-line growth profitably due to leverage across the P&L from ongoing higher sales growth; additional accretion from our accelerating growth initiatives that have a higher operating margin profile; an accelerating shift online where the operating margin is higher; strong merchandise margins from the pricing power our proprietary and vertically integrated products provide; continued occupancy leverage from further store closures and reduced rents; various long-term supply chain efficiencies, such as automation and better in-stock inventory levels; and leverage from overall strong financial discipline throughout, keeping expense growth below sales growth.\nOur capital-allocation plans for 2022 will continue to first prioritize investments into the business and then return excess cash to our shareholders.\nWe expect to invest approximately $350 million in the business, with over 80% of the spend prioritized on technology and supply chain initiatives primarily to support e-commerce, including the addition of a new automated distribution center in Arizona.\nWe also expect to return excess cash to our shareholders in the form of increased quarterly dividend payouts and elevated share repurchases.\nFor dividends, we announced earlier today another double-digit increase in our quarterly dividend, up 10% or $0.07 to $0.78 per share.\nWe also announced our Board has approved a new share repurchase authorization to $1.5 billion, which will replace the remaining amount outstanding under our prior authorization.\nWe continue to believe that our stock price remains undervalued given our projections for growth and profitability.\nThis new authorization will allow us the flexibility to opportunistically invest in our own stock and drive long-term financial returns.\nAs we begin our next fiscal year, our focus remains on executing against our opportunities to drive long-term elevated top and bottom-line growth.\nWe believe we are uniquely positioned to continue to take market share and profitably.\nLong-term macro trends should continue to favor our business, including a strong housing market driving ongoing investment in the home, an accelerating shift to e-commerce, and the increasing importance to the consumer of sustainability and being a values-driven company.\nAnd this, combined with our accelerating growth initiatives, our strong operating cash flow and liquidity and a proven track record of strong financial discipline give us the confidence to reiterate our accelerated long-term growth and profitability outlook and to drive strong financial returns for our shareholders.\nIt is their ongoing commitment that has enabled us to deliver another year of financial outperformance and to reward all of our stakeholders.\n", "role": "user" }, { "content": "q4 comparable brand revenue growth of 10.8%.\nqtrly non-gaap earnings per share of $5.42.\nqtrly net revenue $2.5 billion versus $2.29 billion.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: And with me is A.J. Nahmad, who's the President; and our two Executive Vice Presidents, Paul Johnston and Barry Logan.\nBefore we start, our usual cautionary statement.\nNow on to our financial report.\nWatsco achieved record first quarter results.\nEarnings per share grew 93% to a record $1.39 per share.\nRecords were set for sales, gross profits, gross margin, operating income, operating margin, net income, and earnings per share.\nNow these results were driven by strong sales growth made at higher selling margins, along with improved operating efficiencies.\nWhen we look at our product offering, we achieved double-digit sales growth in equipment, non-equipment, and commercial refrigeration.\nAnd in terms of geography, growth rates during the quarter were similar for U.S. markets and international markets as a whole.\nFor HVAC equipment, residential sales increased 18%, and commercial equipment sales stabilize and are now trending more positively.\nBut more important, this is not just about one quarter.\nOver the last 12 months, residential equipment sales in our U.S. markets have increased 15%, and we believe meaningful market share gains have been achieved.\nLooking forward, we expect business to be strong and that 2021 will be another record year of performance for our company.\nAdding more color, Watsco's industry-leading technology continues to gain adoption.\nThat leads to new customer acquisition and we believe development of greater market share.\nNow a few important trends are also continuing.\nActive technology users continue to outpace growth rates of nonusers.\nCustomer attrition among active technology users is meaningfully lower compared to nonusers, and our platforms used by contractors to make sales to homeowners gain more users.\nWe are happy with our progress, but we believe it is still early in terms of reaching the full potential of our technology investments.\nWe, once again, invite you to schedule a Zoom call with us, and we can further explain our technology and its impact.\nMoving along financially, our balance sheet remains in pristine condition with only a small amount of debt.\nWe're excited to have closed two weeks ago on the acquisition of Temperature Equipment Corporation, also known as TEC.\nThis is a long-established, generationally owned company headquartered in Chicago.\nTEC adds 32 locations and approximately $300 million in revenue and establishes Watsco's first major presence in the Midwest United States.\nI must say that TEC is a great company with a long and proud history.\nThey are led by a wonderful team of entrepreneurs, and we are honored to be part of their family.\nThey are also off to a strong start this year, and we expect their results to be accretive to 2021 results.\nWe continue to look for other transactions with great businesses like TEC.\nWhile doing our search, we offer our well-known culture -- that is to say, again, when we search, we offer our well-known culture that respects and continues a company's distinct legacy, and we support their plans for growth.\nWe think that Watsco is a great next step for family owned companies in our industry.\nLastly, a reminder that we raised our dividends by 10% in April 2021 to $7.80, a follow-up to the record cash flow achieved in 2020.\nWe believe our dividend is a good reason to watch Watsco over the long term.\n2021 marks our 47th consecutive year of paying dividends, and yet, we have increased our dividends 19 over the last 20 years, from $0.10 per share in '20 -- in the year 2000 -- let me say that again.\nFrom $0.10 per share in '20 -- in the year 2000 to today's annual rate of $7.80.\n", "role": "user" }, { "content": "watsco earnings per share jumps 93% setting q1 records for sales, operating profit, operating margins and net income.\nwatsco earnings per share jumps 93% setting first quarter records for sales, operating profit, operating margins and net income.\nq1 earnings per share $1.39.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: This is Al Nahmad, Chairman and CEO and with me is A.J. Nahmad, President; Paul Johnston, Executive Vice President and Barry Logan, Executive Vice President.\nBefore I report, let me first wish that you and your families are healthy and safe.\nNow onto our report.\nWatsco just completed an outstanding third quarter.\nEPS grew 25% to a record $2.76.\nRecords were set for sales, gross profit, operating profit, operating margins and net income.\nThese results were driven by strong growth in our U.S. residential HVAC equipment business, which grew 19% during the quarter and from operating efficiencies achieved throughout our network, as evidenced by the nominal change in SG&A.\nHomeowners clearly are investing in their homes as HVAC replacement sales have remained strong from early summer through today.\nWe also believe that greater adoption of our Watsco technologies has contributed to our results and led to gains in market share.\nOur best indication of this impact are two simple metrics.\nfirst, customers that use Watsco technologies are growing at a much faster rate than non-users.\nSecond, we are experiencing minimal attrition among active users on a year-over-year basis.\nNow keeping this in mind, we continue to invest in our platforms and to drive for greater adoption by more customers.\nHere are some examples of our progress.\nWeekly users of our mobile apps have grown 31% since last year with over 100,000 downloads.\nE-commerce transactions have grown by 19% this year to nearly 1 million online orders, which is about $1.5 billion in annual rate at the moment.\nOur annual -- our annualized e-commerce sales run rate is 32%, versus 29% at the end of last year and in certain markets the use of e-commerce is over 50%.\nOur dockside pickup services have expanded to more locations and now include non-contact payment functionality.\nThis technology has only been available for a few months and already over 12,000 orders were fulfilled during the quarter by more than 2,000 unique users.\nTwo of our newer innovative platforms have gained momentum.\nWe call them OnCall Air and the second one CreditForComfort.\nThese platforms provide digital connectivity for contractors and homeowners when making proposals, and buying and financing replacement systems.\nContractors using our -- what we call OnCall Air platform provided digital proposals to over 39,000 households during the quarter, and generated $114 million in sales, nearly double that of last year.\nOur CreditForComfort platform process doubled in number of digital financing applications resulting in an 87% increase in third-party funded loans.\nInvestments in inventory management software have also benefited us this year, with inventory turns improving 25 basis points over last year and of course contributing to cash flow and operating efficiency.\nAll of this is exciting, but we believe, Watsco's technology are only scratching the surface of their full potential.\nAs always, feel free to schedule a zoom call with us and we can further explain our technology and progress.\nWe also strengthened Watsco's balance sheet this quarter.\nWe generated record operating cash flow of $373 million, which is far away a record for the year, so far, and we have no debt at this time.\nImportantly, we have the capacity to make almost any size investment to grow in our business.\nAnd I always like to comment that we're in a $40 billion industry of which we are only $5 billion, so we have lots of room for growth.\nAnd then finally, one more very important thought, our results are a testament to the efforts of our teams across the Watsco network.\nWe deeply appreciate their commitment.\n", "role": "user" }, { "content": "watsco q3 earnings per share $2.76.\nwatsco earnings per share jumps 25% setting new records for sales, operating profit, net income and operating margins during third quarter.\nq3 earnings per share $2.76.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: First, I hope everyone is safe and healthy given the virus is going on.\nBut this is Al Nahmad, Chairman and CEO, and with me is AJ Nahmad, President; our two Executive Vice Presidents, Paul Johnston and Barry Logan; and Rick Gomez, Vice President.\nNow, I'm pleased to share that Watsco delivered another record quarter.\nNew records were achieved in virtually every performance metric.\nEarnings per share jumped 31% to a record $3.62 per share on a 32% increase in net income.\nSales grew 16% or nearly $250 million during the quarter to a record $1,780 million.\nGross profit increased 29% with gross margins expanding 280 basis points.\nOperating income increased $50 million or 32% to a record $207 million.\nOperating margins expanded 100 basis points to a record 11.6%, and cash flow for the quarter was a record $238 million.\nToday's results are all the more positive when considered against last year's record results and in light of the industry wide supply challenges that are still going on.\nOur teams throughout all of Watsco are doing an extraordinary job taking care of customers and that has made a big difference.\nWe also ended the quarter with a strong balance sheet with virtually no debt and cash for $137 million.\nThis financial strength provides us the flexibility to invest in most any size opportunity.\nAn important fundamental is Watsco geographic coverage and our large number of locations across many markets.\nThe diversity and markets we serve reduces volatility and provides stability during a difficult operating environment such as the one we are witnessing.\nAlso our large and growing customer base is increasingly equipped with our state-of-the-art technology that helps our customers grow their business and purchase more from us.\nAnother advantage now and in the future is our offerings of the broadest variety of products and brands in the industry, the depth and diversity of our product offerings to continue to serve us well.\nWe're optimistic about current market conditions, let me say that again optimistic about current market conditions and recent trends and market demand remain strong and we see signs of improvement in our OEM's ability to help us to fulfill that demand.\nLooking ahead, the industry will experience more change in the years to come as minimum SEER standards rise, that's normally will -- done by the federal government by the way and refrigerant changes that take shape in the coming years.\nAnd with changes come opportunities.\nWe believe that our long-term focus are scale, speed to market, relationship with OEMs, technology offerings position us better than anyone to capitalize on these upcoming changes.\nWe are living in unusual times but could not be more positive and excited about the future of the industry and our role in it.\nNow let's go on to our Q&A.\n", "role": "user" }, { "content": "compname posts q3 earnings per share $3.62.\nwatsco generates record third quarter performance earnings per share jumps 31% to a record $3.62 on record sales of $1.78 billion.\nq3 earnings per share $3.62.\n16% sales growth to $1.78 billion in quarter.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: This is Al Nahmad, Chairman and CEO; and with me is A.J. Nahmad, President; Paul Johnston, Executive Vice President; and Barry Logan, also Executive Vice President.\nAs we normally do, before we start, here's our cautionary statement.\nNow on to our financial report.\nWatsco produced another record year, with sales, net income and earnings per share reaching record levels.\nWe generated record cash flow of $534 million during the year, well in excess of our goal of generating cash flow greater than net income.\nThis further strengthened our balance sheet, which is now debt-free and provides us the capacity to make almost any size investment to grow our business.\nThat reflects our confidence in our business.\n2020 results were driven by steady growth with market share gains in our U.S. residential HVAC equipment business, which grew 10% for the year and 17% during the fourth quarter.\nHomeowners continue to invest in their homes as replacement sales at higher efficiencies remain strong from early summer through today.\nLooking long term, we see opportunity to be a significant participant and contributor in efforts to address climate change.\nSales of high-efficiency products have long been a component of our business and have grown steadily in our sales mix over the past decade.\nThis is an interesting data point.\nthere are over 110 million installed HVAC systems in the United States, many of which are operating under old efficiency standards that resulted for the user in higher energy use and cost to them.\nIt's important to note, we will explore and evaluate impactful opportunities to make progress in our marketplace.\nWe believe the combination of Watsco's technology platforms, industry leading scale, access to capital, customer relationships and unrivaled OEM relationships provide a strong foundation and long-term benefit for all stakeholders involved.\nWe also continue to invest in our industry-leading technology platforms, leading to greater adoption, new customer acquisition and market share gains.\nUser growth on Watsco's e-commerce platform, a good indicator of overall tech adoption, was up 20% during 2020.\nThis is important as sales growth rates for customers that are active users outpace growth rates of nonusers.\nAlso, customer attrition among active users is a fraction of nonusers, another good indicator of effectiveness.\nNow some more detailed examples of our progress.\nWeekly users of our mobile apps increased 27% in 2020, with over 120,000 downloads.\nThe number of e-commerce transactions grew 20% this year to 1.2 million online orders.\nOur annualized e-commerce sales run rate is 33% versus 31% at the end of last year.\nIn certain markets, it's over 50%.\nOur curbside or dockside pickup services expanded to more locations and now includes no-contact payment functionality.\nThe technology has only been available since this summer, and already over 22,000 orders were fulfilled by more than 3,000 unique users.\nTwo of our newer innovative platforms gained momentum in 2020.\nWe call them, OnCall Air and CreditForComfort.\nThese platforms help digitize the relationship between contractors and homeowners when buying and financing replacement HVAC systems.\nOnCall Air is growing exponentially.\nContract has provided digital proposals to over 109,000 hospitals using the tool during last year and generated nearly $350 million in gross merchandise value for our customers, an 89% increase over last year.\nAnd CreditForComfort processed 40% more digital financing applications in 2020 versus 2019, resulting in more than 180% increase in third-party funded loans.\nThis tool helps homeowners afford much needed HVAC systems.\nInvestments in inventory management software have also benefited the company yielding lower inventory, improved returns and contributing to our record cash flow and operating efficiency.\nThese examples are exciting, and we believe it's still early in terms of reaching the full potential of our technology investments.\nAs always, feel free to schedule a Zoom call with us, and we can further explain our technology and its progress.\nOur 2020 results are a testament to the efforts of our valued employees across the Watsco network.\nWe deeply appreciate their commitment.\n", "role": "user" }, { "content": "board of directors approved a 10% increase in its annual dividend to $7.80 per share.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: The Company undertakes no obligation to update new information.\nWhitestone's first quarter earnings news release and supplemental operating and financial data package have been filed with the SEC and are available on our website, www.\nwhitestonereit.com, in the Investor Relations section.\nI will provide a brief overview on Whitestone and as well an update on our business, current events in the first quarter.\nFollowing my remarks, I will turn the meeting over to Dave Holeman, who will provide a financial update on how we did during first quarter then we will follow with question and answers.\nThis quarter's result benefited from the decision to locate our portfolio in some of the country's fastest growing Sunbelt markets, where we are leading in our nation's reopening.\nThis contributed to our performance on leasing, showing the resilience of our business model and corporate culture.\nOur operations team continues to provide their ability to be flexible and quickly adaptable with the support of our strong financial infrastructure.\nAt the end of Q1 this year, our operating portfolio occupancy was 89.1%, an increase of 0.5% from last quarter and down only 0.6% from a year ago.\nOur rent collections versus billings continue to put us at the top of our industry peer group.\nDuring Q1, our collections remains strong approximately 95% of our rents for the quarter and for the month of April.\nOur new lease count was 46 in the quarter, significantly higher than last quarter's count of 28 and our total lease count was 94, 12% higher than the previous quarter.\nOur blended leasing spread was 7.8%, 1 full percentage point higher than last quarter 6.8%.\nAnd our same-store net operating increase -- decrease 4.3% was flat last quarter yet among the best in the industry.\nAdditionally, in Q1 we increased our quarterly dividend by 2.4% and have paid a monthly dividend to our shareholders for 120 consecutive months.\nOur employees are back working safely at our properties and our tenant businesses are ramping up with increasing customer foot traffic as consumers continue to resume their daily lifestyle routines and visiting our properties while migration continues the flow into our markets.\nOur targeted geographic portfolios comprise of institutional qualities open air real estate with predictable cash flow.\nOur properties are adjacent to high-income communities and our tenants include grocery stores, pharmacies and restaurants.\nOur centers are made up of e-commerce resistant tenants who provide necessities and essentials.\nThey drive 18 hour traffic, 7 days a week to our properties.\nAs a result, over the past year our centers have remained open and most of our tenants remained active.\nSome of whom today are experiencing higher sales than their pre-pandemic levels.\nA reminder of shareholder that Whitestone was built during the recession of 2008 to 2010 and many of the lessons that we learned during we incorporated into the fiber of the company.\nOur company has built by acquiring properties that are located in our business friendly states, fast growing and really populated cities and high-income communities.\nBy creating an interest resistant business model, internet resistant business model that focuses on services and essential needs of consumers.\nBy creating a diverse portfolio of entrepreneurial tenants, by structuring leases with tenant owner recourse and minimal co-tenancy approval rights.\nBy providing annual rent increases of 2% to 3%, while passage through triple net expenses and by keeping our focus on training and developing our people for for continuity.\nOur swift response to COVID-19 12 months ago strengthened our balance sheet liquidity and financial flexibility to successfully navigate economic impacts of the pandemic.\nFast forward, the first quarter of 2021.\nWe're activating our strategic growth plan.\nWe are making plans for future redevelopment and development projects.\nWe have reduced our overall debt level, we have increased our divided and we are continuing to scale our infrastructure.\nOur history has been to grow our portfolio by making single off market, value ad acquisitions in four specific markets.\nAustin, Dallas-Fort Worth, Houston and Phoenix Scottsdale.\nWe intend to continue this strategy to assemble valuable properties in markets where tenants want to lease and consumers want to visit.\nBy growing this way, we created a substantial value add portfolio of properties.\nIn fact, we are under contract to acquire a property in one of our identified markets, our first acquisition since the pandemic began and we expect to close this summer.\nThis acquisition will add just under 200,000 square feet and would be immediately accreted to Whitestone's FFO per share and positively contribute to Whitestone's long-term goals related to debt, leverage and G&A coverage.\nIn addition, our regional management team is in place giving us operational economies as we scale up our infrastructure.\nWe look forward to providing more details as we progress in the year.\nMoving forward at Whitestone we're well positioned with the improving balance sheet, enhanced liquidity, a laser focus on driving occupancy and revenue growth and leasing, leveraging our deep knowledge of our markets, properties and opportunities along with our business model to provide and craft the tenant mix to lease, to credit entrepreneurial businesses.\nThis is how we create long-term shareholder value.\nFirst, I would like to provide a little more perspective on the strength of our markets.\nOur targeted geographic focus on top MSAs in the Sunbelt continues to produce great results.\nTexas and Arizona, continue to see significant population migration and corporate relocations producing jobs from other areas of the countries.\nThis is best evidenced by our first quarter leasing activity, occupancy levels, leasing spreads and our average base rent per leased square foot.\nOur leasing activity in the quarter was very strong with 46 new leases, representing 117,000 square feet of newly occupied spaces.\nThis level of new lease square footage was 90% higher than our average quarterly lease volume for the previous three year period.\nAnd 21% higher than the highest quarter over the past three years.\nOn a total lease value basis, this quarter was more than double our average quarterly lease volume for the previous three year period and 38% higher than the highest quarter over the past three years.\nRegarding occupancy, our operating portfolio occupancy stood at 89.1%, up 1.5% from the fourth quarter and down only 6 -- 0.6% from a year ago with our Austin market leading the way with almost 4% increase in occupancy from Q4.\nLeasing spreads on a GAAP basis have been positive 9% over the last 12 months, and first quarter leasing spreads increased 5.3% on new leases and 9.6% on renewal leases signed.\nOur annualized base rent per square foot on a GAAP basis at the end of the quarter grew 1% to $19.71, from $19.58 in the previous quarter, and basically in line with our pre-COVID ABR from a year ago.\nFunds from operations core was $0.23 per share in Q1, compared to $0.24 per share in the prior year.\nAs Jim, mentioned our collection continued to trend toward normal pre-COVID levels, with 95% of our contractual rents collected in Q1.\nRestaurants and food service, our largest tenant category, which represents 23% of our ABR and 17% of our leases square footage continued to perform very well, staying 95% in the quarter and we also saw positive movements in some of our impacted customer types, with entertainment representing only 2% of our ABR, and leased square footage paying 73% of their rents in the quarter, up from 48% in Q4.\nDuring the quarter we had minimal rent deferrals, representing 45% of our total contractual billings.\nOur same-store net operating income was down 4.3% for the quarter versus the prior year quarter, and we expect our same-store growth to resume as we move throughout the balance of the year and into 2022.\nReflecting the continued improvement in the portfolio, our reserve for uncollectible revenue was $529,000 or 1.8% of revenue, down from 4% of revenue in Q4.\nTo put this in further perspective, our first quarter reserve equates to only 9% of 2020s full year reserves.\nOur interest expense was 8% lower than a year ago, reflecting $15 million in lower average debt, and a decrease in our overall interest rate from 3.9% to 3.6%.\nOur first quarter is an encouraging start to 2021, and underscores the resilience of our forward thinking, well-crafted business model and the strength of our strategically chosen high-growth markets.\nLet me provide some further details on our collections, and related receivable balances.\nIncluded on Page 27 of our soft data is a breakdown of our tenants by type.\nAll of our credit category were above 89% collection in Q1, with the exception of entertainment, which I previously discussed.\nOur three largest categories, restaurants, grocery and financial services were at 95%, 100% and 99% respectively.\nAt quarter end, we had $23.3 million in accrued rents and accounts receivable, included in this amount is $16.9 million of accrued straight-line rents, and $1.8 million of agreed upon deferrals.\nOur agreed upon deferral balance is down 18% from year end, reflecting tenants honoring their payment plans.\nSince early last year, we've implemented various measures to strengthen our liquidity, and navigate the economic pressures caused by the pandemic.\nOur total net debt is $632 million, down $17 million from a year ago, and our liquidity representing cash and availability on our corporate credit facility, stands at $39 million at quarter end.\nWe continue to make progress on our publicly stated goal of reducing leverage.\nDuring April, we paid down an additional $10 million of our corporate credit facility.\nCurrently, we have a $140.5 million of undrawn capacity, and $25.9 million of borrowing availability under our credit facility.\nWe are in full compliance with all of our debt and expect to remain so in the future.\nAs I stated earlier, 2021 is off to a very promising start.\nThese results are a testament to the resiliency of Whitestone's business model.\nWe are encouraged by the recovery and we look forward to reengaging our growth strategy, and our continued delivery of value to all of Whitestone stakeholders.\nWith that, we will now take questions.\nOperator, please open the lines.\n", "role": "user" }, { "content": "qtrly ffo core of $0.23 per share.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: The company undertakes no obligation to update the information.\nwhitestonereit.com, in the Investor Relations section.\nWith that, let me pass the call to Jim Mastandrea.\nToday, I would like to share what I believe are pivotal to Whitestone's business, and our CFO, Dave Holeman, will provide even greater detail our operating and financial performance as well as a more detailed COVID update.\nGiven that we've all been affected by COVID-19 pandemic, we hope that all of you, your families and the businesses are doing well and staying safe.\nThe past six months have been incredibly challenging for everyone across the country and the world.\nAs the U.S. economy fell off the cliff in March of 2020, we reacted quickly with safeguards we had in place.\nIn terms of our markets and specifically, as it relates to our community-centered shopping centers located within Texas and Arizona, we too have faced extraordinary challenges, although I believe somewhat less than other parts of the country, operating in states with more business-friendly characteristics as we are.\nAt the time of our earnings call back in May, we were in the early stages of the pandemic and 63% of our tenants were open, and April collections were 64%.\nAs I report today, I am pleased to say that 94% of our businesses are open, and we collected 81% of our rents during the second quarter and have collected 86% for July so far.\nOur business model, which has been crafted from the lessons we learned during the 2008 recession and prior economic downturn, performs exceptionally well in good times and minimizes financial risk in these toughest of times.\nOur business operations have produced exceptional compounded growth rates since our IPO in 2010, and this trend continues, with our relatively strong performance in the second quarter and in the face of very difficult headwinds.\nWhitestone's foundation is built on three key pillars.\nFirst Whitestone's philosophy, including how we acquire the right real estate and then how we effectively operate and lease and manage it.\nThe second is our entrepreneurial culture in which employees become shareholders and participate shoulder-to-shoulder with our shareholders and value to help create.\nAnd third, our experienced management team that extends beyond this 12 years they worked together producing results for our investors, and consistently demonstrating an ability to capture and capitalize on opportunities that others may miss.\nMy first point is that our philosophy provides us with autonomy to act quickly and decisively.\nEven before the pandemic, the rapid shift toward online shopping as the preferred distribution channel was taking a huge toll.\nStore closures and retail transactions hit all-time high.\nThe pandemic only served to amplify that trend.\nOverall, Whitestone stayed on point with our strategy.\nOur business strategy, which was formulated in an economic down cycle with great recession of a decade ago, is created to withstand tough times and significant structural change in the structure of our industry e-commerce.\nOur contrarian approach focuses on buying open air properties in Texas and Arizona.\nThese states have led the nation in population growth and small business formations over the past several years.\nInvesting in real estate in these states allow us more freedom and control of our properties to lease and manage the owners as builders.\nThis affords the flexibility to make decisions that could be implemented quickly and strategically.\nIf a tenant performs well, we can expand them into other locations.\nAnd if they do not succeed, we can replace them with no hesitation.\nKeep in mind that we have a large tenant base and tenant can impact our revenue stream more than 3% if they go viral.\nWe fill our properties with business owners committed to innovating, growing and contributing to their communities.\nOur diversified mix of tenants that provide essential services for needs that can't be easily acquired online, if at all.\nAs a result, our open air center is providing community experiences that cater to the adjacent neighborhood as an extension of the resident's lifestyle.\nWe continue to take a proactive approach to engaging with our tenants and are always looking for ways to help their businesses.\nOur market level teams, with their deep tenant knowledge, have developed longtime relationships with local entrepreneurs.\nThis is what differentiates us from many of our peers who tend to have relationships with the real estate arm of national tenants, not the person fully committed to making daily tough decisions in running the business.\nWe have implemented numerous strategic initiatives at the property level, including on-site measures to help customers feel safe, a digital signing, and have worked with many of our restaurant tenants to increase their takeout, meal delivery business, and expand their outdoor spaces to generate more revenue, while maintaining safe social distancing.\nAs our tenant businesses return to full capacity, we believe our initiatives will continue to produce additional revenue sources for them.\nOur philosophy has produced sustained profitability and added value to our properties, resulting in industry-leading returns because it works.\nMy second point is at Whitestone, the core of our culture is our people.\nWe believe a strong culture makes for a strong business.\nOur team members are committed to creating value for all shareholders and they go the extra mile.\nAfter two months of effective remote working, our associates reporting feeling safe and excited about returning to the office.\nWe implemented safety measures in our offices, and now we have our entire dedicated workforce back in each of our offices.\nFrom the beginning of the pandemic, Whitestone associates worked tirelessly, continuing to manage in these properties with an expansive base of approximately 1,400 tenants.\nThey conducted themselves with integrity and fairness, helped tenants access PPP loans, providing temporary open/closed signs, and in some cases agreeing to rent deferrals, not for giving us any pressure and give tenants time to recover.\nWorking in the team, they have also been willing to make tough decisions that are in the best interest of our shareholders.\nWe want all of our tenants to succeed and make it through these tough times.\nYet we've seen a few who are taking advantage of this situation, not working collaboratively with us and not necessarily anxiously willing to pay the rent.\nWe expect to honor our commitments and we expect our tenants to honor theirs, which means paying the rent.\nDuring the quarter, we locked out a few tenants who by the way are well capitalized.\nIn most of these situations, these tenants pay the full amount of rent always and continue operating in the states.\nWe repeated this tough love approach several times, even though we prefer a more collaborative approach of working with our tenants.\nOur leadership team has both the depth and breadth of experience in the industry, which leads me to my third point.\nI would like to say that it is not only what we own but it's what we do with what we own.\nAs a result of the skills and experience of our team, we have and we will continue to identify structural shifts in the industry before they happen and capitalize on those opportunities.\nWe know our markets, we know our properties, we know our tenants and we know the consumer.\nFrom the start, we understood that by owning and operating quality properties in global markets, mastering consumer business and preferences and staying disciplined, we could succeed.\nIn closing, our philosophy, culture and experience underlies our brand that identifies lifestyle in the real estate industry with a formula that produces leading investment results.\nWe call this hard work and as our brand evolves within the industry, we believe our work will be recognized for the results we produce.\nWe believe that all shareholders should have the benefit real estate by owning shares in Whitestone.\nWe also know that we have continued to gain their confidence by delivering meaningful value and producing stable, predictable cash flow, value appreciation through asset management and leasing that increased 2% to 3% annually.\nAnd when appropriate, both through acquisitions and development, to achieve scale and long-term sustainable value.\nWe have a highly dedicated team that works every day to create local connections and communities that thrive, and we feel strongly that we are positioned to withstand the current headwinds and thrive into the future.\nGiven the severe economic pressures caused by the stay-at-home orders during the quarter, our portfolio has held up remarkably well.\nEntering the pandemic, our overall occupancy stood at 89.7%.\nDespite having a significant amount of our tenant businesses closed or severely impacted for all or part of the quarter, we only had a handful of tenants closed for good, such that the portfolio occupancy rate held up well, ending the quarter at 89.2%.\nAlso, our annualized space rent per square foot held relatively flat at $19.58.\nWhile our square foot leasing activity was down 37% from the second quarter of 2019, we were pleased with positive leasing spreads of 13.5% and 3.4% on renewals and new leases signed in the quarter.\nAs Jim mentioned, for the quarter, we collected 81% of our rents.\nThis includes base rent and triple net charges billed monthly.\nWe have also entered into rent deferral agreements for 5% of our second quarter rents.\nAs part of the deferral agreement, we have negotiated beneficial items such as entry into our online payment portal, reporting of tenant sales, suspension of co-tenancy requirements, loosening of exclusives or restrictions, allowing further development and stronger guarantees.\nToday, 94% of our businesses are open.\nAs a result, July collections have shown improvement.\nTo date, we have collected 86% of our July rents which compares favorably to Q2 and to the April collections of 64% we reported at this time last quarter.\nWhile we are encouraged by how things are progressing, the pandemic took a toll on our business during the second quarter in terms of our financial results.\nFunds from operations for the quarter was $9.6 million, or $0.22 per share, compared to $11.1 million, or $0.27 per share, in the same quarter of the prior year.\nThe decrease is primarily due to the impact of the pandemic, which resulted in a charge of $2.8 million, or $0.07 per share, related to the collectibility of revenue, which includes $500,000, or $0.01 per share, for noncash straight-line rent receivables.\nLet me add a little color on our flexibility analysis related to the pandemic.\nFor the quarter, we recorded a bad debt reserve of $2.3 million, which excludes reserves for straight-line rents and unbilled amounts.\nOur cash collections for the quarter were 81%.\nSo with the remaining 19% of unselected rents, which includes 5% of agreed rent deferrals, we reserved 41%.\nAdditionally, we have converted approximately 70 tenants, representing 3% of our GLA and 3.2% of our revenue, to cash basis accounting.\nThose tenants paid 41% of their own rent in Q2.\nWe have provided some additional details on our collections that can be found on page 25 of the supplemental.\nTurning to the balance sheet.\nSince March, we have implemented various measures to conserve cash, including further reductions in head count.\nToday, we have approximately $45 million in cash, representing an $8 million or 22% increase since March 31.\nWe have one $9 million mortgage loan maturing in 2020, which we expect to refinance in the third quarter, and no debt maturities in 2021.\nCurrently, we have $110.5 million of capacity and $1.2 million of borrowing availability under our credit facility.\nBorrowing availability under the credit facility is largely driven by trailing 12-month net operating income for unencumbered properties.\nAssuming that NOI for the third quarter is the same as the second quarter, we project that our current borrowing will exceed our available borrowing at the next measure period, which is September 30, 2020.\nWe expect to remain in compliance with our debt covenants and continue to work closely with our bank group.\nWe have seen pent-up demand in our markets as consumers are leaving their homes and returning quickly and in force.\nParking lots are filling, stores and restaurants are active, and figuring out creative ways to do business.\nWhitestone is well positioned to capture this pent-up demand and intends to do so.\nOur team has worked together through this ongoing crisis, and our shareholders will reap significant future benefits through greater collaboration, a more robust exchange of ideas, better and more effective communication, and improved systems and processes that provide new actionable data and allow us to more efficiently scale our infrastructure.\nWhitestone is continuing to perform and deliver on its strategic plan.\nIt is in many of the most highly desirable growth markets and high population growth states.\nWe look forward to providing an update as we progress.\nAnd with that, we will now take questions.\nOperator, please open the lines.\n", "role": "user" }, { "content": "q2 revenue $2.8 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: The Company undertakes no obligation to update this information.\nWhitestone's second quarter earnings news release and supplemental operating and financial data package have been filed with the SEC, and are available on our website at www.\nwhitestonereit.com, in the Investor Relations section.\nNow over to Jim Mastandrea, our Chairman and CEO to update you on our second quarter results.\nI will focus my remarks on our performance.\nThe demand characteristic around those results, provide some insight on our operations and the strategic direction of the company, then Dave will provide financial insight into the quarter.\nIt is a pleasure to start out telling you we have a great business with great properties and we run them well.\nAs a result, we had a record second quarter 2021, and our focus remains on leasing and more leasing, which fuels our growth and supports our dividends to a core payout ratio of 41%.\nIt also validates the quality of our portfolio drive cash flow, which strengthens our balance sheet and reduces risk.\nOur second quarter leasing activity brought our total occupancy to 89.9% up 120 basis points from the first quarter, highlighting the increased demand from new businesses entering our markets, where an average between 15 to 20 new tenants represent 1% increase in occupancy.\nWe attribute this growing demand to several factors, including the location, quality and maturity of our properties, and tenants expanding their businesses and moving to second and third Whitestone locations.\nOur properties also are benefiting from population migration, and a robust recovery in the Sunbelt markets, where we target properties that are in densely populated high income neighborhoods, located in the fastest growing cities in Texas and Arizona.\nWe achieved net income per share of $0.12 up from $0.03 in the prior quarter, and up from $0.01 from the prior year.\nAnd FFO core per share increase 13% to $0.26 a share from $0.23 in the prior quarter and increased to 18% from $0.22 in the prior year.\nOur increases in per share earnings is derived from adding new essential service focus tenants to our existing base of grocery stores, restaurants, salons, pets, care centers, drugstores, banks and financial advisories, medical out care centers health and wellness and other services.\nWe grew our asset base organically, and by making off market acquisitions of properties that we believe had significant upside and would benefit from applying the principles and the processes of our business model, streamlining property management, reconfiguring and redeveloping our community centers and adding features that attracts additional visits and extends consumer time at the properties.\nThis is best evidenced by almost 18% increase in foot traffic at our 59 centers in the first half of the year.\nAs an example of projects that drive traffic to our centers.\nWe install outdoor misting systems in Arizona for customer comfort during the three months hottest months of the year, where temperatures can average 100 degrees.\nWe currently have five million square feet of space that generates 30.6 million in revenue for Q2.\nWithin each property we curate the tenant mix.\nWith more than 1400 tenants serving customers from the surrounding neighborhoods, our properties stay vibrant 18-hours a day, seven-days a week.\nOne proactive example that is driving increased visits is a rotation among our properties of coffee and cars at our Market Street property in Scottsdale, Arizona, and our Starwood property in Plano, Texas.\nThese venues display high end sports cars, and appeal to a large variety of car lovers and families.\nOn a given Saturday during each month, we accommodate upwards of 150 cars in each location, whose owners and admirers return as customers for our local tenants.\nIncreased foot traffic to our centers is one of the most important drivers of tenant sales and attracts potential new tenants to our properties.\nOur tenants occupy an average of 3,000 square feet of space and provide e-commerce resistance services.\nThey are entrepreneurial businesses, capture sales revenues, as they keep alive the American dream, our tenant profile at it is core, as entrepreneurial as a risk or financial net worth to build their businesses.\nIn the REIT industry, these tenants, however, are referred to as small businesses.\nThey comprise a large percentage of our overall tenant base, and they recovered more quickly from COVID than some larger tenants.\nThey paid their rent and proved their resilience owners and founders of local and regional businesses prioritize their companies because it supports their families, livelihood and their future, which align with our high collection levels.\nAs they recover, Whitestone reported industry-leading collections, Our model was tested and proven during COVID.\nOur culture is about personalizing our service to tenants and our property managers and associates to apply a hands-on approach.\nThis teamwork uniting a Whitestone tenant relationships gives us a competitive advantage over other retail centers in our local neighborhood markets.\nOur culture of service produced leasing spreads on a weighted-average by 6.8% on new and renewal leases in the second quarter.\nWe expect this trend to continue, as we receive annual lease increases of 2% to 3%, on new and renewal tenant leases and pass-through triple net expenses, helping us to hedge against inflation.\nAnother driver of our revenue is increasing our leaseable square footage.\nAdding space to existing properties with no added cost of land and land development is very profitable.\nWe have approximately 230 million of development and redevelopment opportunities in our portfolio that we believe will add significant value.\nOur diversified tenant base also has a notable impact on our balance sheet.\nFor Whitestone, those single tenants can impact our revenues by more than 2.9%.\nDuring the second quarter, as our earnings increase, we strengthened our balance sheet and improved our debt-to-EBITDA ratio by 1.2 turns to 8.2 turns.\nWe have remained committed to lowering our debt service leverage.\nWe also are committed to lowering our G&A as a percent of revenue.\nWe are seeing progress as our asset base expands and our revenues increase.\nIn the second quarter, G&A as a percent of revenue was 14.6%, improving from 15.7% one year-ago.\nIn July, we reactivated our acquisition program and acquired our newest property, Lakeside Market in Dallas as fluid upscale neighborhood of Plano.\nIt is shattered anchor by Texas iconic regional grocer HEB, and it is their first flagship format store in the Dallas market.\nThe purchase price of Lakeside Market was 53.2 million, and it has significant upside from leasing up the current 19% vacant square footage.\nRental rate increases and developing the additional pad sites to add leasable square footage.\nWe currently are working with other sellers on other properties in our pipeline in locations in Dallas, Austin, Houston, and Phoenix.\nPotential sellers who have owned property in our markets for many years understand that they could benefit from spreading their risk over a large pool of quality properties, achieve liquidity to stock and selling, comply converting to stock and selling and receive a tax efficient transaction with Whitestone utilize our OP unit currency.\nIn turn Whitestone benefits by expanding our asset base, lowering our cost of capital and increasing our economies of scale.\nDividends are an important component of the REIT structure.\nOur dividend is well funded, with a payout ratio in the second quarter of 41% of FFO Core.\nI would like to expand more on our dividend and our policy.\nWe have a solid record of paying 131 consecutive monthly dividends since our IPO in 2010 and in total paid our shareholders more than 300 billion in dividends during the same time.\nIn March of 2021, we increased our dividend by $0.01, or 2.4% reflecting our strong recovery.\nOur policy is to evaluate our dividend regularly and consider many factors including our profitable growth, cash flow and progress toward creating long-term shareholder value.\nIn the meantime, we use our excess cash flow to fund internal development opportunities, acquisitions and reducing debt.\nI would also like to discuss how we expect to achieve our long-term value goals and increase our valuation.\nOur primary focus of creating and driving long-term real estate value is integral in everything we do.\nAs we lease up our portfolio, bring our development land on stream, it makes your dishes acquisitions, the intrinsic embed value in our assets will begin to be reflected in our valuation.\nWhile the value we are creating is not yet fully reflected in the market, we trade at a significant discount to our true valuation.\nWe know that as we continue to grow occupancy, revenue and cash flow, it will be recognized by the investment community.\nAchieving our long-term goals is a function of our assets.\nOur portfolio of quality real estate is spread over great markets and demand for space in our centers, as they are nearly full is highly valued.\nAnd our rental income produces a solid, stable cash flow.\nOur great locations, quality of properties and strong operating performance is notable in our success and extracting value from our properties, along with our ability of seeking and closing new acquisitions from our deep pipeline of properties will continue to keep us at the forefront of our industry as we grow.\nIn summary 10-years ago, we develop and began to build a contrarians business model with entrepreneurial tenants that would be e-commerce resistant.\nWe started with a relatively small asset base of approximately 150 million and has expanded to 59 properties in eight major cities in over 1,400 tenants and approximately 1.5 billion in real estate and value today.\nWe continue to be passionate in executing our plan and are pleased to deliver our second quarter results.\nI would now like to turn things over to Dave Holeman to provide a more detailed results or financial performance.\nI appreciate the opportunity to share some great results for the second quarter.\nDuring the quarter, our best-in-class geographic concentration and strategically designed tenant mix have produced strong top-line and bottom-line growth, and our long-term focus and day-to-day execution have allowed us to make significant progress toward our long-term goals of scaling our infrastructure and improving our overall debt leverage.\nThe MSAs that we operate in, continue to see significant population migration and corporate relocations, producing jobs from other areas of the country.\nThis is best evidenced by second quarter and year-to-date year-over-year and quarter-over-quarter top-line revenue growth, year-over-year and quarter-over-quarter property net operating income growth and year-over-year and quarter-over-quarter net income and FFO core per share growth.\nThis growth is driven by our strong leasing activity, resulting in increased occupancy levels and strong positive leasing spreads.\nThe growth is driven by reduced debt levels and borrowing costs, greater scale of our G&A infrastructure and asset sales at attractive prices.\nTotal revenue for the second quarter was 30.6 million, up 5% from the first quarter and up 11% from the second quarter of 2020.\nThe revenue growth was driven by sequential 1.2% increase in occupancy, and a 0.7% improvement, compared to Q2 2020.\nWe are also benefiting from our ABR per square foot, rising 1.2% sequentially, and 1.9% from a year-ago, along with lower uncollectibility reserves.\nProperty net operating income was $22 million for the quarter, up 4% sequentially and 10% from the second quarter of 2020.\nOur Q2 same-store net operating income increased 8.4% from Q2 of 2020.\nNet income for the quarter was $0.12 per share, up from $0.03 per share in the first quarter and $0.01 per share in the prior year quarter.\nFunds from operations core was $0.26 per share in the quarter, an increase of 13% from the first quarter, and an increase of 18% from the 2020 second quarter.\nOur leasing activity in the quarter continued to build on our very strong first quarter with 35 new leases, representing 75,000 square feet of newly occupied square footage.\nOur new lease activity for the six months is 100% higher on a square foot basis than 2020, and 40% higher than 2019.\nLeasing spreads on a GAAP basis have been positive 8% over the last 12-months, and second quarter leasing spreads increased by 3.1% on new leases, and 7.9% on renewal leases signed.\nOur annualized base rent per square foot on a GAAP basis at the end of the quarter grew 1.2% to $19.95 from $19.71 in the previous quarter, and a 1.9% increase from a year-ago.\nTotal occupancy stood at 89.9%, all of our markets saw increased quarter-over-quarter occupancy, led by our Dallas market at a 3.6% increase.\nAustin and Phoenix both grew 0.8% from the first quarter, and Houston grew point 6% from the first quarter.\nOur collections were very strong for the quarter returning to normal pre-COVID levels.\nReflecting the high collection levels, our reserve for uncollectible revenue for the quarter was $143,000, or approximately 1.5% of our revenue, down from 529,000 or 1.8% of revenue in the first quarter, and 2.3 million or 7.9% of revenue in the second quarter of 2020.\nOur total tenant receivables improved 8.4% from the first quarter and 13.5% from a year-ago.\nOur interest expense was 5% lower than a year-ago, reflecting our lower debt levels.\nAt quarter end, we had 21.3 million in accrued rents and accounts receivable.\nIncluded in this amount is 16.4 million of accrued straight line rents and 1.5 million of agreed upon deferrals.\nOur agreed upon deferral balance is down 34.4% from year end, reflecting tenants honoring their payment plans.\nTurning to our balance sheet, since early last year, we have implemented various measures to strengthen our liquidity.\nOur total net debt is 601.3 million down 48 million from a year-ago, improving our debt to gross book real estate cost ratio to 52% and improvement from 56% a year-ago.\nOur debt-to-EBITDA ratio also improved 1.2 times from the first quarter to 8.2 times.\nReflecting our post quarter acquisition and our continued focus on deleveraging, we expect our debt-to-EBIT ratio to be approximately eight by year end, reflecting significant progress on our long-term debt reduction goals.\nAt quarter end, we have 160.5 million of undrawn capacity, and 55.1 million of borrowing availability under our credit facility.\nDuring the second quarter, we sold approximately three million common shares under our ATM program, resulting in 25.4 million in net proceeds to the company.\nAfter the quarter, we acquired Lakeside market in Plano, Texas for 53.2 million financing the acquisition with approximately 30 million in equity, 10 million in debt from our corporate credit facility, and 13 million from cash flow and cash on hand.\nThese results are a testament to the strength of Whitestone's strategic geographic focus and business models.\nWe are encouraged by the acquisition of Lakeside Market and look forward to continued delivery of value to all of Whitestone's stakeholders.\nWith that, we will now take questions.\nOperator, please open the lines.\n", "role": "user" }, { "content": "compname reports q2 ffo core per share of $0.26.\nqtrly revenues of $30.6 million versus $27.6 million in 2q 2020.\nqtrly ffo core per share of $0.26.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: The company undertakes no obligation to update this information.\nWhitestone's third quarter earnings news release and supplemental operating and financial data package have been filed with the SEC and are available on our website www.\nwhitestonereit.com in the Investor Relations section.\nNow over to Jim Mastandrea, our Chairman and CEO, to update you on our third quarter results.\nOperating portfolio occupancy increased to 90.2% from 89.9% last quarter and annualized base rent increased to $20.41 from $19.95 last quarter.\nOur overall foot traffic at our centers in 3Q '21 was 35% higher than the same quarter in 2020.\nWith the resurgence of the COVID through its delta variant, we maintained a steady, but slightly lighter pattern versus 2Q '21.\nWe continue to experience active recurring traffic from existing and new community members visiting our centers as population shifts continue with the ongoing migration from corporations and individuals to Arizona and Texas.\nRegarding our financial performance for the quarter, revenue grew by 9% to $32.4 million this quarter compared to $29.9 million in 3Q '20.\nSame-store net operating income growth of 7% in this quarter and 8% in Q2 was driven by increases in occupancy and annual base rent per square foot as previously noted, as well as positive leasing spreads.\nA key financial indicator for REIT is FFO.\nFunds from operations core was $0.25 per share and $0.75 per share in the quarter and the nine months ended September 30, 2021 respectively.\nAlong with this noted growth, we continue to make progress toward one of our long-term goals of deleveraging the trust.\nWe reduced our debt to EBITDA, which is now 8.1 times down from 9.4 times a year ago.\nEqually important to the trust is our dividend, which we consider sacred.\nRegarding our quarterly dividend, we now have paid dividends to our shareholders for the 134th consecutive months since our IPO.\nOur dividend yield of 4.3% remains at a premium and our payout ratio to FFO core is exceptionally strong at 42%.\nThis quarter we reactivated our external growth plan with the acquisition of Lakeside Market in Plano, Texas at a purchase price of $53.25 million.\nImportantly, this acquisition did not require any additional corporate overhead, which is a key component toward our attaining economies of scale.\nAlong with this acquisition, we're actively pursuing additional properties in our strong pipeline of assets in Austin, Dallas and Phoenix.\nLooking at our current portfolio, we now have 4.6 million of our 5.1 million square feet of space leased.\nOur approximately 1,500 tenants' average lease space is 3000 square feet per tenant, complemented by a mix of larger square footage leases by our grocery anchors.\nOur strong tenant relationships and rigorous vetting process ensures the quality of our revenue for our portfolio and stability of our cash flow.\nI would like to point out that our tenant improvement costs to bring a new smaller tenant into one of our centers is much lower per square foot than the cost of a big box tenant.\nBy doing so, we spread our risk among a group of tenants in a relatively the same space as a larger tenant, achieve higher rent per square foot, annual escalators of 2% or 3% and some of our tenants pay percentage lease of revenues.\nIn addition, typically our tenants pay taxes, insurance and common area maintenance.\nOur strong leasing activity is one of the key drivers and performance this quarter.\nSome important metrics to highlight that our new lease count for 3Q '21 is 38 versus 35 in the prior quarter and 32 in the prior year.\nOur leasing spreads for 3Q '21 are 5.4% versus 3.1% in the prior quarter and 2.9% in the prior year, both of which are moving in a positive direction.\nIn summary, the update I've shared with you today highlights, in particular, our business model continues to perform exceptionally well.\nOur leasing strategy focusing on entrepreneurial tenants continues to produce consistent results.\nAnd most notably, we are continuing to make good progress to achieving our long-term goals.\nWhile we are pleased with our continued improving performance, we know that the work ahead of us is cut out, but our team remains committed to serving our shareholders and increasing long-term value.\nI appreciate the opportunity to share some great results for the third quarter.\nDuring the quarter, our best-in-class geography and strategically designed tenant mix have produced strong top line and bottom line growth, and our long-term focus and day-to-day execution have allowed us to make significant progress toward our long-term goals of scaling our infrastructure and improving our overall debt leverage.\nThe MSAs that we operate in, continue to see significant population migration and corporate relocations producing jobs from other areas of the country.\nThis is best evidenced by record leasing activity, occupancy and annualized base rent growth, year-over-year and quarter-over-quarter topline revenue, NOI and FFO growth, robust leasing spreads, strong same-store NOI growth, reduced debt levels and interest cost resulting in improved debt leverage metrics and greater scale of our G&A infrastructure.\nTotal revenue was $32.4 million for the quarter, up 6% from the second quarter and up 9% from the third quarter of 2020.\nThe revenue growth was driven by a sequential 0.3% increase in same-store occupancy from Q2 and a 1.2% improvement compared to Q3 of 2020.\nWe are also benefiting from our ABR per square foot, rising 2.3% sequentially and 5.3% from a year ago along with lower and collectability reserves.\nProperty net operating income was $23.2 million for the quarter, up 5% sequentially and up 9% from the third quarter of 2020.\nQ3 same-store NOI increased 7% from Q3 of 2020.\nNet income for the quarter was $0.06 per share, up from $0.02 per share in the prior year quarter.\nFunds from operations core was $0.25 per share in the quarter, up 9% from the second quarter of 2020 and year-to-date FFO core per share was $0.75 per share, up 9% from the same period of 2020.\nOur leasing activity in the quarter continued to build on our very strong first and second quarters, with 38 new leases, representing 90,000 square feet of newly occupied spaces.\nOur new leasing activity for the nine months was 56% higher on a square foot basis than 2020 and 48% higher than 2019.\nOn a total lease value basis, our new leasing activity for the nine months was 112% higher than 2020 and 191% higher than 2019.\nLeasing spreads on a GAAP basis have been a positive 8.5% over the last 12 months and third quarter leasing spreads increased by 5.4% on new leases and 14.1% on renewal leases signed.\nOur annualized base rent per square foot on a GAAP basis at the end of the quarter grew 2.3% to $20.41 from $19.95 in the previous quarter and increased 5.3% from a year ago.\nTotal operating portfolio occupancy stood at 90.2%, up 1.2% from a year ago and up 0.3% from the second quarter.\nIncluding our newest acquisition Lakeside Market, our total occupancy is 89.9%, up 1% from a year ago.\nOur collections continued to be very strong in the third quarter, reflecting the overall high collection levels and collections on tenants classified as cash basis.\nOur tenant receivables decreased by $1 million, an improvement of 4.4% from year-end 2020.\nOur interest expense was 4% lower than a year ago, reflecting our lower net debt.\nAt quarter end, we had $22 million in accrued rents and accounts receivable.\nIncluded in this amount is $17.8 million of accrued straight-line rents and $1.3 million of agreed upon deferrals.\nOur agreed upon deferral balance is down 43% from year-end reflecting tenants honoring their payment plans.\nTurning to our balance sheet.\nSince early last year, we have implemented various measures to strengthen our liquidity.\nOur total net debt was $616.6 million, down $20.5 million from a year ago, improving our debt to gross book real estate cost ratio to 51% down from 55% a year ago.\nOur debt to EBITDA ratio improved 1.3 turns from a year ago and 0.1 turn from the second quarter to 8.1 times in Q3.\nWe are pleased with the significant progress we are making toward our long-term debt reduction goal and remain steadfast in our commitment in this area.\nAs of quarter end, we have $155.5 million of undrawn capacity and $81.8 million of borrowing availability under our credit facility.\nDuring the quarter, we sold 3 million common shares under our ATM program, resulting in $28 million in net proceeds to the company at an average sale price of $9.49 per share.\nThese strong results in 2021 are a testament to the strength of Whitestone's strategic geographic focus and business model.\nWe are encouraged by the acquisition of Lakeside Market in the quarter and look forward to continued delivery of value to all of Whitestone's stakeholders.\nWith that now -- we will now take questions.\nOperator, please open the lines.\n", "role": "user" }, { "content": "q3 ffo per share $0.25.\nq3 revenue $32.4 million versus $29.9 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: On Slide 4 is our safe harbor statement.\nThese statements are based on our beliefs and assumptions, current expectations, estimates, and forecasts.\nThe company's future results are influenced by many factors beyond the control of the company.\nDuring today's call, management will make reference to non-GAAP financial measures, including organic sales growth, adjusted operating profit, adjusted operating profit margin, and adjusted diluted EPS.\nStarting on Slide 5.\nI am pleased to report that we had an exceptional first quarter.\nThis was driven by strong organic sales growth in both our base business and the accelerating demand for products associated with COVID-19.\nOur high-value products continue to fuel increased gross and operating margins.\nTogether, this has resulted in record earnings per share for the first quarter.\nThe strength of our performance is demonstrated in our ability to execute the market-led strategy, leverage the power of our global manufacturing network, and rally as a One West team to meet the increased market demand.\nI am proud of how our team members have focused on our priorities and emphasize the importance of our purpose and values during these times.\nTurning to Slide 6.\nWe have highlighted the key drivers of growth in Q1.\nWe continue to see strong uptake of HVP components, including Westar, FluroTec, Envision, and NovaPure offerings, as well as Daikyo's Crystal Zenith.\nOur biologics customers are seeking to use these best-in-industry components to ensure the highest degree of quality and safety for their vaccines and injectable medicines.\nThis has resulted in strong double-digit growth, excluding COVID sales, and continued demand growth for FluroTec and NovaPure in our biologics business.\nThrough the first four months of 2021, our participation rate in recently approved new molecular entities in the U.S. and Europe continues to be strong with over 95% of these approvals using either West or Daikyo components.\nIn addition, we experienced strong growth in Westar ready-to-use components with customers seeking the value, quality, and convenience of our Westar washed and sterilized products.\nAnd for Envision, we also had significant growth with customers looking for higher quality and better production yields by using our Envision inspected components.\nAnother highlight was strong sales growth in Daikyo CZ syringes and vials.\nCustomers prefer CZ for its compatibility with their sensitive molecules and its outstanding track record of quality and reliability.\nMoving to Slide 7.\nThe power of our global manufacturing network continues to support our growth trajectory.\nWe are uniquely positioned as a result of the global operations strategy implemented a few years ago.\nThis has enabled the right capabilities, scale, and flexibility to keep in pace with the increase in demand.\nAs a result of recent capital investments, we have expanded our manufacturing capacity across our high-value product portfolio with additional equipment and validated lines to support our highest HVP growth areas, Westar, FluroTec, and NovaPure.\nWe have accelerated the timeline for capacity builds within our existing footprint by working closely with our incumbent suppliers and staging installations around the 24/7 plant schedules.\nOur first phase, which began at the start of the pandemic is about 75% installed and operational, with expected completion in second half of the year.\nOur second phase, we'll see equipment arriving in the back end of the year in operational in 2022.\nAnd we are evaluating additional investments for a third expansion phase in response to an increasing possibility of COVID-19 boosters and annual vaccinations required over the next few years.\nWhen this occurs, we think that future COVID-19 vaccines could likely be fewer doses per vial and/or in single-dose prefilled syringes.\nAs a result, it may mean higher volume demand of our HVP components compared to what we are experiencing today.\nI am pleased to share that from my recent visit to our Scottsdale, Arizona facility, we are on schedule with our fully automated line for CZ insert needle syringes.\nWe're in the process of validating the line, which is targeted to commence commercial production for our customers' committed orders during the third quarter of this year.\nThis is our third automated line with another line scheduled for delivery in late 2021.\nTurning to Slide 8.\nCore to our values at West has been a strong corporate citizen.\nIn 2019, we exceeded our initial five-year environmental, social, and governance, or ESG, initiatives set in 2017 and raised the bar higher with a new set of five-year goals.\nI'm proud to say that we continue to make significant progress on our ESG priorities with good momentum toward our stated reduction goals for waste, energy, and water usage.\nWe continue to reaffirm our commitment to live by our One West team value that calls on us to respect each other, drive collaboration, and to embrace diversity, inclusion in our workplace.\nAnd we continuously look for ways to improve sustainability of our business and the rigor of our ESG reporting continues to evolve.\nLast year, we published a supplement -- or later this year, we will publish a supplement to our 2020 CR report incorporating the SASB ESG standards.\nLet's review the numbers in more detail.\nWe'll first look at Q1 2021 revenues and profits, where we saw continued strong sales and earnings per share growth, led by strong revenue performance, primarily in our biologics, pharma, and generic market units.\nI will take you through the margin growth we saw in the quarter, as well as some balance sheet takeaways.\nAnd finally, we will provide an update to our 2021 guidance.\nOur financial results are summarized on Slide 9, and the reconciliation of non-U.S. GAAP measures are described in Slides 17 to 20.\nWe recorded net sales of $670.7 million representing organic sales growth of 31.1%.\nCOVID-related net revenues are estimated to have been approximately $102.9 million in the quarter.\nThese net revenues include our assessment of components associated with vaccines, treatment, and diagnosis of COVID-19 patients, offset by lower sales to customers affected by lower volumes due to the pandemic.\nLooking at Slide 10.\nProprietary products sales grew organically by 39.6% in the quarter.\nHigh-value products, which made up more than 70% of proprietary products sales in the quarter grew double digits and had solid momentum across all market units throughout Q1.\nLooking at the performance of the market units, Biologics market unit delivered strong double-digit growth.\nWe continue to work with many biotech and biopharma customers who are using West and Daikyo high-value product offerings.\nThe generics market unit also experienced strong double-digit growth led by sales of FluroTec components.\nOur pharma market unit saw strong double-digit growth with sales led by high-value products including Westar and FluroTec components.\nAnd contract manufacturing had mid-single-digit organic sales growth for the first quarter, led once again by sales of diagnostic and healthcare-related injection devices.\nWe continue to see improvement in gross profit.\nWe recorded $271.9 million in gross profit, $104.9 million or 62.8% above Q1 of last year.\nAnd our gross profit margin of 40.5% was a 650-basis-point expansion from the same period last year.\nWe saw improvements in adjusted operating profit with $179.2 million recorded this quarter, compared to $88 million in the same period last year, for a 103.6% increase.\nOur adjusted operating profit margin of 26.7% was an 880-basis-point increase from the same period last year.\nFinally, adjusted diluted earnings per share grew 103% for Q1.\nExcluding stock-based compensation tax benefit of $0.15 in Q1, earnings per share grew by approximately 102%.\nSo let's review the growth drivers in both revenue and profit.\nOn Slide 11, we show the contributions to sales growth in the quarter.\nVolume and mix contributed $146.7 million or 29.8 percentage points of growth, including approximately $102.9 million of volume driven by COVID-19-related net demand.\nSales price increases contributed $6 million or 1.2 percentage points of growth, and changes in foreign currency exchange rates increased sales by $26.5 million or an increase of 5.4 percentage points.\nLooking at margin performance.\nSlide 12 shows our consolidated gross profit margin of 40.5% for Q1 2021, up from 34% in Q1 2020.\nProprietary products first-quarter gross profit margin of 46.3% was 610 basis points above the margin achieved in the first quarter of 2020.\nThe key drivers for the continued improvement in proprietary products gross profit margin were favorable mix of products sold driven by growth in high-value products, production efficiencies, one-time fees associated with certain canceled COVID supply agreements of approximately $11.8 million, and sales price increases, partially offset by increased overhead costs, inclusive of compensation.\nContract manufacturing first-quarter profit gross margin of 15.7% was 140 basis points above the margin achieved in the first quarter of 2020.\nThis is a result of improved efficiencies and plant utilization.\nNow, let's look at our balance sheet and review how we've done in terms of generating more cash for the business.\nOn Slide 13, we have listed some key cash flow metrics.\nOperating cash flow was $88.7 million for the first quarter of 2021, an increase of $31.6 million compared to the same period last year or a 55.3% increase.\nOur first-quarter 2021 capital spending was $54.7 million, $22.6 million higher than the same period last year and in line with guidance.\nWorking capital of $844.2 million at March 31, 2021, declined slightly by $26.1 million from December 31, 2020.\nOur cash balance at March 31 of $483.7 million was $131.8 million less than our December 2020 balance primarily due to our share repurchase program activity offset by the positive operating results.\nSlide 14 provides a high-level summary.\nFull-year 2021 net sales are expected to be in a range of $2.63 billion and $2.655 billion, compared to prior guidance range of $2.5 billion and $2.525 billion.\nThis guidance includes estimated net COVID incremental revenues of approximately $345 million.\nThere is an estimated benefit of $75 million based on current foreign exchange rates.\nWe expect organic sales growth to be approximately 19% to 20%.\nWe expect our full-year 2021 adjusted diluted earnings per share guidance to be in a range of $6.95 to $7.10, compared to a prior range of $6 to $6.15.\nWe continue to expand our HVP manufacturing capacity at our existing sites to meet anticipated core growth and COVID vaccine demand.\nWe are keeping our capex guidance at $230 million to $240 million but continue to evaluate the levels needed to support our continued growth.\nThere are some key elements I want to bring your attention to as you review our guidance.\nEstimated FX benefit on earnings per share has an impact of approximately $0.23 based on current foreign currency exchange rates.\nAnd our guidance excludes future tax benefits from stock-based compensation.\nSo to summarize the key takeaways for the first quarter, strong top-line growth in proprietary, gross profit margin improvement, growth in operating profit margin, growth in adjusted diluted EPS, and growth in operating and free cash flow, delivering in line with our pillars of execute, innovate, and grow.\nTo summarize on Slide 15, in this dynamic changing environment, we remain committed to our customers and the patients we serve together.\nOur focus remains within the strategic pillars, which allow us to be more responsive, leverage our assets more effectively and support the trends that are happening in the industry today.\nWe're working from a position of strength, and we believe we have a long horizon of continued organic sales growth and margin expansion.\nToday, more than ever, we're enabling our customers' ability to support patient health, and it's not taken for granted.\nWest products are needed by patients across the globe and in many cases, for the administration of life-saving medicines.\nAs the market leader, we know that West will continue to play an integral role with our customers as they develop and bring new medicines to market for a brighter future.\nStephanie, we're ready to take questions.\n", "role": "user" }, { "content": "sees fy sales $2.63 billion to $2.655 billion.\nq1 sales rose 36.5 percent to $670.7 million.\nwest pharmaceutical services - raising full-year 2021 adjusted-diluted earnings per share guidance to a new range of $6.95 to $7.10.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: On Slide 4 is our safe harbor statement.\nThese statements are based on our beliefs and assumptions, current expectations, estimates, and forecasts.\nThe company's future results are influenced by many factors beyond the control of the company.\nDuring today's call, management will make reference to non-GAAP financial measures, including organic sales growth, adjusted operating profit, adjusted operating profit margin, and adjusted diluted EPS.\nWe will start on Slide 5.\nOur team delivered an incredibly strong third quarter.\nOur proven market-led strategy delivered double-digit growth across all three market units and geographies.\nAnd excluding positive impact from sales related to the pandemic, we delivered double-digit growth in our base business with continued strong adoption of our high-value products, coupled with solid execution and leveraging our global operating model, it has led to robust margin expansion and earnings per share growth for the quarter.\nOur Q3 performance was made possible by the commitment of the West team members across the globe.\nWe are in the business of helping our customers bring new medicines and treatments that improve the lives of patients.\nI'm very proud and humble of how we live our purpose by producing billions of components and devices each quarter.\nAnd we do so with the knowledge that each and every component we make is impacting patients' life.\nWe continue to fulfill our purpose by earning our customers' trust by leading with quality, service, and science.\nLooking ahead, we are well-positioned with the right growth strategy.\nOur committed order book remains robust.\nWe continue to capture the benefits of the globalization of our operating network and continued capital investments to support the increasing demand driven by the pandemic and attractive end markets.\nWith this substantial momentum, we are raising our sales and earnings per share guidance for the full year 2021.\nAnd for the 29th consecutive year, we are increasing the company's dividend, Bernard will go into greater detail shortly.\nTurning to Slide 6.\nOur key drivers of growth in Q3 are being fueled by COVID-19 customers that are used in our stoppers and seals including the highest level of NovaPure and FluroTec.\nBiologic customers that are shifting preference from FluroTec to our premium platform, NovaPure, to achieve the highest quality and tightest specifications for their newly approved biologic drugs.\nAnd pharma and generic customers, there are increasing orders as their demand grows for non-COVID-19 vaccines and injectable drugs.\nShifting to our device portfolio and our long-standing partnership with Daikyo Seiko, we continue to see adoption and uptick of customer interest for new pipeline drugs with Crystal Zenith syringes, cartridges, and vials.\nTo meet this demand and stay ahead of the current growth trends for future approvals, we have continued to add manufacturing capacity for CZ.\nOur teams have successfully validated additional lines for insert needle syringes and will begin producing commercial product by the end of the year.\nAll these products as well as other HVP components are contributing to our growing book of committed orders, which position us well for the remainder of the year and into 2022 and beyond.\nMoving to Slide 7.\nTo date, we have been leveraging our global infrastructure and tapping into the agility of our own team to meet the increased customer orders.\nAs we highlighted in Q2, several phases of investment are proceeding and now being realized.\nSince the onset of the pandemic, we have expanded capacity at 13 existing sites with 30 major facility modifications, dedicated over $300 million of capital, and added over 400 incremental pieces of equipment, all while keeping pace with a growing base demand and moving our operations to 24/7.\nAs our book of committed orders continues to surge, we will continue to make further strategic investments to meet demand.\nToday, we're announcing a fourth phase of capacity expansion that will commence in 2022.\nThis will primarily focus on expanding NovaPure production at our HVP sites in the United States and Europe.\nShifting to the rapidly changing environment and the impact of COVID-19 on the global supply chain, no industry has been immune to this impact.\nWe're working with our partners to help overcome challenges that span from transportation and logistics to raw materials and securing labor, all leading to cost inflation and delays.\nTurning to Slide 8.\nI'm proud of the significant progress we have made on our ESG priorities.\nThese have been an integral part of our One West culture and our commitment to all our stakeholders and the communities where we work and live.\nOver the past six years, we continue to raise the bar in all aspects of our ESG initiatives.\nAnd we remain on track to publish by year end, a supplement to our 2020 corporate responsibility report incorporating the SASB and TSFD ESG standards.\nLet's review the numbers in more detail.\nWe'll first look at Q3 2021 revenues and profits where we saw continued strong sales and earnings per share growth led by strong revenue performance in our biologics, generics, and pharma market units.\nI will take you through the margin growth we saw in the quarter as well as some balance sheet takeaways.\nAnd finally, we will provide an update to our 2021 guidance.\nOur financial results are summarized on Slide 9 and the reconciliation of non-U.S. GAAP measures are described on Slides 17 to 21.\nWe recorded net sales of $706.5 million, representing organic sales growth of 27.9%.\nAnd COVID-related net revenues are estimated to have been approximately $115 million in the quarter.\nThese net revenues include our assessment of components associated with vaccines, treatments, and diagnosis of COVID-19 patients, offset by lower sales to customers affected by lower volumes due to the pandemic.\nLooking at Slide 10.\nProprietary Products sales grew organically by 35.7% in the quarter.\nHigh-value products, which made up approximately 73% of proprietary product sales in the quarter grew double digits and had solid momentum across all of our market units in Q3.\nLooking at the performance of the market units, the biologics market unit delivered strong double-digit growth.\nWe continue to work with many biotech and biopharma customers who are using West and Daikyo high-value product offerings.\nThe generics market unit also experienced double-digit growth led by sales of FluroTec and Westar components.\nOur pharma market unit also saw strong double-digit growth with sales led by high-value products including Westar, FluroTec, and NovaPure components.\nAnd contract manufacturing had low single-digit organic sales growth for the third quarter, led once again by sales of healthcare-related medical devices.\nWe continue to see improvement in gross profit.\nWe recorded $288.2 million in gross profit, 93.6 million or 48.1% above Q3 of last year.\nAnd our gross profit margin of 14.8% was a 530 basis point expansion from the same period last year.\nWe saw improvement in adjusted operating profit with $182.8 million recorded this quarter, compared to 103.9 million in the same period last year for a 75.9% increase.\nOur adjusted operating profit margin, 25.9%, was a 690 basis point increase from the same period last year.\nFinally, adjusted diluted earnings per share grew 79% for Q3.\nExcluding stock-based compensation tax benefit of $0.11 in Q3, earnings per share grew by approximately 72%.\nLet's review the growth drivers in both revenue and profit.\nOn Slide 11, we show the contributions to sales growth in the quarter.\nVolume and mix contributed $142.9 million or 26.1 percentage points of growth, including approximately 83 million of incremental volume driven by COVID-19-related net demand.\nSales price increases contributed 10.1 million or 1.8 percentage points of growth.\nLooking at margin performance.\nSlide 19 shows our consolidated gross profit margin of 40.8% for Q3 2021, up 35.5% in Q3 2020.\nProprietary products third quarter gross profit margin of 46.3% was 550 basis points above the margin achieved in the third quarter of 2020.\nThe key drivers for continued improvement in Proprietary Products gross profit margin were favorable mix of products sold, driven by growth in high-value products, production efficiencies, and sales price increases, partially offset by increased overhead costs, inclusive of compensation.\nContract manufacturing third quarter gross profit margin of 16.1% was 180 basis points below the margin achieved in the quarter of 2020.\nThe decrease in margin is largely attributed to a mix of products sold as well as timing of the pass-through of raw material price increases to customers.\nNow let's look at our balance sheet takeaway and review how we've done in terms of generating more cash for the business.\nOn Slide 13, we have listed some key cash flow metrics.\nOperating cash flow was $423.2 million for the third quarter of 2021, an increase of 99.4 million compared to the same period last year, a 30.7% increase.\nOperating cash flow in the period was adversely impacted by our working capital increase as well as timing of tax payments.\nOur third quarter 2021 year-to-date capital spending was $176.9 million, $60.2 million higher than the same period last year.\nWorking capital of approximately $1 billion at September 30th, 2021 increased by 169.4 million from December 31, 2020, primarily due to higher accounts receivable from our increased sales.\nOur cash balance at September 30th of $688 million was $72.5 million higher than our December 2020 balance.\nThe increase in cash is primarily due to our strong operating results in the period, offset by our share repurchase program and higher capex.\nSlide 4 provides a high-level summary.\nFull year 2021 net sales are expected to be in a range of 2.8 billion and $2.81 billion, compared to our prior guidance range of 2.76 billion to $2.785 billion.\nThis guidance includes estimated net coal with incremental revenues of approximately $450 million.\nThere is an estimated benefit of $55 million based on current foreign exchange rates, compared to a prior estimated benefit of $80 million.\nThis $25 million reduction in FX tailwind has been absorbed into our guidance.\nWe expect organic sales growth to be approximately 28%, compared to a prior range of 24 to 25%.\nWe expect our full year 2021 reported diluted earnings per share guidance to be in a range of $8.40 to $8.50, compared to a prior range of $8.05 to $8.20.\nThis revised guidance includes a $0.35 earnings per share positive impact of tax benefits from stock-based compensation from the first nine months 2021.\nAlso, our capex guidance remains at 265 to $275 million for the year.\nThere are some key elements I want to bring your attention to as we review our guidance.\nEstimated FX benefit on earnings per share has an impact of approximately $0.19 based on current foreign currency exchange rates compared to a prior estimated benefit of $0.27.\nAnd our guidance excludes future tax benefits from stock-based compensation.\nTo summarize the key takeaways for the third quarter, strong top line growth in proprietary gross profit margin improvement, growth in operating profit margin, growth in adjusted diluted EPS, and growth in operating cash flow, delivering in line with our pillars of execute, innovate, and grow.\nTo summarize on Slide 15, the excellent financial performance reported today continues to reaffirm that our strategy is working.\nOur market-led approach is delivering unique value to our customers.\nOur global operations team is efficiently manufacturing and delivering products in this complex environment with a focus on service and quality.\nAnd we're continuing to accelerate capital spending across our operations to meet current and anticipated future growth.\nMost importantly, we have an incredible team working to make this all happen.\nWe are proud to serve as a valuable trusted partner for customers to support patient health and look forward to continue to play a critical role in delivering healthcare well into the future.\nAmanda, we're ready to take questions.\n", "role": "user" }, { "content": "sees fy sales $2.8 billion to $2.81 billion.\nq3 sales rose 28.9 percent to $706.5 million.\nraising full-year 2021 adjusted-diluted earnings per share guidance to a new range of $8.40 to $8.50.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: On Slide 4 is our safe harbor statement.\nThese statements are based on our beliefs and assumptions, current expectations, estimates and forecasts.\nThe company's future results are influenced by many factors beyond the control of the company.\nDuring today's call, management will make reference to non-GAAP financial measures, including organic sales growth, adjusted operating profit, adjusted operating profit margin, and adjusted diluted EPS.\nWest had an extraordinary year of success in the face of the biggest healthcare challenge of our generation.\nA record-setting year of sales and margins were driven by base business demand of our components, devices and solutions as well as the accelerating demand for components associated with COVID-19 vaccines and therapeutics.\nThis was accomplished by our dedicated team members across the globe, working tirelessly to show up each day at our facilities, our labs and remotely at their homes to make a meaningful difference to customers and patients.\nThe past year has truly brought to life the importance of our mission and values that guides our work each day at West.\nWe remain steadfast in our purpose to serve society and lead by example for the communities in which we live and work.\nImportantly, we continue to manage through these unprecedented times by focusing on two key priorities.\nOne, keeping our team members safe and two, ensuring uninterrupted supply of high-quality containment and delivery devices required by our customers and the patients we jointly serve.\nThe criticality of our business today is shown in the character and the perseverance of our team members to deliver on our commitments as a trusted partner for our customers.\nThe strength of our performance this past quarter and throughout 2020, demonstrates the forward momentum that we have built over time with our market-led strategy, globalization of our manufacturing network and One West team approach to satisfy market demand.\nMoving to Slide 6.\nThese charts show a breakdown of the 2020 sales and the impact of our high-value products that we bring to numerous customers around the world.\nAs the base business continues to grow, and as we saw a growing demand for components associated with COVID-19, we leveraged our global infrastructure and team's agility to meet the increased demand.\nNow, turning to Slide 7.\nProudly, West components are on a majority of the vaccines on the market and in development to combat COVID-19.\nThe process for selecting the best high-quality packaging components for use with injectable medicines, including vaccines is a complex one, driven by years of science, which West has pioneered.\nIt became clear to us in early 2020 that would -- we would need to accelerate production capacity for certain high-value products.\nAs I previously shared, many of our customers are selecting fluoropolymer-coated stoppers from vial configurations made by both West and our partner, Daikyo.\nThese are the industry standard for packaging sensitive molecules and have an outstanding track record of quality and reliability.\nSome of our customers have selected NovaPure, as they have made the decision to use this best-in-industry component to ensure the highest degree of quality and safety.\nIn addition, we're involved in many therapeutic approvals and our contract manufacturing business is supporting the COVID-19 diagnostic requirements of our customers.\nIn Q4, we accelerated our capacity expansions and began the installation of additional equipment with a modular approach to expand Flurotec and NovaPure capacity.\nThis included the installation of several 45-ton hydraulic presses and additional HVP manufacturing processes to produce components for COVID-19 vaccines at several sites.\nI'm proud to say that the first presses were installed and validated at the end of 2020, and we're now producing product.\nAnd we're not done yet.\nWe have more presses that will be installed in the first half of this year.\nIt should be noted that these investments were already included in the 5-year plan.\nWe just brought them forward to support the pandemic efforts.\nMoving to Slide 8.\nWhile COVID-19 was much of the focus in 2020, there are a few other notable highlights I would like to share.\nWest was named to the S&P 500 and recently joined the S&P 500 Dividend Aristocrats.\nWe continue to make significant progress with our environmental, social and governance priorities and have received many accolades in 2020 for these efforts.\nWe launched several innovative products such as our 20-millimeter Vial2Bag Advanced product.\nAccelTRA component line extensions and a Flip-Off seal container closure system compatible with Daikyo Crystal Zenith vials.\nOur team of scientific and technical experts continue to educate and share insights in biologics, combination products and container closure integrity, which are priority areas in pharmaceutical packaging and necessity during this pandemic to ensure patient safety.\nAt the end of the year, West digital technology center successfully implemented a new ERP system, SAP S/4HANA, which during this pandemic is quite an accomplishment.\nAs we continue to improve our internal systems, S/4HANA brings enhanced analytics to improve responsiveness, operating efficiencies and greater service levels for customers.\nTurning to Slide 9.\nThe opportunity ahead of us centers around three core pillars: execute, innovate and grow.\nThe first pillar, Execute is about continuing to build from the strength and success of the market led strategy.\nFurther globalization of our operating model.\nAnd lastly, a shift from analog to a digital environment across West.\nWe continue to drive the market-led strategy for further defining unique value propositions to address specific customer needs in biologics, generics and pharma.\nThese are very attractive, robust markets for the future of injectable medicines.\nFor the benefit of our customers, we have been able to leverage our global manufacturing network by enabling the right capabilities, scale and flexibility to keep up with the increased demand with the ability to leverage existing assets more effectively across our global network, we can respond to the demand of our base business and importantly, the demand for COVID-19, while maintaining our global leadership position.\nWe will continue to deliver digital tools, such as the Knowledge Center and the West Virtual, along with enhancements to improve plant productivity with automation and advanced manufacturing systems.\nThe second pillar is Innovate with a focus on R&D efforts with -- from concept to commercialization.\nOur newly aligned R&D team is focused on several areas: the first area of new products and platforms, to connect the dots across science and technology for potential value creation.\nThe second area is technology solutions and new go-to-market enablement, which explores adjacent technologies and disruptors to realize new opportunities.\nAnd the third area is product life cycle management with the execution of development agreements and product extensions.\nWe are confident that these R&D efforts will have us well positioned to deliver unique innovations and future improvements to existing portfolios for our customers.\nThe third pillar is Growth, capital deployment and free cash flow.\nAs mentioned earlier, we have increased capital expenditures on specific equipment focused on Flurotec and NovaPure to enable us to respond to the core business growth and vaccine requirements and as the vaccines are being approved, making sure we can respond and meet the customer demand.\nAnd we continue to look for external technology opportunities to complement our business.\nWe are working from a position of strength as we believe we have a long horizon of continued organic sales growth and margin expansion.\nOur focus within these three pillars: execute, innovate and grow, allows us to be more responsive, leverage our assets more effectively, and support the trends that are happening in the industry today.\nTurning to Slide 10 and our performance in the fourth quarter and full year.\nOur financial results were strong.\nWe had approximately 20% organic sales growth in the fourth quarter and 16% for the full year driven again by robust biologics growth, high-value product sales and contract manufacturing.\nAnd our base business delivered significant growth with solid growth in operating profit margin expansion.\nThis resulted in a strong adjusted earnings per share and free cash flow for the fourth quarter.\nSo let's review the numbers in more detail.\nWe'll first look at Q4 2020 revenues and profits where we saw continued strong sales and earnings per share growth led by strong revenue performance, primarily in our biologics and generics market units and contract manufacturing.\nI will take you through the margin growth we saw in the quarter as well as some balance sheet takeaways.\nAnd finally, we'll review our 2021 guidance.\nFirst up Q4, our financial results are summarized on Slide 11 and the reconciliation of non-U.S. GAAP measures are described in Slides 20 to 23.\nWe recorded net sales of $580 million, representing organic sales growth of 19.8%.\nCOVID-related net revenues are estimated to have been approximately $46 million in the quarter.\nThese net revenues include our assessment of components associated with vaccines, treatment and diagnosis of COVID-19 patients, offset by lower sales to customers affected by lower volumes due to the pandemic.\nLooking at Slide 12.\nproprietary product sales grew organically by 25.1% in the quarter.\nHigh-value products, which made up more than 65% of proprietary product sales in the quarter grew double digits and had solid momentum across all market units throughout Q4.\nLooking at the performance of the market units, the biologics market unit delivered strong double-digit growth.\nWe continue to work with many biotech and biopharma customers, who are using West and Daikyo high-value product offerings.\nThe generics market unit also experienced strong double-digit growth made by sales of Westar and Flurotec components.\nOur pharma market unit saw low single-digit growth with sales led by high-value products, including Westar and Flurotec components.\nAnd contract manufacturing had mid single-digit organic sales growth for the fourth quarter, led once again, by sales of diagnostic and healthcare-related injection devices.\nWe continue to see improvements in gross profit.\nWe recorded a $211.1 million in gross profit, $57.9 million or 37.8% above Q4 of last year.\nAnd our gross profit margin of 36.4% was a 390-basis-point expansion from the same period last year.\nWe saw improvements in adjusted operating profit with $119.1 million recorded this quarter compared to $73.1 million in the same period last year or a 62.9% increase.\nOur adjusted operating profit margin of 20.5% was a 500-basis-point increase from the same period last year.\nFinally, adjusted diluted earnings per share grew 63% for Q4.\nExcluding stock tax benefit of $0.09 in Q4, earnings per share grew by approximately 55%.\nSo let's review the growth drivers in both revenue and profit.\nOn Slide 13, we show the contributions to sales growth in the quarter.\nVolume and mix contributed $87.8 million or 18.7 percentage points of growth, including approximately $46 million of volume-driven by COVID-19-related net demand.\nSales price increases contributed $5.5 million, a 1.2 percentage points of growth, and changes in foreign currency exchange rate increased sales by $16.3 million or an increase of 3.5 percentage points.\nLooking at margin performance.\nSlide 14 shows our consolidated gross profit margin of 36.4% for Q4 2020, up from 32.5% in Q4 2019.\nproprietary Products fourth-quarter gross profit margin of 41.7% was 370 basis points above the margin achieved in the fourth quarter of 2019.\nThe key drivers for the continued improvement in proprietary Products gross profit margin were favorable mix of products sold driven by growth in high-value products, reduction efficiencies and sales price increases, partially offset by increased overhead costs.\nContract manufacturing fourth-quarter gross profit margin of 17.2% was 80 basis points above the margin achieved in the fourth quarter of 2019.\nThis is a result of improved efficiencies and plant utilization.\nNow, let's look at our balance sheet and review how we've done in terms of generating more cash.\nOn Slide 15, we have listed some key cash flow metrics.\nOperating cash flow was $472.5 million for 2020, an increase of $105.3 million compared to the same period last year, a 28.7% increase.\nOur 2020 capital spending was $174.4 million, $48 million higher than the same period last year and in line with guidance.\nWorking capital of $870.3 million at December 31, 2020, was $153.2 million higher than at December 31, 2019, primarily due to an increase in accounts receivable of $66 million due to increased sales activity and an increase in inventory of $85.6 million to position us to support the increasing needs of our customers.\nOur cash balance at December 31 of $615.5 million, was $176.4 million more than our December 2019 balance, primarily due to our positive operating results.\nSlide 16 provides a high level summary.\nFull year 2021 net sales guidance will be in a range of between $2.5 billion and $2.2 -- $2.525 billion.\nThis includes estimated net COVID incremental revenues of approximately $260 million.\nThere is an estimated benefit of $75 million based on current foreign exchange rate.\nWe expect organic sales growth to be approximately 13% to 14%.\nWe expect our full year 2021 reported diluted earnings per share guidance to be in a range of $6 to $6.15.\nWe continue to expand our HVP manufacturing capacity at our existing sites to meet anticipated core growth and COVID vaccine demand.\nAccordingly, we have set capex guidance of $230 million to $240 million.\nThere are some key elements I want to bring your attention to as you review our guidance.\nEstimated FX benefit on earnings per share has an impact of approximately $0.23 based on current foreign currency exchange rates and excludes future tax benefits from stock-based compensation.\nTo summarize the key takeaways for the fourth quarter, strong top-line growth in both proprietary and contract manufacturing, gross profit margin improvement, growth in operating profit margin, growth and adjusted diluted EPS, and growth in operating and free cash flow, delivering in line with our pillars of execute, innovate and grow.\nTo summarize on Slide 17, we have a critical role to support our customers as we work to resolve this global pandemic.\nThe participation rate remains very high.\nAnd our products are being used in this battle.\nWe have strength in the underlying core business and long-term growth.\nOur focus on execute, innovate and grow, allows us to be more responsive to the changes in the industry.\nOur market-led strategy is delivering the right products and solutions to our customers.\nOur global operations network continues to flex and respond to increased demand and capacity requirements.\nAnd our investments to fuel R&D and innovation in digital technology will continue to keep us on the forefront of the industry.\nThe future is promising, but most importantly, we remain grounded for our mission and values each day at West, because every component has a patient's name on it.\nCatherine, we're ready to take questions.\n", "role": "user" }, { "content": "sees fy 2021 earnings per share $6.00 to $6.15.\nsees fy 2021 sales $2.5 billion to $2.525 billion.\nfull-year 2021 capital spending is expected to be in a range of $230 million to $240 million.\nfy organic sales growth is expected to be in a range of 13% to 14%.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: On Slide 4 is our safe harbor statement.\nThese statements are based on our beliefs and assumptions current expectations, estimates and forecasts.\nThe company's future results are influenced by many factors beyond the control of the company.\nDuring today's call, management will make reference to non-GAAP financial measures, including organic sales growth, adjusted operating profit, adjusted operating profit margin and adjusted diluted EPS.\nWe are excited to discuss our 2021 results and outlook for 2022.\nWe will start on Slide 5.\nWest delivered a remarkable year of success.\nAs I reflect on the year, three things stand out to me.\nWe serve to improve patient lives, and we understand the criticality of our role in the containment and delivery of life-saving and life-changing medicines, including the battle against COVID-19.\nOur team members have rallied together with great strength and resolve to meet the accelerated customer demand.\nSecond, our proven market-led strategy.\nWe have continued to meet shifting market and customer needs with unique value propositions across our business segments.\nThis is evident in the continued strength of our financial performance in 2021.\nAs the global leader, customers come to West knowing that we will deliver superior value through our high-quality products and solutions.\nAnd we remain focused on delivering value to all our stakeholders on a sustainable basis and doing our part to support the healthcare industry.\nAs highlighted on Slide 6, 2021 was an exceptional year of sales and margin expansion driven by strong demand in our base business and accelerated demand for components associated with COVID-19 vaccines and therapeutics.\nWe ended the year with 28% organic sales growth in the fourth quarter.\nAnd adjusting for COVID-related sales, our base business grew by mid-teens organically.\nOur proprietary products segment led the way with 37% organic sales growth, and all of this was fueled by high-value products, resulting in impressive gross and operating margin expansion for the quarter.\nLooking ahead, we are well positioned with the right growth strategy around execute, innovate and grow.\nOur committed order book is at an all-time high.\nWe continue to realize the benefits of the globalization of our operating model and continued capital investments to support the increase in demand driven by the attractive end markets.\nTurning to Slide 7.\nIn addition to our financial momentum, West has several other notable accomplishments in 2021.\nWe shipped over 45 billion components touching billions of patient lives.\nThis was done with the continued safety of our team members as top priority and the importance of ensuring the continuity of supply for our customers.\nWe launched five product extensions that continue to bring additional value to our customers.\nAnd we donated over $2.5 million, but more importantly, over 3,600 hours, volunteer hours were donated by team members to help our local communities with the greatest needs.\nAs we move to Slide 8, a we strive to be stewards of a sustainable future by factoring environmental considerations into every aspect of our business.\nIn 2021, we expanded our ESG transparency reporting by aligning with the task force for climate-related financial disclosure recommendations.\nThis includes reducing energy dependencies and lessening emission production through renewable and greener energy, developing more carbon-friendly products and actively engaging with stakeholders to seek out opportunities to have an impact on climate.\nAligned with our focus to improving patient lives across the globe through our products, we remain strongly committed to creating a healthier environment with efforts that will have a positive impact on our communities and future generations.\nTurning to Slide 9 and the recent announcement of our collaboration with Corning.\nAs you look across biotech and pharma companies' drug pipelines, there is a growing need to provide system solutions to support increasingly more sensitive and complex molecules.\nAnd with that comes a changing and increasing regulatory environment that are setting the high-bar requirements for performance data on combination of products at the system level.\nThese regulatory changes are driving drug manufacturers to look to West to reduce risk by specifically specifying a system of packaging rather than individual components.\nWe're excited to have Corning as a key collaborator as we expand our HVP value proposition to lead the industry from components to a truly integrated system that couples elastomer and glass.\nIn response to our customers, this exclusive supply and technology agreement with Corning includes significant investment in R&D and capital for installed manufacturing capacity to expand Corning's Ballard glass technology.\nBy combining West industry-leading NovaPure components with Daikyo's FluroTec coating technology and Corning's Valor Glass and Velocity vials, the collaboration will enable new advanced pharmaceutical packaging solutions.\nWe believe that an integrated system of -- glass under a single drug master file is the next level of high-value products.\nOur initial focus is addressing the need for complete system offering.\nAnd in time, we will offer a broad range of systems from vials to prefilled syringes to cartridges.\nAs we enter in 2022, we are building on the positive momentum we generated in 2021.\nWe are introducing full year 2022 financial guidance that assumes approximately 10% organic sales, led by strong HVP sales and another strong year of both gross and operating profit margin expansion well in excess of 100 basis points.\nThis guidance includes a substantial acceleration in our R&D efforts as we enter this new era of integrated systems.\nAnd with a robust book of committed orders, we see momentum in 2022 and continuing into 2023.\nAs such, we expect to add more capital expansion plans for additional HVP capacity to stay ahead of our customers' demand.\nWe expect these projects to be completed throughout the year and ready for 2023 production.\nFor the past few years, we have set our long-term financial construct as annual organic sales growth of 6% to 8%, led by HVP sales and annual operating profit margin expansion of 100 basis points per year.\nOver the past five years, we've had an annual organic sales CAGR of 13% and annual operating profit margin expansion of 240 basis points per year.\nFive years ago, Biologics was our smallest market unit.\nand also in Europe.\nAs we look to the future, we see continued demand growth for our HVP products as we launch a new level of HVP's integrated systems.\nWe are updating our long-term construct to annual sales growth of 7% to 9%.\nAnd we continue to expect to expand operating margins by 100 basis points per year over the next few years.\nSo let's review the numbers in more detail.\nWe'll first look at Q4 2021 revenues and profits where we saw continued strong sales and earnings per share growth led by strong revenue performance in each of our proprietary market units.\nI will take you through the margin growth we saw in the quarter as well as some balance sheet takeaways.\nAnd finally, we will review our 2022 guidance.\nOur financial results are summarized on Slide 10 and the reconciliation of non-U.S. GAAP measures are described in Slides 19 to 22.\nWe recorded net sales of $730.8 million in the quarter, representing organic sales growth of 28.3%.\nCOVID-related net revenues are estimated to have been approximately $124 million in the quarter.\nThese net revenues include our assessment of components associated with vaccines, treatment and diagnosis of COVID-19 patients, offset by lower sales to customers affected by lower volumes due to the pandemic.\nLooking at Slide 11.\nproprietary products sales grew organically by 36.8% in the quarter.\nHigh-value products, which made up approximately 74% of proprietary product sales in the quarter grew double digits and had solid momentum across all of our market units in Q4.\nLooking at the performance of the market units.\nThe biologics market unit delivered strong double-digit growth led by NovaPure and Westar components.\nThe generics and pharma market units also experienced double-digit growth led by sales of FluroTec and Westar components.\nAnd contract manufacturing organic net sales declined by 2.1% in the fourth quarter primarily driven by lower sales of healthcare-related medical devices.\nWe continue to see improvement in gross profit.\nWe recorded $300.6 million in gross profit, $89.5 million or 42.4% above Q4 of last year.\nAnd our gross profit margin of 41.1% was a 470-basis-point expansion from the same period last year.\nWe saw improvement in adjusted operating profit with $189.2 million recorded this quarter compared to $119.1 million in the same period last year for a 58.9% increase.\nOur adjusted operating profit margin of 25.9% was a 540-basis-point increase from the same period last year.\nFinally, adjusted diluted earnings per share grew 52% for Q4.\nExcluding stock-based compensation tax benefit of $0.06 in Q4, earnings per share grew by approximately 58%.\nSo let's review the growth drivers in both revenue and profit.\nOn Slide 12, we show the contributions to sales growth in the quarter.\nVolume and mix contributed $153 million or 26.4 percentage points of growth, including approximately $78 million of incremental volume driven by COVID-19-related net demand.\nSales price increases contributed $11.3 million or 1.9 percentage points of growth.\nLooking at margin performance.\nSlide 13 shows our consolidated gross profit margin of 41.1% for Q4 2021, up from 36.4% in Q4 2020.\nproprietary products fourth quarter gross profit margin of 46.3% was 460 basis points above the margin achieved in the fourth quarter of 2020.\nThe key drivers for the continued improvement in proprietary products gross profit margin were favorable mix of products sold driven by growth in high-value products, production efficiencies, sales price increases partially offset by increased overhead costs, inclusive of compensation.\nContract manufacturing fourth quarter gross profit margin of 16.5% was 70 basis points below the margin achieved in the fourth quarter of 2020.\nThe decrease in margin is largely attributed to increased raw material costs and a mix of products sold.\nNow, let's look at our balance sheet and review how we've done in terms of generating more cash.\nOn Slide 14, we have listed some key cash flow metrics.\nOperating cash flow was $584 million for the year, an increase of $111.5 million compared to the same period last year, a 23.6% increase.\nOperating cash flow in the period was adversely impacted by our working capital increase as well as an increase in tax payments.\nIn 2021, we spent over $253 million on capital expenditures, a 45% increase over 2020.\nThe majority of the incremental capex has been leveraged to increase our high-value product manufacturing capacity within our existing facilities.\nWe expanded capacity at 13 existing sites with 13 major facility modifications and over 400 pieces of equipment, all while keeping pace with the growing demand.\nWe have continued to increase capacity at our HVP sites in the U.S., Germany, Ireland and in Singapore.\nAnd we have been able to leverage our existing asset base to support proprietary products manufacturing.\nFor example, our Williamsport, Pennsylvania site, formerly a contract manufacturing site, will be transformed with over half its manufacturing capacity to support proprietary products with elastomer mixing and batch off line.\nAnd this leverages the close proximity to our HVP site at Jersey Shore.\nAs we flex our global infrastructure with the phased capacity expansions, we are well positioned for the continued growth in 2022.\nWorking capital of approximately $1.1 billion increased by $277.6 million from 2020 primarily due to higher accounts receivable from our increased sales, higher inventory levels and an increase in our cash position.\nOur cash balance at December 31 of $762.6 million was $147.1 million higher in our December 2020 balance.\nThe increase in cash is primarily due to our strong operating results in the period, offset by our share repurchase program and higher capex.\nSlide 15 provides a high-level summary.\nFull year 2022 sales guidance will be in a range of $3.05 billion to $3.075 billion.\nThere is an estimated headwind of $70 million based on current foreign exchange rates.\nWe expect organic sales growth to be approximately 10%.\nThis comprises a mid-teen growth in our proprietary business.\nThe forecast includes mid-teen growth in our base business and mid-teen growth in our net COVID-related revenues.\nFor contract manufacturing, we are forecasting low to mid-single-digit negative growth in 2022.\nWe do expect contract manufacturing to return to growth in 2023.\nWe expect our full year 2022 reported diluted earnings per share guidance to be in a range of $9.20 to $9.35.\nAlso, our capex guidance is $380 million for the year.\nThere are some key elements I want to bring your attention to as you review our guidance.\nEstimated FX headwind on earnings per share has an impact of approximately $0.21 based on current foreign currency exchange rates.\nAnd our guidance excludes future tax benefits from stock-based compensation.\nTo summarize the key takeaways for the fourth quarter, strong top-line growth in proprietary, gross profit margin improvement, growth in operating profit margin, growth in adjusted diluted earnings per share and growth in operating cash flow, delivering in line with our pillars of execute, innovate and grow.\nTo summarize on Slide 16, the excellent financial performance reported today continues to reaffirm that our strategy is working.\nWe have a strong base business proven by our market-led approach is delivering unique value to our customers.\nOur global operations team is efficiently manufacturing and delivering products in this complex environment with a focus on service and quality.\nAnd we're continuing to accelerate capital spending across our operations to meet current and anticipated future growth.\nWe realize that our products are critical for healthcare across the globe, which is why we're so dedicated to support patient health today and well into the future.\nTowanda, we're ready to take questions.\n", "role": "user" }, { "content": "sees fy earnings per share $9.20 to $9.35.\nsees fy sales $3.05 billion to $3.075 billion.\nq4 sales rose 26 percent to $730.8 million.\nwest pharmaceutical services- 2022 net sales guidance includes estimated full-year 2022 headwind of $70 million based on current foreign exchange rates.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'd especially like to applaud our manufacturing, supply chain and logistics teams.\nDuring the first quarter, the teams dealt with numerous issues around component availability, transportation bottlenecks, customer fulfillment needs and the ongoing pandemic.\nI'm proud of how they worked together to serve our global customers' demand.\nWe had a solid start to the year.\nThe severe winter freeze experienced in the South Central U.S. in mid-February caused widespread plumbing infrastructure problems and was an unexpected benefit that we estimate positively affected consolidated sales by about 3%.\nThe underlying market conditions in Europe and APMEA were stronger than we had anticipated.\nLastly, part of the year-over-year upside was driven by an easier comp in APMEA, which was heavily impacted by COVID in Q1 of 2020.\nAdjusted operating margin exceeded expectations supported by continued cost actions and incremental sales.\nWe also delivered strong cash flow in the quarter, and shortly after the quarter ended, we completed the renegotiation of our credit agreement extending the facility through March 2026 and amending terms to mirror current market conditions.\nWe have ample capacity, which affords us a lot of flexibility.\nFinally, we announced a double-digit dividend increase starting in June.\nShashank will review the financials in more detail momentarily.\nOperationally, commodity increases, especially in copper, steel and packaging supplies coupled with the increases in logistics costs have driven us to announce additional price increases globally.\nThese will go into effect later in the quarter.\nWe won't see the real benefit of that price increase until the second half of 2021.\nSupply chain constraints have increased significantly as well driving potential component and product availability issues.\nEntering the first quarter, we maintained higher inventory levels, which allowed us to proactively meet the heavier freeze demand.\nHowever, constraints in the local and global supply chains are now resulting in higher costs.\nDuring the quarter we continue to invest for the future.\nWe incrementally spent approximately $2 million of which over half was invested in our smart and connected products.\nWe plan to increase investment spending for the full year from $13 million to $16 million primarily to support additional growth in productivity projects.\nWe announced a proposal to close or sell a small plant in Mery, France.\nWe are currently consulting with the works councils and local government authorities, so timing for making a final decision to close or sell the plant and related costs have yet to be determined or approved.\nOur goal is to move the Mery operation to other existing plants in France.\nOur proposal impacts approximately 85 employees.\nOn a net basis we anticipate downsizing by approximately 50 people.\nNow, I'd like to provide an update on our end markets.\nFrom a macro perspective, since we last spoke in February, GDP forecasts have been revised upwards in the U.S., Canada and parts of Asia Pacific while other key areas in Europe including France, Germany and Italy have seen GDP expectations reduce.\nMarket expectations in the Americas for new construction in both the commercial and residential markets continue to be mix and vary by submarkets.\nNew residential single-family constructions continues to look steady for the year with recent March and year-to-date housing starts positive and multifamily residential starts although lumpy showed some buoyancy recently with March starts up over 30% sequentially.\nWe anticipate non-residential new construction growth will remain challenged at least through 2021.\nWe still see a diverging growth prospect depending on the end market.\nA recent AGC survey of about 1,500 contractors noted that 77% saw new projects either postponed or canceled in 2020, and 40% are seeing further project cancellations or postponements for the January to June 2021 period.\nOur drain product lines that are installed early during commercial construction projects saw continued negative sales growth in the quarter.\nThe latest industry indicators have been more positive, which may indicate new commercial construction growth as we head into 2022.\nFor now, non-residential repair and replacement market is holding up very well and with the positive impact of the freeze in the South Central region has offset the air pocket in new construction.\nAs mentioned, GDP expectations for the U.S. and Canada have increased, so we expect that to continue to drive repair and replacement activity.\nCertainly the South central U.S. freeze helped during Q1 and we anticipate that tailwind will continue into the second quarter.\nThat sudden freeze demand has also caused reduced channel inventory levels, so we expect there'll be channel restocking in the second quarter as well.\nFeedback from many contractors in the Americas that business has picked up and look solid in Q2.\nIn Europe, except for drains, the underlying markets look better.\nIn our drains business, the commercial marine market is expected to continue to be challenged for the foreseeable future.\nGovernment sponsored home energy subsidies in Germany and Italy should continue to provide support and we see stronger wholesaler activity in France, at least in the near term.\nHowever, the second half of the year is still unclear.\nStrength in Italy has been driven by government-sponsored programs protecting employment that are in place through June, and successful vaccine implementation across Europe is still a concern as many countries are lagging the progress in the U.S. and the U.K. In the Asia Pacific region, our China markets have come back strong especially in commercial valve sales, and we see growth in both the Australian and New Zealand markets where the governments have done a good job controlling the pandemic.\nThe Middle East is still being challenged by COVID and we expect minimal market expansion there for the balance of 2021.\nRegarding our outlooks for Q2 and the remainder of the year, we expect a strong year-over-year performance in the second quarter given the negative impact COVID had last year and the expected positive impact from the freeze and channel restocking.\nWe are increasing our full year outlook given the stronger than expected first half.\nWe still have some concerns about the second half with the main issues being supply chain and logistics disruptions, the final impact of the commercial new construction air pocket, inflation, and vaccine roll outside the U.S. Finally, I want to mention a few points as we continue along our ESG journey.\nFirst, we remain vigilant toward the health and safety of our employees, which remains a priority.\nMasks, social distancing and sanitation protocols remain embedded in our operations.\nSecond, we recently took part in Project 24 in partnership with the Planet Water Foundation.\nWe sponsored the installation of an integrated water system and funded a water health and hygiene education program for more than 600 students in a small Vietnamese town.\nSince the beginning of our partnership with Planet Water in 2016, we provided approximately 30,000 people in nine countries with safe, clean drinking water.\nFinally, we'll be issuing our Annual Sustainability Report in June.\nThe enhanced report will discuss our latest accomplishments and some important near-term ESG goals.\nSales of $413 million were up 8% on a reported basis and up 4% organically.\nAs discussed, we had an easier compare in APMEA during the quarter and we estimate sales increase by approximately 3% because of the freeze in the South Central United States.\nPrice was favorable in both the Americas and Europe, and Europe's organic volume was stronger than expected.\nForeign exchange, primarily driven by a strong euro, increased the year-over-year sales by roughly $13 million or 3%.\nAcquisitions net of divestitures accounted for $4 million of incremental sales year-over-year.\nAdjusted operating profit was $60 million, up 24% compared to last year, and adjusted earnings per share were up 31% to $1.24.\nAdjusted operating margin of 14.5% was up 190 basis points as volume, price, productivity and cost actions more than offset inflation and incremental investments.\nThe adjusted effective tax rate was 28% comparable to the first quarter of 2020.\nOur free cash flow for the quarter was $32 million as compared to negative $8 million in the first quarter of 2020.\nThe cash flow improvement was due to better working capital management, higher net income, and less net capital spending.\nOur goal is to drive free cash flow conversion at 100% or more of net income for the year.\nDuring the quarter, we repurchased approximately 31,000 shares of our common stock for $3.8 million, and as Bob mentioned, announced a double-digit increase in our dividend.\nThe Americas posted a solid quarter where organic sales up approximately 3%.\nThis was primarily driven by the tailwind from the freeze in the South Central Region of the U.S., which we estimate provided almost 4% of incremental growth.\nAbsent the freeze impact, sales would have been in line with our first quarter expectations.\nWe saw growth in plumbing and electronics, which is partially offset by lower heating and hot water and water quality sales.\nAdjusted operating profit increased by 11%, and adjusted operating margin increased by 110 basis points.\nThe margin expansion was driven by volume, price, cost actions and productivity being only partially offset by inflation and incremental investments.\nEurope delivered a solid quarter with organic sales up approximately 2%, and adjusted operating margin expanded by 350 basis points.\nReported sales also increased by 10% from favorable foreign exchange movements.\nOrganic sales were better than we anticipated as we saw growth in France in the wholesale plumbing channel, driven by higher residential demand and in OEM electronic products with customers pre-buying due to supply chain and inflationary concerns.\nIn Italy, growth was driven by government heating subsidies.\nSales in these regions were partially offset by lower sales in Germany and in Scandinavia, both from a continued contraction in the commercial marine business.\nFrom a platform perspective, plumbing and HVAC sales growth more than offset continued softness in rates.\nAdjusted operating margin expanded from volume, price, cost actions and productivity more than offsetting inflation.\nAPMEA's year-over-year results was primarily driven by the easier comp to last year's soft first quarter that was negatively impacted by COVID and to a lesser extent by stronger than expected growth in China.\nReported sales increased by 76% including 43% of organic growth, 23% from net acquisitions and 10% from favorable foreign exchange movement.\nChina's organic sales grew from commercial valve sales in the data centers.\nOrganic sales outside China were flat with growth in Australia and New Zealand being offset by continued softness in the Middle East.\nThe AVG acquisition provided approximately $3 million of sales, which was in line with our expectations.\nAdjusted operating margin increased 15.5 percentage points due to higher third party and intercompany sales volume, and from cost actions and productivity offsetting inflation and investments.\nChina intercompany activity was up 80% organically benefiting from the U.S. freeze-driven demand.\nslide six provides our assumptions about our second quarter operating outlook.\nWe expect a strong year-over-year compare given COVID's major impact on Americas and Europe in the second quarter last year.\nFurther, we anticipate an additional sales benefit of approximately 4% from the continued impact of the freeze in the U.S. and expect restocking actions in the wholesale market.\nAs Bob mentioned, we have announced a second price increase globally to offset commodity and supply chain inflation.\nThese become effective later in the second quarter and so will have a minimal impact.\nIn total, we estimate consolidated sales may grow organically between 19% and 24%.\nIn addition, acquired growth should approximate $4 million for the second quarter.\nWe estimate our adjusted operating margin could range from 13.5% to 14.5% for the second quarter driven by volume and offset partially by incremental investment spending of $4 million and incremental cost of $6 million related to temporary spending reductions in 2020 that we expect will return All-in we estimate the incremental volume to drop through between 25% and 30%.\nCorporate cost should approximate $10 million.\nWe expect interest expense should approximate $2 million in the second quarter or about half of last year's interest charge.\nUnder the new debt agreement, we locked in current market rates, which are lower than what we were paying under the old agreement and we have less outstanding debt than last year as well.\nThe adjusted effective tax rate should approximate 27%.\nForeign exchange should be a tailwind when compared to the second quarter last year given the current euro-dollar exchange rate.\nWe estimate that organically Americas sales may increase in the range of 2% to 7% for 2021, driven by the freeze benefit and the second price increase neither of which was anticipated in our February outlook as well as stronger growth in non-residential repair and replace due to higher GDP expectations.\nSales should increase by about $4 million for the full year from the acquisition of the Detection Group.\nWe expect adjusted operating margin in the Americas may be up versus 2020, driven by the drop through benefits of the freeze, along with the incremental cost savings and productivity initiatives.\nFor Europe, we are forecasting organic sales to increase between 1% and 5%.\nThe increase will be driven by the second price increase as well as slight growth in underlying residential markets in France, and growth in Germany and Italy due to government energy initiatives.\nThis will more than offset expected GDP reductions.\nAdjusted operating margin maybe up from incremental drop-through on volume, price and cost savings initiatives.\nIn APMEA, we now expect organic sales to grow from 10% to 15% for the year.\nSales should also increase by approximately $6 million from the AVG acquisition in the first half.\nWe anticipate adjusted operating margin for the year to be similar to 2020, if not marginally higher, depending on intercompany volume in the second half of the year.\nOverall, on a consolidated basis, we anticipate Watts' organic sales to range from up 2% to 7% in 2021.\nThis is approximately 7% higher than our previous outlook and is primarily driven by the impact of the freeze in the South Central region of the United States, the second inflation driven price increases, and the slightly better end market expectations in our key regions.\nHowever, we are still cautious about the second half due to the impact of the potential supply chain issues and the impact of the air pocket in new construction in the United States.\nAlso in Europe, there is the risk of potential shutdowns due to the delays in vaccine rollouts.\nTo date these risks have been more than offset by the impact of the freeze and a more robust repair and retrofit market.\nWe estimate our consolidated adjusted operating margin maybe up 30 to 70 basis points for the year.\nThis is primarily driven by the drop through from incremental volume, price, restructuring savings of $14 million, and productivity being offset partially by 2020 cost headwinds of $15 million, incremental investments of $16 million, and general cost inflation.\nAnd regarding other key inputs.\nWe expect corporate costs will approximate $42 million for the year.\nInterest expense should be roughly $7 million for the year.\nOur estimated adjusted effective tax rate for 2021 should approximate 27.5%.\nCapital spending is expected to be in the $38 million range.\nDepreciation and amortization should approximate $46 million for the year.\nWe expect to continue to drive free cash flow conversion equal to or greater than 100% of net income.\nWe are now assuming a 1.19 average euro-U.S. dollar FX rate for the full year versus the average rate of EUR1.14 in 2020.\nPlease recall that for every $0.01 movement up or down in the euro-dollar exchange rate, our European annual sales are impacted by approximately $4 million and our annual earnings per share is impacted by $0.01.\nWe expect our share count to approximate 34 million for the year.\nThe first quarter was better than we anticipated with growth in all regions that was aided by an unexpected freeze tailwind in the U.S. and an easier compare in APMEA.\nWe expect to benefit from the freeze impact in the second quarter as well.\nSupply chain issues were minimal in our operations in the first quarter, but we see potential issues in Q2 and beyond that our team is managing on a daily basis.\nInflation is also accelerating and we've announced a second price increase to help offset the cost increases.\nWe are on top of both matters and monitoring closely.\nWe are increasing our investments for growth for 2021 while continuing to focus on cost controls.\nMarket expectations in residential end markets are consistent with our February outlook.\nNear term, the non-residential outlook is better, fueled by the freeze, channel inventory restocking, and stronger repair and replacement demand, which is overshadowing the weak new commercial construction market.\nWe are still cautious about the second half because of supply chain constraints, the air pocket impact due to lower non-residential construction starts, and vaccine rollout progress outside the U.S. The leading indicators are suggesting we'll see growth in non-residential new construction in 2022.\nWatts is well capitalized.\nWe have ample liquidity to drive our capital deployment strategy.\nThe second quarter should be strong given the easier compare due to COVID last year and freeze benefits this year.\nWe have increased our full year outlook given the strong start to the year while remaining prudent concerning the second half.\nFinally, we continue to execute on a day-to-day basis to meet our customer needs while managing through the ongoing pandemic and supply chain challenges.\nThe company is well positioned both financially, operationally and commercially to take advantage of market opportunities.\n", "role": "user" }, { "content": "q1 sales rose 8 percent to $413 million.\nq1 adjusted earnings per share $1.24.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: During today's call, Bob will provide an overview of the third quarter results and discuss the current state of our operations and markets.\nShashank will discuss the details of our third quarter performance, provide our initial outlook for the fourth quarter and offer a revised outlook for the full year 2021.\nFollowing our remarks, we will address questions related to the information covered during the call.\nThese statements are subject to numerous risks and uncertainties that could cause the actual results to differ materially.\nFor information concerning these risks, see Watts' publicly available filings with the SEC.\nI request that questions be limited to one, plus a follow-up, to ensure everyone has an opportunity to participate.\nIf you have additional questions, please rejoin the queue.\nFirst, I must recognize the efforts of all our employees for their sustained commitment while dealing with continued supply chain and logistics challenges and the delta variant.\nOur team has maintained a customer focus and have worked diligently to deliver on our promises to them.\nThe team produced another strong quarter despite supply chain and logistics challenges.\nWe delivered record third quarter sales, adjusted operating margin and adjusted earnings per share.\nAll regions' sales grew organically by double digits.\nOur results benefited from the continued economic recovery as well as price and volume tailwinds.\nCash generation remains a focal point.\nYear-to-date, we have increased our free cash flow by 26% as compared to last year.\nShashank will review the financial results in more detail momentarily.\nIn late September, we purchased Sentinel Hydrosolutions in an all-cash transaction.\nSentinel, a $6 million sales business, provides leak detection solutions mostly to the high-end residential market.\nSentinel's systems are designed to detect leaks in water pipes, plumbing fixtures and appliances, and will automatically shut off water when a leak is detected.\nThis acquisition further expands our developing focus in leak detection technology.\nLike many companies, we're dealing with supply chain and logistics challenges.\nWe previously mentioned concerns involving components used in our electronics products.\nSince then, supply chain and logistics issues have gotten more dynamic.\nWe are seeing disruptions across the board in all regions, impacting many of our core raw materials and components.\nLead times, on average, have more than doubled, and suppliers are dealing with labor constraints.\nWe're addressing these and other problems daily to maximize customer order fulfillment.\nOur expectation is that supply chain and logistics disruptions will continue into 2022.\nWe are monitoring this issue closely.\nNow let me talk about the markets.\nIn general, markets have continued to be positive.\nGDP expectations in most regions portend a solid finish to 2021 for repair and replacement in both commercial and residential end markets.\nIn the Americas, single-family residential new construction remains strong, and we've seen some pickup in multifamily starts as well.\nRepair and replacement business in both nonresidential and residential end markets remains strong.\nWe still see pent-up demand in older projects, while new project starts are still lagging.\nContractors are also dealing with materials and skilled labor shortages at job sites in addition to substantial inflation on project costs.\nIn Europe, German and Italian OEMs continue to benefit from government energy efficiency subsidies.\nRepair and replacement was again strong in France.\nWe are beginning to hear customer feedback that there is more uncertainty heading into Q4 as projects are being delayed due to material and labor shortages, as well as an across-the-board inflationary impact on project costs.\nThe team is watching this trend closely.\nIn APMEA, underlying market demand has improved but is being impacted by the pandemic.\nNew Zealand and Australia have both had recent lockdowns affect their economies.\nChina market demand has been steady, but is being impacted by a potential correction in the housing market in COVID outbreaks that caused lockdowns, which impacts both suppliers and customers.\nChina is also experiencing power outages, which is further exasperating the supply chain.\nFinally, given our performance in the third quarter and our expectations for Q4, we are raising our full year sales outlook.\nSales of $455 million were up 18% on a reported basis and up 17% organically, driven primarily by the global economic recovery.\nForeign exchange and acquisitions combined had a favorable year-over-year impact of $5 million.\nAdjusted operating profit of $66 million increased 24% and adjusted operating margin of 14.4% increased 60 basis points as volume, price and productivity more than offset the impact of supply chain challenges, logistics inflation, incremental investments, incentives and business normalization costs.\nAdjusted earnings per share increased by 32% for the reasons just cited in addition to lower interest expense and reduced foreign currency transaction losses.\nThe adjusted effective tax rate of 26.9% is 40 basis points lower year-over-year.\nFor GAAP purposes, we recorded a charge of $0.9 million related to the previously announced restructuring of our Mery facility in France.\nWe expect approximately $1 million more will be incurred in the fourth quarter.\nWe anticipate another $5 million to $6 million in restructuring costs in 2022 with respect to this plant closure upon completion.\nAs Bob noted, year-to-date free cash flow is up 26% to $120 million as compared to the same period last year.\nThis was driven by higher net income and lower capital spend.\nWe expect to maintain free cash flow conversion at 100% or more of net income for the full year.\nOur balance sheet remains strong and provides ample flexibility.\nThe gross and net leverage ratios at the end of September were 0.6 times and negative 0.3 times, respectively.\nOur net debt to capitalization ratio at quarter end was negative 8%.\nDuring the quarter, we purchased approximately 25,000 shares of our common stock at an investment of $4 million primarily to offset dilution.\nTurning to slide five, and our regional results.\nOrganic sales in all regions increased by double digits during the quarter, primarily from the continued strong economic recovery.\nReported regional sales also benefited from favorable foreign exchange movements.\nIn addition, the Americas had approximately $1 million in acquired sales.\nAmericas' organic sales increased 17% during the quarter, with broad growth across all of our major product categories driven by strong repair and replacement and single-family residential markets and price.\nWe had minimal benefit in the quarter from the U.S. South Central freeze.\nAmericas' adjusted operating margin declined by 30 basis points during the quarter as gross margin expansion from price, volume and productivity was more than offset by inflation, incremental investments, incentives and business normalization costs.\nEurope sales increased over 14% organically, delivering another solid quarter with expansion in both the Fluid Solutions and Drains platforms.\nSales were up in all key regions, driven by the wholesale activity in France and Italy, continued strong OEM demand in Germany and Italy, driven by local government energy subsidies, and an uptick in Scandinavian sales due to a gradual recovery of the commercial and marine market.\nEurope's adjusted operating margin expanded by 420 basis points, benefiting from volume, price and productivity, which more than offset inflation, incremental investments and business normalization costs.\nAPMEA continued its strong performance with sales up 33% organically.\nThe region saw double-digit growth in most locations, except for New Zealand, where sales were down due to COVID-related shutdowns.\nAdjusted operating margin expanded by 400 basis points in APMEA in the quarter as trade and intercompany volume and productivity more than offset inflation and business normalization costs.\nMoving to slide six, and general assumptions about our fourth quarter and full year 2021 outlook.\nOur expectation for the fourth quarter is sales should expand by 10% to 14% over the fourth quarter of 2020.\nWe anticipate that fourth quarter adjusted operating margin should range from 13.4% to 13.8%.\nMargins may be challenged due to the impact of inflation, especially from supply chain and logistics costs, as well as continued growth in business normalization costs and incremental investments.\nCorporate costs should approximate $11 million to $12 million for the fourth quarter.\nWe expect interest expense sequentially will be flat to the third quarter.\nThe adjusted effective tax rate should approximate 26%.\nForeign exchange would be a headwind to last year should current rates persist throughout the fourth quarter.\nAs a reference, the average euro-dollar foreign exchange rate for the fourth quarter of 2020 was 1.19.\nPlease recall that for every $0.01 movement up or down in the euro-dollar exchange rate, our European annual sales are impacted by approximately $4 million, and our annual earnings per share is impacted by $0.01.\nWe expect seasonally strong cash flow to end the year.\nFor the full year 2021, we anticipate organic growth to be 14% to 17% or about 350 basis points higher at the midpoint than our previous outlook in August.\nFull year adjusted operating margin, adjusted margin expansion and free cash flow expectations are anticipated to be in line with our previous outlook in August.\nOther full year inputs are noted on the right with some minor changes since August.\nTo summarize, I'd like to leave you with a few key points.\nThird quarter results were better than we anticipated and was aided by continued global demand and a strong repair and replacement market.\nWe continue to drive price and proactively manage the many supply chain issues to support our customers.\nWe continue to invest for the long term, including smart and connected solutions.\nWe have raised our full year 2021 revenue outlook.\nAdjusted margin expansion remains in line with previous expectations.\nFinally, given our strong results today and our already healthy balance sheet, we are well positioned to drive our strategy, including expanding our smart and connected offerings and executing on strategic M&A opportunities as they arise.\n", "role": "user" }, { "content": "q3 sales rose 18 percent to $455 million.\nincreasing full year 2021 sales outlook.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Bob will provide an overview of the past year, review our 2021 priorities as well as update you on our market expectations for this year.\nShashank will provide a detailed analysis of our fourth quarter and full year financial results and discuss our outlook for 2021.\nFor information concerning these risks, see our publicly available filings with the SEC.\nI want to start out by expressing my deepest gratitude to our employees around the world.\nTheir dedication since the start of the pandemic has been unwavering to ensure our customers' needs were being met and our business continued to move forward.\nThis past year has tested everyone's endurance and patience.\nI'm so grateful to our experienced team that was able to nimbly adapt to the dynamics of this constantly changing global environment, and I'm confident the team will continue to proactively manage our business to meet our customer expectations in 2021 and accelerate Watts' strategy.\nI'm also pleased to report that we continue to make progress in our environmental, social and governance efforts and in diversity, equity and inclusion initiatives this past year.\nOur sustainability performance improved following evaluations from several leading ESG rating agencies, and we supported our customers and local communities that were impacted by the pandemic.\nAs you know, our product portfolio is aligned with three macro themes.\nSafety & Regulation, Energy Efficiency and Water Conservation.\nWe believe this focus dovetails well with the ESG framework.\nIn 2020, we launched our first diversity, equity and inclusion survey, which identified key focus areas, and we formed working groups to lead our global diversity initiatives.\nWe've also deployed employee training and development programs relevant to this effort.\nAs a company, we enacted a comprehensive response to COVID-19 challenges.\nFirst, employee safety was and remains our priority.\nThrough our COVID-19 taskforce, we emphasized safety protocols in the workplace that met or exceeded CDC and other country-specific requirements.\nSecondly, given we are an essential business, we maintained a customer focus.\nWe set up a hotline very early in the pandemic to aid healthcare customers with any urgent requirements.\nWe expanded our library of online learning tools to offer training and to stay in touch with our customers, which has provided us with great insights into customer focus areas and usage.\nAnd we continue to invest in new product development to address our customers' needs.\nRegarding our 2020 performance, we proactively took very aggressive cost actions starting late in the first quarter of 2020.\nThese address long-term structural as well as short-term discretionary costs.\nThe totality of these actions was a positive impact of $55 million to our operating income in 2020.\nClearly, some of the short-term actions are a headwind in 2021.\nThe cost actions helped us maintain our operating margin at 2019 levels despite the top line headwinds.\nWe also invested in strategic new product development and in our Smart & Connected strategy.\nWe increased free cash flow over 2019 levels by 14%, and we strengthened our balance sheet by paying down debt, putting the company on solid footing as the pandemic subsides.\nWe prioritized liquidity by managing working capital, extending our financing agreements, and aggressively paying down existing debt through repatriation and operating cash flow.\nWe continued our balanced capital allocation strategy.\nWe invested 50% more than 2019 in capital spending to fund growth and productivity.\nWe continue to invest in new product development, and we made two small bolt-on acquisitions.\nWe acquired the Australian Valve Group in Q3 and The Detection Group, or TDG in the fourth quarter, which I'll discuss momentarily.\nFinally, we sustained our dividends and share repurchase programs.\nGiven the circumstances and challenges we faced, 2020 was a successful year for our company.\nNext, I'll review our key priorities for 2021.\nAs I previously mentioned, employee safety is our #1 priority.\nWe'll continue to promote proper hygiene and safe social distancing practices.\nIn 2020, we delivered over 100,000 training sessions, both online and through virtual Lunch & Learn meetings.\nThis represented a 70% increase in training sessions over 2019.\nIn 2021, we'll continue to enhance our training programs for customers, reps, engineers and contractors in order to drive further customer connectivity.\nWe'll continue to elicit customer feedback to drive new product introductions and solutions, including expanding our Smart & Connected portfolio.\nWe'll look for opportunities to expand geographically into new regions, either organically or through acquisition.\nProductivity will continue to expand through our One Watts performance initiative and is expected to help fund incremental 2021 long-term investments.\nNow let's briefly talk about how we see the market-shaping up in 2021.\nWe gave some preliminary views on this year's markets during our November earnings call.\nSince then, we have finalized our internal operating plans and updated industry data has been published.\nAlso, two important macro unknowns have been crystallized, namely the US elections are behind us, and effective vaccines have been approved and the deployment process has begun.\nWhat is still uncertain is when we can effectively reach herd immunity, which in turn depends on how quickly the vaccine can be disseminated to the broader population and how many people opt to take the vaccine.\nFrom a macro perspective, GDP forecasts in all our major regions are expected to grow from 2020's depressed levels, with most of our key countries expanding at 3% or higher.\nIn the Americas, our market expectations for new construction in both the commercial and residential markets are still mixed and vary by submarkets.\nNew residential single-family construction in general looks to be steady with persistently low interest rates, higher housing starts, expected job and income growth and positive demographics, driving anticipated mid to high-single-digit growth in single-family housing starts in 2021.\nAnd the LIRA index is anticipating the growth rate of homeowner spend on repair and replacement projects to continue into 2021, with spending increasing approximately 4%.\nHowever, multifamily starts are expected to decline mid-single digits in 2021.\nIn nonresidential, we anticipate that overall growth will be challenged.\nWe still see divergent growth prospects dependent on the end market.\nThe latest industry indicators, including the ABI, construction market data and construction industry confidence indexes are all portending a decline in nonresidential construction in 2021.\nThe AIA recently released its semiannual Consensus Construction Outlook, which expects new non-resi construction spend in the US to decrease by about 6% in 2021.\nAlso, AGC recently released survey results based on over 1,300 contractors that concluded 2021 will be a very difficult year for many construction firms in their markets.\nGiven the various industry indicators and feedback we are getting from the channels, we are anticipating air pocket in activity impacting us starting in the second quarter of this year due to the reduction in non-residential and multifamily new construction starts during the pandemic.\nExisting funded projects continue and are being finished, but we expect new construction projects starting in the second quarter and through yearend may be down significantly.\nIn Europe, the markets are also mixed.\nIn our Drains business, the Commercial Marine segment is expected to continue to be challenged.\nProject markets are lumpy and homebuilding is flat.\nGovernment-sponsored home energy subsidies in Germany should continue to provide support, and we see more wholesaler activity in France, at least in the near-term as we enter 2021.\nIn Italy, there are concerns with government programs protecting employment that expire in March, which could impact unemployment and recovery there.\nIn the Asia Pacific region, the overall economy is expected to grow with GDP up in all regions.\nChina is forecasted to grow over 8% in 2021.\nFinally, Middle East GDP is expected to grow in the 3% range, so a little slower than other regions and likely being more influenced by adverse geopolitical issues and energy demand.\nNow I'd like to provide an update on our Smart & Connected product initiatives.\nWhen we started evaluating the potential for transforming our portfolio to be Smart & Connected in 2015, we realized we had deep capabilities and competencies in our Watts Electronics and Tekmar businesses, but little in the way of a development pipeline or strategic plan.\nToday, each of our business units has clear strategic goals to digitally transform their product portfolio where possible.\nAdditionally, we have created and deployed a dedicated team that has a mandate for ensuring that our connections are robust, scalable with our businesses, and most importantly, secure.\nWith these added resources, we have more than 85 people working exclusively on Smart & Connected products globally, a 55% increase in resources over 2019.\nCumulatively, we have exceeded 70,000 connected devices shipped since we started selling Smart & Connected products.\nThe primary goal of our Smart & Connected initiative is to enhance the value our products provide to customers.\nWe are focusing our efforts on the following key areas.\nSafety and regulation, like our IntelliStation digital mixing products.\nWater hygiene, like our HF Scientific instruments.\nEnergy efficiency in products like our AERCO boilers and PVI water heaters.\nLeak detection systems like the Century Plus backflow discharge system.\nThese systems will ultimately provide us with the meaningful data that we can begin leveraging to further enhance our product performance, customer service levels and our own operational activities.\nIn addition, we see pathways toward subscription services.\nIn 2020, our Smart & Connected solutions continued to represent a larger share of our sales and were in the mid-teens of total Watts sales.\nWe're still focused on achieving our goal of 25% Smart & Connected product sales by 2023.\nOn slide five, let me highlight two Smart & Connected product solutions.\nAs I mentioned previously, we made a small acquisition in the fourth quarter, a company called The Detection Group, or TDG.\nTDG provides factory mutual approved wireless leak detection products and notification services for commercial and multifamily buildings.\nSales approximate $4 million annually.\nWe were interested in TDG as another offering to bundle into our overall Smart & Connected suite of products.\nTheir products are addressing a key pain point for commercial and multifamily building owners, that being rising insurance costs due to water leaks.\nOn the right side of the slide, you will see an in-house developed solution that leverages multiple Watts brands to provide a single connected user experience.\nThe Dormont FloPro-MD combines our Dormont gas connector manufacturing with our Tekmar Electronics expertise on a single Bluetooth-enabled device and is utilized by service technicians and gas equipment installers to read and document consumption, pressure and flow of gas via a proprietary mobile app.\nThis allows installers to quickly identify and report if a problem may be related to equipment or to disturbances in the gas line.\nThis reduces the need for return service calls and increases efficiency during initial start-up or repair and maintenance procedures.\nFloPro-MD is another good example of how far we can combine our capabilities to create solutions that address everyday customer challenges.\nWe remain excited about the future of Smart & Connected systems and what it's bringing to Watts and the industry.\nNow, Shashank will review our results for the fourth quarter and full year and offer our outlook for 2021.\nReported sales of $403 million were up 1% year-over-year.\nOrganic sales were down 2%, but were more than offset by net acquired sales and a foreign exchange tailwind.\nWhile each region experienced lower organic sales, America and Europe sales were better than anticipated.\nAcquired sales, net of divestiture, approximated $1 million in the quarter.\nI will review regional performances momentarily.\nAdjusted operating profit of $55 million, a 10% increase, translated into an adjusted operating margin of 13.6%, up 110 basis points versus last year.\nBenefits from cost actions, including restructuring and productivity savings, more than offset lower volume and incremental growth and productivity investments.\nInvestments totaled $3 million in the quarter.\nAdjusted earnings per share of $1.15 increased 15% versus last year.\nEPS growth was driven by $0.08 from operations and $0.07 primarily from a lower adjusted effective tax rate and positive foreign currency translation.\nThe adjusted effective tax rate in the quarter was 24.6%.\nThe rate declined as compared to last year as new regulations provided an opportunity to benefit from a favorable tax election, and we received tax benefits related to foreign exchange on cash repatriation.\nGAAP reporting included a net tax charge of $9.7 million or $0.29 a share, primarily driven by increased income tax expense resulting from recently issued final tax regulations which reduced the realizability of foreign tax credits.\nIn summary, aggressive cost controls and a higher American and European topline drove the better-than-anticipated operating results.\nIn the Americas, reported sales decreased by approximately 1% to $264 million.\nOrganically, sales were down by approximately 2%, with growth in certain plumbing and electronic products being more than offset by reductions in heating and hot water, water quality, drains, and HVAC product sales.\nTogether, positive foreign exchange movements in the Canadian dollar and the TDG acquisition added 1% to sales year-over-year.\nAmericas adjusted operating profit for the quarter increased 1% to $46 million.\nAdjusted operating margin expanded 40 basis points to 17.4%.\nThe margin increase was driven by cost savings and productivity, which more than offset the volume reduction and incremental investments.\nWe made approximately $2 million more in investments than the previous year.\nOverall, Americas sales were slightly better than anticipated, with cost actions driving the positive bottom line.\nTurning to Europe, sales of $120 million were up 6% on a reported basis, driven mainly by a stronger euro as foreign exchange increased sales by 8% year-over-year.\nOrganically, sales were down 2%, which was better than we had expected.\nFrom a platform perspective, we saw growth in fluid solutions from higher plumbing and HVAC sales being more than offset by continued drain softness, especially sales into the commercial marine market.\nBy region, we saw growth in Italy with France flat and Germany and Scandinavia both down.\nItaly saw strength in the plumbing, wholesale, electronics and OEM markets.\nFrance saw growth in the wholesale and OEM markets being offset by drains.\nIn Germany, the sales decline was driven by reduced drain sales into commercial marine applications and in electronics, partially offset by continued strong sales into OEMs that are supporting government subsidized energy savings programs.\nScandinavia was down with softness in drains and the wholesale market.\nAdjusted operating profit in Europe was approximately $17 million, a 25% increase over last year.\nAdjusted operating margin of 14% increased 220 basis points, primarily due to cost actions and productivity, including restructuring savings which more than offset lower volume and investments.\nIn summary, Europe's top line performed better-than-expected and along with restructuring benefits delivered a solid operating performance in the quarter.\nNow let's review APMEA's fourth quarter results.\nSales approximated $19 million, up 1% on a reported basis, with favorable foreign exchange movements of 5% probably in China and net acquired sales growth of 4%, more than offsetting an organic decline of 8%.\nWe saw double-digit organic growth within China, where commercial valve sales into datacenters continued to be strong.\nOutside China, double-digit organic sales declines in the Middle East and Australia offset nominal growth in New Zealand.\nAdjusted operating profit of $3.4 million was up 13% versus last year with adjusted operating margin up 170 basis points driven by cost controls, productivity and high intercompany volume, partially offset by lower third-party volume and investments.\nSo APMEA saw continued China growth, while other regions are still dealing with the impacts of COVID.\nOn slide eight, let me speak to the full year results.\nFor 2020, reported sales were $1.5 billion, down 6% on a reported basis.\nThe decrease was primarily driven by an organic sales decline of 7%, attributable to the effect of COVID-19.\nForeign exchange and acquisitions had a 1% positive effect on sales year-over-year.\nAdjusted operating margin was 12.9% in 2020, flat with 2019 and a good result factoring in lower volume.\nA decremental decline in adjusted operating profit was 13% for the year.\nWe were able to mitigate the impact of the volume decline through aggressive cost actions which totaled $55 million in 2020.\nIt is important to note that we maintained our adjusted operating margin while still funding incremental investments of roughly $9 million during the year.\nAdjusted full year earnings per share of $3.88 declined 5% versus the prior year.\nThere was a decrease from operations due to the pandemic related sales decline, but this was partially offset by lower adjusted effective tax rate and favorable foreign currency translation.\nFree cash flow for the full year was $187 million, an increase of 14% over 2019 driven by better working capital management, especially in accounts receivable.\nFree cash flow conversion was 164%.\nWe increased free cash flow while still investing 50% more in key projects over 2019.\nThese investments were specifically in new product development, capacity expansion and factory productivity.\nIn total, we invested $44 million in 2020, which equates to 140% reinvestment ratio.\nIn 2020, we returned $60 million to shareholders in the form of dividends and share repurchases, an 18% increase over 2019.\nDuring 2020, we also paid down debt by $110 million.\nOur net debt to capitalization ratio is now negative at 2% at yearend as compared to a positive 8.4% in the prior year.\nWe used cash from repatriations and operations to pay down debt.\nOur balance sheet continues to be in excellent shape and provides substantial flexibility to address our capital allocation priorities.\nGiven the many operating and personal challenges we faced with COVID in 2020, our ability to proactively manage costs, maintain margins in a down environment and strengthen our balance sheet was noteworthy.\nBob characterized the year as successful, and I would agree.\nNow on slide nine, let's discuss the general framework we considered in preparing our 2021 outlook.\nFirst, let's look at expected headwinds.\nCOVID-19 will continue to be a focal point and the evolution of the pandemic could provide potential headwind until we reach herd immunity.\nWe mentioned the non-residential and multifamily air pocket that could affect new construction and discretionary repair/replace.\nIts timing and length will determine the impact on our business.\nWe presently believe that this air pocket will impact us starting in the second quarter of 2021.\nConsistent with our ongoing strategy, we are going to incrementally reinvest for the long-term growth of the business, especially in investments to drive our Smart & Connected strategy.\nOf the $55 million of cost actions we took in 2020, we expect that approximately $15 million of these costs will return in 2021.\nThese costs include pay reductions, government incentives, travel and MARCOM.\nIn the middle column are themes that we'll continue to monitor.\nThere are several geopolitical concerns that could impact Asia Pacific and the Middle East as well as Europe.\nWith the US election results behind us and a new administration in place, the transition and new policy proposals will take time to sort out, especially regarding further fiscal stimulus and future potential tax increases.\nCommodity inflation, especially in copper and steel, have been significant.\nWe have also experienced substantial cost increases in logistics, packaging and insurance.\nWe have announced price increases to help mitigate the current cost increases.\nNow looking at anticipated tailwinds, residential single-family construction should continue to grow in 2021.\nWe expect to benefit from new product introductions, including additional Smart & Connected products.\nWe intend to drive continuous improvement through our One Watts performance efforts with additional productivity initiatives within our factory walls as well as in the SGA function.\nAnd we should benefit from incremental savings on cost actions taken last year.\nAs discussed, our balance sheet is exceptionally strong coming into 2021.\nWe have the flexibility to pursue inorganic growth opportunities to augment the business, assuming a transaction meets our strategic and financial criteria.\nLastly, global economies are expected to continue to recover in 2021 from the lows of the COVID induced recession of 2020.\nWith that backdrop, let's review our outlook for the full year 2021.\nOn slide 10, we have provided our major assumptions.\nWe estimate that organically, Americas sales may range from down 5% to flat in 2021.\nWe expect adjusted operating margin in the Americas may be down compared to 2020, with incremental cost savings and productivity initiatives offsetting increased costs that were suspended last year.\nSales should increase by about $4 million with the addition of the TDG acquisition.\nFor Europe, we are also forecasting organic sales to be down 5% to flat.\nAdjusted operating margin may decline for similar reasons as the Americas.\nIn APMEA, we expect organic sales may grow from 2% to 6% for the year.\nSales should also increase by approximately $6 million from the AVG acquisition.\nWe anticipate adjusted operating margin may decline against 2020 as some level of expenses get reintroduced and intercompany volume is expected to decline year-over-year.\nOverall, on a consolidated basis, we anticipate Watts organic sales to range from down 5% to flat in 2021.\nOrganically, we expect that first half sales may be better than the second half from a year-over-year perspective.\nWe have an easier second quarter comp due to the major COVID impact last year.\nAlso, the second half will be challenged as we anticipate nonresidential and multifamily new construction markets will slow due to the air pocket we've mentioned.\nWe estimate our adjusted operating margins may be down 50 to 90 basis points.\nThis is primarily driven by the 2021 time/cost headwinds of $15 million, decremental lower volume, incremental investments of $13 million, and general cost inflation, which are being partially offset by $14 million of incremental restructuring savings, along with price and productivity actions.\nNow a few other key inputs to consider for 2021.\nWe expect corporate costs to be about $40 million for the year.\nInterest expense should be roughly $10 million.\nOur adjusted effective tax rate for 2021 should approximate 27%.\nCapital spending is expected to be in the $40 million range as we will continue to reinvest in our manufacturing facilities, systems and new product development, which will support future growth and productivity.\nDepreciation and amortization should be approximately $46 million for the year.\nWe expect to continue to drive free cash flow conversion equal to or greater than 100% of net income.\nWe are assuming a 1.22 euro-US dollar foreign exchange rate for the full year versus the average rate of 1.12 in 2020.\nPlease recall that for every $0.01 movement up or down in the euro-dollar exchange rate, our European annual sales are impacted by approximately $4 million, and our annual earnings per share is impacted by $0.01.\nWe expect our share count should approximate $34 million for the year.\nFinally, a few items to consider for Q1.\nFor Q1 organically, we see sales down 3% to up 1%, with Americas and Europe sales slightly negative and APMEA likely experiencing organic growth in line with the full year range due to easier comps from Q1 COVID impact last year.\nWe estimate our Q1 operating margin will be flattish in the first quarter as compared to Q1 last year.\nAcquired sales should approximate $2.5 million in Q1, $1 million in the Americas and $1.5 million in APMEA.\nWe expect incremental investments of $2 million to $3 million in Q1.\nThe investments will be offset by about $5 million of incremental restructuring savings.\nThe adjusted effective tax rate should approximate 26%.\nWe anticipate foreign exchange would be a tailwind in Q1, given current rates as compared to the first quarter of 2020.\nSo overall, we see 2021 as a transition year for the company.\nDuring this time, we expect many of our end markets may be adversely affected, putting pressure on our organic growth and margin expansion opportunities, but we are taking this opportunity to continue to invest for the future, deepen our customer relationships, and empower our people to drive us forward.\nThe team successfully navigated through a very trying year.\nWe were able to adapt to the many challenges caused by the COVOD pandemic, delivering strong results by controlling what we could, given the economic environment.\nOur market outlook for 2021 remains guarded.\nTiming for broad dissemination of the vaccine is critical to reduce uncertainty and restore some normalcy to the markets.\nWe see a challenging year starting in the second quarter, given current industry indicators and the lack of new nonresidential and multifamily construction starts in 2020.\nSmart & Connected products continue to gain momentum, and we expect they should continue to grow in 2021.\nProductivity and efficiencies gained through the One Watch performance system will continue and help fund investments.\nWe plan to deliver strong free cash flow.\nAs always, we'll remain disciplined in our capital deployment, prioritizing reinvestment in bolt-on acquisitions that strengthen our core, further expand our geographic reach and add technology to build scale.\nWe'll be closely monitoring how the COVID vaccination process develops and how that affects customer sentiment and the construction markets.\nGiven our 2020 performance, I'm very confident in our experienced team will work through the near-term COVID issues and execute on what we can control in 2021, while still focusing on our long-term growth strategy.\n", "role": "user" }, { "content": "q4 adjusted earnings per share $1.15.\nq4 sales $403 million versus refinitiv ibes estimate of $385.9 million.\ncovid-19 will continue to affect our business in 2021.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: On our call today is our CEO, Hikmet Ersek; our CFO, Raj Agrawal; and Head of Treasury and Investor Relations, Brad Windbigler.\nDuring the call, we will discuss some items that do not conform to Generally Accepted Accounting Principles.\nWe have reconciled those items to the most comparable GAAP measures on our website, westernunion.com, under the Investor Relations section.\nWe will also discuss certain adjusted metrics.\nThe expenses that have been excluded from adjusted metrics are specific to certain initiatives, but maybe similar to types of expenses that the company has previously occurred and can reasonably expect to occur in the future.\nWe weathered COVID-19 better than many companies in 2020, owing to our resilient fundamentals and the foresight behind our leading digital business that had us ready for accelerated demand for digital services.\nBefore I give you an update about the encouraging first quarter results and share my thoughts about the rest of the year, I would like to take a moment and mention that although we do see some modest economic improvement and there are signs of some COVID-19 recovery like in the US, parts of Europe and parts of Asia Pacific due to progress with vaccinations, at the same time, I am saddened by the hard breaking current situation in countries like India, Brazil and many others.\nOur thoughts are with all of the people who are currently navigating this challenging situation.\nThe recent outbreaks in many countries show us that as a global community, we still have work to do in the fight against the virus.\nHowever, at the same time, I am hopeful and I know that all my colleagues and all our partners in more than 200 countries, we will do their best to recover from the virus as soon as possible.\nBack to our business.\nThe conditions were fairly stable in the first quarter.\nI am pleased that trends for our business improved over the quarter and held up well in April, giving us confidence to push forward with an ambitious agenda and reaffirm 2021 financial targets on an adjusted basis.\nRaj will discuss our outlook in more detail in a few minutes.\nWith that, let's review business highlights for the quarter.\nStarting with the big picture, our cross-border consumer-to-consumer or C2C business grew principal 28%, which was the highest quarterly growth in years and the third consecutive quarter with growth over 20%.\nThis really shows the momentum we are seeing today, especially when compared to forecast from third parties projecting modest growth or even declines in principals for 2021.\nTotal company revenue grew 2% on a constant currency basis, around a 300 basis points increase from declines in the third and fourth quarter of last year.\nC2C revenues and transactions grew 4% and 9%, respectively, and both digital and retail revenue trends improved sequentially.\nDigital performed exceptionally well again.\nRevenues were up from the fourth quarter and grew 45% year-over-year to over $240 million, putting us on target to exceed $1 billion in 2021.\nDigital comprised 34% of transactions and 23% of revenues for the C2C segment and was a key source of new customers and incremental profit.\nWu.com delivered impressive results and shows the potential we see as a foundation for a consumer ecosystem.\nThis is the fourth consecutive quarter of transaction growth of 50% or more and average monthly active users growth of over 40%.\nWu.com led money transfer peers in mobile app downloads by a wide margin and grew principal 78% off of an already large base, which we believe is well ahead of the market.\nOur customer engagement efforts also appear to be paying off with favorable trends in retention, transaction per customer and principal per customer.\nDigital partnerships revenue more than doubled year-over-year, and it has exceeded our expectation over the past 18 months since we announced it in late 2019.\nWe continue to have more encouraging developments in the pipeline.\nRetail trends improved sequentially from the fourth quarter to the first quarter, despite the effects of additional rates of COVID-19.\nWhile the business is not back to pre-pandemic levels yet, it has demonstrated resilience and we expect continued improvement to the rest of the year, assuming the pandemic and global economy doesn't worsen.\nOur business solution trends also improved.\nWe made progress on key initiatives, including launching our payment solutions in Spain and implementing technology upgrades that will allow us to add differentiated solutions and capabilities.\nWe are optimistic that the business will continue to rebound over the course of the year.\nShifting to an update on operating and strategic objectives during this quarter.\nStarting with wu.com, we continue to invest in consumer acquisition and marketing, which drove 46% growth in average monthly active users for the first quarter.\nOn the branding side, we launched one of our highest-rated television campaigns in recent years, send more than money, which future wu.com.\nWe also made progress on a number of product initiatives to improve our customer experience, faster registration, better web page performance and enhanced visibility into transaction status.\nWe achieved an important platform milestone by completing a major phase of our multiyear settlement transformation project.\nWe also advanced a number of initiatives that will make us more nimble and efficient like cloud migration and adding artificial intelligence and machine learning into processes to reduce project run times and enhance analytics.\nMoving on to our global network.\nThe team has done a great job optimizing commission costs while still enhancing the quality of our global payments distribution capabilities.\nDuring the quarter, we renewed agreements with 34 existing agents and added 41 new agents with favorable terms.\nOver 50% of our global account payout transaction volume was delivered real time.\nOur launch with Walmart is off to a good start, and we look forward to getting all 4,700 US locations up and running in the second quarter.\nTo wrap up the first quarter discussion, despite ongoing challenges from the pandemic, we are off to an encouraging start with financial and operating performance on course with our expectations for 2021.\nGiven the strong customer trends, we have seen over the last year in our C2C business, including almost 9 million wu.com annual active users in 2020, the agenda for the rest of 2021 is largely centered around enhancing the customer experience.\nConvenience, reliability and speed are fundamental for a good customer experience in payments, which makes a high-quality network important.\nOn the digital side, we can reach billions of accounts today, but we are expanding access to even more accounts with new partnerships.\nSpeed is increasingly valued by customers, and we already have one of the broadest real-time cross-border payment networks in the industry.\nSo the focus this year is making it more robust by adding additional direct third-party relationships and multiple partners in markets.\nOur retail distribution will continue to benefit from ongoing agent optimization, upgrading the caliber of agents and filling in gaps in distribution.\nPlatform initiatives for 2021 include upgrading and modernizing technology, incorporating cutting-edge solutions and bolstering our executive talent.\nThis will enhance customer experience in a number of ways, such as better processing speed and enabling more innovation.\nUltimately, we are working toward building a best-in-class tax stack that can support the range of cross-border use cases, including C2C, C2B, B2C and B2B and serve as a foundation for ecosystems.\nI'm really excited about the slate of product initiatives this year that can be impactful for customer experience.\nA few examples include improving the functionality of our mobile app advancing dynamic pricing, revamping our customer loyalty program and the pilot in Europe with our Western Union International Bank later this year, extending our offerings to a wider set of financial services.\nGiven the customer-centric agenda we have for 2021, I think it makes sense to discuss why we are so optimistic about the long-term prospects of serving our core customer segment, the global migrant community.\nLet me start by saying, we are extremely proud and privileged to serve the global migrant community and we are honored that they trust Western Union with one of the most important financial aspects of their lives, supporting loved ones in home countries.\nAs highlighted in our ESG reports for 2018, 2019 and our 2020 report coming in June, we are proud of the contribution our business mix around the world by promoting economic growth and prosperity for the people we serve.\nOur purpose underpins our market position and strategy, and we believe our business offers strong potential value creation for all stakeholders.\nFirst, the migrant and their loved ones is a large customer segment for Western Union.\nAccording to the United Nations, there are more than 270 million migrant residents globally and many of them send remittances.\nFactoring in remittance, recipients in home country, who also use our services and desire more options for financial services could more than double the potential customer base to over 0.5 billion people.\nSecond, migrants are a growing, hardworking and upwardly mobile group.\nThey are expected to drive a significant share of future population growth in higher-income countries and have above-average labor participation rates, higher rates of entrepreneurship and contribute significantly to innovation.\nThe third and final point, migrants have significant spending power.\nAccording to our 2019 new American economy study, migrants represented $1.3 trillion of spending power in the US alone.\nAnd obviously, globally, this amount is even higher.\nTo summarize, we believe migrants and their families and loved ones are special group of people that have an important role in societies and economies around the world.\nServing our customers' needs is a good business that offers Western Union organic growth and opportunity to expand into new services.\nOn top of this, in cross-border expertise and capabilities we gain through serving our core customer segments enables us to offer our cross-border platform for financial institutions and other third parties, extending our market opportunity beyond our own Western Union consumer services.\nIn closing, I'm pleased with the direction of our business.\nBased on what we see internally and in the market, we are confident in the strategy and plan for the year, and we are off to a good start.\nMoving to first quarter results.\nRevenue of $1.2 billion increased 2% on both a reported and constant currency basis.\nCurrency translation net of the impact from hedges had a limited impact on first quarter revenues.\nIn the C2C segment, revenue increased 4% on a reported basis or 2% constant currency with transaction growth partially offset by mix.\nB2C transactions grew 9% for the quarter, led by 77% transaction growth in digital money transfer.\nRetail money transfer transactions were down in the quarter, but the business continued to move in the right direction with trends improving sequentially from the fourth quarter.\nThe mix impact from the high growth of digital white label partnerships and account-to-account digital transactions both lower revenue per transaction or RPT, continued to contribute to a spread between C2C transaction and revenue growth in the quarter.\nWe do expect this gap to moderate over the next three quarters.\nTotal C2C cross-border principal increased 28% on a reported basis or 26% constant currency, driven by growth in digital money transfer and retail.\nTotal C2C principal per transaction or PPT was up 15% or 12% constant currency led by retail and wu.com.\nEvolving business mix, coupled with changes in consumer behavior, more widely contributed to a higher PPT.\nDigital money transfer revenues, which include wu.com and digital partnerships, increased 45% on a reported basis or 44% constant currency.\nSimilar to the broader C2C business, the mix impact from digital white label partnerships and account-to-account digital transactions contributed to a spread between transactions and revenue growth.\nAnd from our vantage point, the pricing environment in the digital market remains constructive.\nAs Hikmet mentioned, wu.com had another very strong quarter.\nRevenue grew 38% or 37% constant currency on transaction growth of 55%.\nCross-border revenue was up 49% in the quarter.\nPPT trends were impressive, and we saw continued double-digit growth.\nDigital partnerships, transactions and revenues more than doubled in the quarter.\nAs you may recall, the business experienced a step-up in transactions in the second quarter of 2020 with the initial global wave of COVID-19, and then another step-up for the second half of 2020.\nThis strong prior year growth is expected to cause a moderation in growth over the rest of 2021.\nMoving to the regional results.\nNorth America revenue was flat on a reported basis or increased 1% constant currency on transaction growth of 1%.\nThe increase in constant currency revenue and transaction growth was driven by US outbound, partially offset by declines in US domestic money transfer and Cuba where current US regulations limit our ability to operate.\nRevenue in the Europe and CIS region increased 8% on a reported basis or 4% constant currency on transaction growth of 28%.\nConstant currency revenue growth was led by France and Russia.\nGrowth in Russia was driven by the incremental digital white label business, which continued to contribute to a spread between transaction in constant currency growth.\nRevenue in the Middle East, Africa and South Asia region increased 1% on a reported basis or was flat constant currency while transactions grew 13%.\nQatar had solid constant currency revenue growth in the quarter, while the United Arab Emirates continued to experience soft trends.\nIncremental digital white label business in Saudi Arabia was the primary driver of the spread between transaction growth and constant currency revenue growth.\nRevenue growth in the Latin America and Caribbean region continued to improve sequentially and was up 3% or 8% constant currency on transaction declines of 8%.\nThe constant currency revenue growth was driven by a broad increase in principal across the region with higher PPT driving the spread between constant currency revenue growth and transaction growth in the quarter.\nRevenue in the APAC region increased 9% on a reported basis or 3% constant currency, led by strength in Australia.\nTransactions declined 2%, primarily driven by the Philippines domestic business, which has limited impact on revenue.\nBusiness Solutions revenue decreased 2% on a reported basis or 8% constant currency as COVID-19 continue to impact certain verticals and hedging activity.\nHowever, revenue trends continue to improve sequentially, and we expect will remain on an improving trajectory for the remainder of the year with a broader recovery in cross-border trade.\nThe segment represented 8% of company revenues in the quarter.\nOther revenues represented 5% of total company revenues and declined 18% in the quarter.\nOther revenues primarily consist of retail bill payments in the US and Argentina and retail money orders.\nThe revenue decline was due to the ongoing impact of COVID-19 and the depreciation of the Argentine peso.\nTurning to margins and profitability.\nConsolidated operating margin in the quarter was 19.2% compared to the prior year period margin of 19.6% on a GAAP basis and 20.5% on an adjusted basis, which excluded costs related to our restructuring program.\nThe decrease in the operating margin primarily reflects how COVID-19 impacted the level and timing of certain expenses and investments in 2021 compared to 2020, including investments in strategic initiatives and marketing and compensation-related expenses, partially offset by changes in FX.\nForeign exchange hedges had a negative impact of $4 million on operating profit in the quarter and a benefit of $10 million in the prior year period.\nMoving to segment margins.\nNote that segment margins exclude last year's restructuring charges.\nB2C operating margin was 19.6% compared to 20.7% in the prior year period.\nGiven that our C2C segment comprises almost 90% of total company operating income, the decrease in operating margin was driven by the same factors that impacted total company margin.\nBusiness Solutions operating margin was 13.1% in the quarter compared to 14.1% in the prior year period.\nThe decline in operating margin was primarily due to an increase in compensation-related expenses.\nOther operating margin was 22.6% compared to 26.1% in the prior year period, with the decline primarily due to lower revenue.\nThe effective tax rate in the quarter was 10.4% compared to a 12.5% effective tax rate on both a GAAP and adjusted basis in the prior year period.\nThe decrease in the company's effective tax rate was due to changes in composition between higher tax and lower tax foreign earnings and an increase in discrete tax benefits.\nEarnings per share or earnings per share was $0.44 compared to the prior year period GAAP earnings per share of $0.42 and adjusted earnings per share of $0.44.\nYear-over-year comparisons of earnings per share in the quarter reflects benefits of revenue growth, a lower effective tax rate and share repurchases, offset by increased investments in strategic initiatives and marketing and compensation-related expenses.\nTurning to our cash flow and balance sheet.\nCash flow from operating activities in the first quarter was $176 million.\nCapital expenditures in the quarter were approximately $97 million driven by agent signing bonuses and should be in a normal range for the full year.\nAt the end of the quarter, we had cash of $1.5 billion and debt of $3.2 billion.\nDuring the quarter, we took advantage of historically low interest rates to issue new notes.\nProceeds were used to prepay a portion of the term loan in the first quarter, and we repaid our notes due in 2022 in early April.\nWe returned $172 million to shareholders in the first quarter consisting of $97 million of dividends and $75 million in share repurchases.\nThe outstanding share count at quarter end was 410 million shares.\nAnd we had $708 million remaining under our share repurchase authorization, which expires in December of this year.\nWe are also on track to achieve our digital revenue target exceeding $1 billion.\nThe increase in GAAP earnings per share reflects the sale of an investment, partially offset by expenses related to the early retirement of the company's notes due in 2022.\nBoth of these items will be reflected in second quarter results.\nExcluding the impact of these two items, the 2021 earnings per share outlook would be unchanged, which we have reflected with an adjusted earnings per share outlook.\nNote that our outlook assumes no material worsening in current global macroeconomic conditions or the COVID-19 pandemic.\nWe expect full year 2021 revenues will grow mid to high single-digits on a GAAP basis or mid single-digits on a constant currency basis, which also excludes the impact of Argentina inflation.\nOperating margin is expected to be approximately 21.5%, reflecting revenue growth and benefits from our three year productivity program that we expect to generate approximately $150 million of annual savings by the end of 2022, partially offset by higher operating expenses and investments in strategic initiatives.\nWe expect our effective tax rate will be in the mid-teens range on a GAAP and adjusted basis.\nGAAP earnings per share for the year is now expected to be in a range of $2.06 to $2.16, including approximately a $0.06 net benefit in other income on an investment sale and debt retirement expenses that occurred early in the second quarter of 2021.\nAdjusted EPS, which excludes those items, is expected to be in a range of $2 to $2.10.\nGiven the variability that COVID-19 caused on quarterly results, I will provide some context for how we think results may progress over the remainder of the year.\nNote that our underlying assumptions include no material worsening in the effects of the pandemic and moderate improvement in global macro environment as the quarters progress.\nStarting with revenue, we saw continued positive momentum in April.\nAnd for the second quarter, we expect to see the strongest year-over-year growth rate as we cycle over the largest quarterly decline at the prior year.\nFor the third and fourth quarter of 2021, given the stability we had in the back half of last year, we expect general stability and trends and similar year-over-year growth rates.\nKeep in mind that as a result of COVID-19, our digital business delivered exceptional growth from the second quarter onward in 2020.\nSo growth rates this year should moderate somewhat for the remainder of, 2021.\nAlthough, we still expect to generate more than $1 billion in digital money transfer revenues this year.\nOur retail business experienced a significant decline in the second quarter of 2020.\nAnd while it began to come back quickly, we expect recovery will occur gradually.\nAs a result, we expect retail will generate growth in 2021.\nThe Business Solutions segment and other revenues were adversely impacted by COVID-19 in 2020.\nSo we expect that those businesses will continue to rebound this year.\nMoving on to margin.\nBased on our current view, we expect that second quarter margin will be below the full year margin outlook, while the back half of the year will be above the full year margin outlook.\nTo wrap up, we are off to a solid start to the year, optimistic that the macro environment will remain constructive, confident in our competitive position and underlying fundamentals.\nAnd we are enthusiastic that our strategic agenda for the year will position us to realize the significant opportunities we see for our business over the next few years and beyond.\nAnd operator, we are now ready to take questions.\n", "role": "user" }, { "content": "western union q1 earnings per share $0.44.\nq1 earnings per share $0.44.\nq1 revenue rose 2 percent to $1.2 billion.\nq4 adjusted earnings per share $0.44.\nreaffirms 2021 financial outlook for revenue and margin; raises gaap earnings per share to $2.06 - $2.16.\nqtrly consumer-to-consumer (c2c) transactions increased 9%, while revenues increased 4% on a reported basis, or 2% constant currency.\nsees 2021 adjusted earnings per share in a range of $2.00 - $2.10.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: com under the Investor Relations tab and will remain available after the call.\nOn our call today is our CEO, Hikmet Ersek; and our CFO, Raj Agrawal.\nDuring the call, we will discuss some items that do not conform to generally accepted accounting principles.\nWe have reconciled those items in the most comparable GAAP measures on our website, westernunion.com, under the Investor Relations section.\nWe will also discuss certain adjusted metrics.\nThe expenses that have been excluded from adjusted metrics are specific to certain initiatives but may be similar to the types of expenses that the company has previously incurred and can reasonably expect to incur in the future.\nOur second quarter performance was strong, and we are on track to achieve our adjusted 2021 financial outlook with revenue growth, reflecting sequential improvement in underlying trends and a favorable comparison to the prior year period, which was impacted by COVID-19 pandemic.\nProfit trended as expected in the quarter as we continue to make strategic technology investments to strengthen our market-leading platform and digital capabilities.\nOur business remained resilient despite global uncertainties related to ongoing COVID-19 resurgences from the delta variant and the potential risk this poses to economic recovery.\nOur strategy to be a leader in cross-border, cross-border, cross-currency, money movement and payments, serving consumers, businesses and financial institutions remains unchanged.\nWe remain confident in our ability to exceed $1 billion of digital revenue in 2021, supported by continued strong growth in our wu.com business and our digital partnership business.\nThe expansion of our wu.com customer base position us well as we look to build a consumer ecosystem, deepening engagement with our customers and providing them access to a wider array of products and services.\nWe will discuss more on our consumer ecosystem strategy in just a moment.\nBut first, I'd like to highlight another important strategic development, which is the Business Solutions transaction we announced today.\nToday, we separately announced that, we reached a definitive agreement to sell our Business Solutions business to Goldfinch Partners and the Baupost Group for $910 million.\nSmall- and medium-sized businesses and organizations around the world to rely on Western Union Business Solutions, as they are global payments, foreign exchange and hedging partner, and we believe that, Goldfinch Partners and The Baupost Group are well positioned to invest in the business to deliver good value and innovation to these clients.\nWith the planned sale of Western Union Business Solutions, which was approximately 7% of total company revenue during the last 12 months ended June 30th, 2021, now we will be fully focused on increasing our penetration of the global cross-border consumer payments market, expanding our digital partnership business and increasing our total addressable market, through our Western Union branded ecosystem strategy.\nThe company will benefit by having a single global payments platform capable of serving multiple use cases and customer segments, including Fintech companies like, Google Pay, telecom companies like, STC Pay and banks and other financial institutions like Spare.\nThis requires a modern, adaptable platform that provides a strong user experience for our customers, agents and partners.\nAnd we are well on our way in this regard with significant recent progress in our cloud migration, pricing, automated marketing and customer support built, on the foundation of advanced machine learning and omnichannel engagement.\nThese developments enable us to be more efficient, but most importantly, improve the customer experience and identify incremental revenue opportunities.\nContinuing technology investment and our unique global platform remains a key area of focus for us.\nWe also remain focused on enhancing our market-leading network by improving our coverage, cost and quality.\nOn a year-to-date basis, our new agent signings will expand our network by approximately 18,000 retail locations.\nWe have also renegotiated contracts with over 50 agents' year-to-date, reflecting our commitment to optimize commissions.\nFinally, we continue to enhance our global account payout capabilities, which is now available in over 125 countries with real-time capabilities in approximately 100 countries.\nOver 60% of our global account payout transaction volume was delivered real-time.\nTurning back to our consumer ecosystem strategy, we are excited about our plan to pilot through our Western Union International Bank as WU-branded multicurrency bank account, debit card and integrated money transfer solution in a couple of European countries later this year.\nOur initial focus will be testing and learning and then we will evaluate how we expand from there.\nLonger term, we see significant opportunity for our consumer ecosystem strategy.\nWe are a trusted provider to a large, unique customer segment, the global migrant community, which has many needs beyond money transfer, such as insurance, lending and travel.\nAnd it's often not well served in the market.\nWestern Union with its trusted brand, large and growing digital customer base, and global platform is well positioned to execute on this opportunity.\nWhile we are fully focused on the implementation of our profitable growth strategy, we also remain committed to advance environmental, social and governance, or ESG, at Western Union.\nI would encourage you to read our 2020 ESG report released in June to learn more about our 2020 impact and our ESG strategy and goals, which are closely aligned to our business, our values and our purpose.\nNow turning back to second quarter results.\nWe see pricing stability in the market and varying levels of recovery from the effects of the ongoing pandemic, particularly outside the US, where economic activity and government policies are more mixed.\nThis was evident in my recent tours in Europe where agents, customers and business leaders confirmed that while local economies are reopening and travel was sections are being lifted, the pace of economic recovery is being impacted by labor shortages and the spike in cases from the delta variant.\nFortunately, for our customers around the globe, we offer remarkable choice with our omnichannel offering with a comprehensive set of funding and payout options, so they can transfer and receive money in a way that it's most convenient for them.\nDuring the quarter, we saw continued strength in principal per transaction or PPT with growth over 11% and cross-border total principal growth of 29%, benefiting from continued demand for support in received markets and improving economic and employment trends in central regions like the U.S. and Western Europe.\nTotal company revenue grew 16% or 13% on a constant currency basis, with underlying trends aided by continued growth in our digital business and sequential improvement in the retail business.\nC2C revenues and transactions, each grew 15% in the quarter with C2C revenue growing 12% on a constant currency basis.\nDigital revenues were up from the first quarter and grew 22% year-over-year to over $265 million with quarterly highs for revenue, transactions and principal.\nDigital comprised 36% of transactions and 24% of revenues for the C2C segment.\nAs expected, we are beginning to see digital growth ease after exceptionally strong performance during the height of the COVID-19 pandemic.\nWu.com results were healthy with transaction growth over 18%, driven by 14% growth in average monthly active users.\nWu.com continue to lead money transfer appears in mobile app downloads by a wide margin and grow principle over 30%.\nOur customer engagement trends remained favorable year-over-year with positive trends in retention, transaction per customer and principal by customer.\nWe continue to expand in the new market launch in Chile and Peru in the second quarter and enhancing the customer experience with new futures and tools, including the rollout of additional electronic Know Your Customer options across European and transaction reminders.\nImproving the customer experience not only supports the continued growth in westernunion.com, but also provides a growing customer base for the consumer ecosystem strategy that I mentioned earlier.\nRetail revenue achieved strong year-over-year growth, cycling over the disruption from the pandemic in the prior year period and is growing sequentially.\nWe remain focused on ramping up our partnership with Walmart in the US.\nOur domestic and international money transfers, bill payments and money order services are now available in nearly 4,700 Walmart stores across the US.\nTrends in the Business Solutions segment continued to move in the right direction with strong improvement in the new business and stable trends in hedging and across most segment verticals.\nWhile we have announced, a definitive agreement to divest Western Union Business Solutions, it will be business as usual until the transaction closes.\nNow, overall, we are pleased with the announcement of the Western Union Business Solution today.\nI'm excited for the Business Solutions management team to receive strong support from the new ownership.\nAdditionally, with our healthy second quarter results, we are confident in our ability to execute to include market conditions and our strategy, with our resilient retail channel, strong growth of our digital channel, building a WU branded ecosystem with additional products and serving multiple enterprises with our unique and agile cross-border platform positions the company well for long-term incremental growth opportunities.\nI'll now pass it over to Raj, to review our financial results in more detail.\nLet me first summarize second quarter performance.\nAnd then, I will provide more color on the Business Solutions divestiture, the planned termination of our defined benefit plan, and finally, our 2021 full year outlook.\nMoving to the second quarter results, revenue of $1.3 billion increased 16%, on a reported basis or 13% constant currency.\nCurrency translation, net of the impact from hedges benefited second quarter revenues by approximately $29 million compared to the prior year.\nIn the C2C segment, revenue increased 15%, on a reported basis or 12% constant currency, with transaction growth partially offset by mix.\nB2C transactions grew 15% for the quarter led by 33% transaction growth in digital money transfer, and supported by growth in retail money transfer, which improved sequentially, particularly in North America and Europe and CIS.\nIn line with our expectations, spread between C2C transactions and revenue growth moderated this quarter and was flat on a reported basis or three percentage points constant currency, as we cycled through the mix impact from the high growth of digital partnership transactions, which represents a lower revenue per transaction category.\nWe expect the spread will remain fairly tight during the remainder of the year.\nGlobally, we continue to see pricing environment as stable.\nTotal C2C cross-border principal increased 29% on a reported basis or 25% constant currency driven by growth in retail and digital money transfer.\nTotal C2C Principal per Transaction or PPT was up 11% or 8% constant currency.\nBoth, retail and wu.com continued to experience higher average PPT, due to mix and changes in consumer behavior.\nDigital money transfer revenues which include wu.com and digital partnerships increased 22% on a reported basis or 19% constant currency.\nWu.com revenue grew 18% or 15% constant currency on transaction growth of 18%.\nWu.com cross-border revenue was up 23% in the quarter.\nDigital partnerships continued to show, strong growth across revenue, transactions and principal in the quarter.\nTrends in our digital business moderated somewhat as expected, from the exceptional growth we experienced from the second quarter onwards last year, as demand for our digital services grew significantly, adding incremental revenue, profit and transactions to our business.\nWhile we expect this moderating trend will continue the remainder of the year, we are now growing off a much larger base.\nMoving to the regional results, North America revenue increased 4% on both a reported and constant currency basis, on transaction growth of 3%.\nThe increase in constant currency revenue and transaction growth was driven by US outbound, partially offset by current US regulations in Cuba that limit our ability to operate and declines in US domestic money transfer.\nUS domestic money transfer represented approximately 4% of total C2C revenue in the quarter.\nRevenue in the Europe and CIS region increased 18% on a reported basis or 10% constant currency on transaction growth of 26%.\nConstant currency revenue growth was led by the United Kingdom, France and Russia with the spread between transaction and constant currency revenue growth driven by the digital partnership business in Russia.\nRevenue in the Middle East, Africa and South Asia region increased 19% on a reported basis or 18% constant currency, while transactions grew 22%.\nThe digital partnership business in Saudi Arabia led constant currency revenue growth in the quarter, followed by Kuwait and Qatar.\nThe impact of the digital partnership business on the spread between transaction and constant currency revenue growth diminished in the quarter but was still the primary contributor.\nRevenue growth in the Latin America and Caribbean region was up 70% or 68% constant currency on transaction growth of 42%.\nConstant currency revenue growth was broad-based across the region, led by Chile, Ecuador and Mexico.\nMuch higher average principal amount resulted in constant currency revenue growth greatly exceeding transaction growth in the quarter.\nRevenue in the APAC region increased 20% on a reported basis or 13% constant currency led by the Philippines and Australia.\nTransactions increased 3% with the Philippines driving the difference between constant currency revenue and transaction growth.\nBusiness Solutions revenue increased 25% on a reported basis or 16% constant currency, benefiting from favorable comparisons to prior year.\nRevenue trends remained on a positive course with the continuing recovery in cross-border trade.\nThe segment represented 8% of company revenues in the quarter.\nOther revenues represented 5% of total company revenues and increased 8% in the quarter.\nOther revenues primarily consist of retail bill payments in the US and Argentina and retail money orders.\nTurning to margins and profitability.\nThe consolidated GAAP operating margin in the quarter was 19.8% compared to 19.\n9% in the prior year period.\nWhile the consolidated adjusted operating margin was 20.2% in the quarter compared to 20.4% in the prior year period.\nAdjusted operating margin excludes M&A expenses in both the current and prior year periods and last year's restructuring expenses.\nThe decrease in consolidated operating margin continues to reflect how COVID-19 impacted the level and timing of certain expenses and investments as the company curtailed spending last year.\nCompensation-related expenses and strategic investments in marketing and technology were the primary contributors to the slight margin decrease in the quarter.\nForeign exchange hedges had a negative impact of $2 million on operating profit in the current quarter and a benefit of $7 million in the prior year period.\nMoving to segment margins.\nNote that M&A expenses are included in other operating margins for both the current and prior year period, and segment margins exclude last year's restructuring charges.\nB2C operating margin was 20.7% compared to 21.8% in the prior year period.\nGiven that our C2C segment comprises most of total company operating income, the decrease in operating margin was driven by the same factors that impacted total company margin.\nBusiness Solutions operating margin was 10.9% in the quarter compared to 1.6% in the prior year period.\nThe increase in operating margin was largely due to increased revenue, partially offset by increased compensation-related expenses.\nOther operating margin was 16.2%, compared to 21.9% in the prior year period, with the decrease driven by higher M&A expenses, related to the divestiture of Western Union Business Solutions announced today.\nThe GAAP effective tax rate in the quarter was 14.5%, compared to 16.2% in the prior year period, while the adjusted effective tax rate in the quarter was 14.2%, compared to 15.7% in the prior year period.\nThe decrease in the company's GAAP and adjusted effective tax rates was due to changes in pre-tax earnings, including differences in the composition between high tax and low tax jurisdictions.\nGAAP Earnings per Share or earnings per share was $0.54 in the quarter compared to $0.39 and in the prior year period, while adjusted earnings per share was $0.48 in the quarter compared to $0.41 in the prior year period.\nThe increase in GAAP earnings per share reflects benefits of revenue growth, the gain on an investment sale and a lower effective tax rate, partially offset by debt retirement expenses, compensation-related expenses and strategic investments in marketing and technology.\nBoth the gain on an investment sale and the debt retirement expenses are excluded from adjusted EPS, in addition to the expenses we noted earlier during the operating margin discussion.\nThe net impact of these two items was a $0.07 benefit to GAAP earnings per share in the quarter.\nTurning to our cash flow and balance sheet, year-to-date cash flow from operating activities was $349 million.\nCapital expenditures in the quarter were approximately $48 million.\nAt the end of the quarter, we had cash of $1.1 billion and debt of $3 billion.\nWe returned $171 million to shareholders in the second quarter, consisting of $96 million in dividends and $75 million in share repurchases.\nThe outstanding share count at quarter end was 407 million shares.\nAnd we had $633 million remaining under our share repurchase authorization, which expires in December of this year.\nAs Hikmet highlighted previously, today we announce the divestiture of Western Union Business Solutions.\nThe sales price of $910 million is expected to generate in excess of $800 million in proceeds, net of tax in 2022 and result in a gain on sale.\nOur net proceeds estimate is based on current tax policy and is subject to certain regulatory and working capital adjustments.\nThe transaction is expected to close in two stages with the majority of the business and the entire proceeds, transferring in early 2022 and the European business transferring by late 2022.\nBoth closings are subject to requisite work council consultations, regulatory approvals and other customary closing conditions.\nFollowing the transaction, we will evaluate options for the use of proceeds based on market conditions and opportunities and in accordance with our established capital allocation priorities, which include reinvestment in the business to drive organic growth, dividends, acquisitions, including technological capabilities that support our growth strategy and share repurchases.\nAs a reference point, during the last 12 months ended June 30th, 2021, the Business Solutions segment generated revenue, EBITDA and operating profit of $374 million, $64 million and $33 million, respectively.\nTurning to our outlook for 2021, the outlook we provided today assumes moderate improvement in macroeconomic conditions as the quarters' progress in line with current prevailing macroeconomic forecast with no material changes related to the COVID-19 pandemic.\nWe reaffirmed our expectations for revenue growth, including our expectation that the digital business will achieve over $1 billion in revenue this year.\nWe also affirmed our remaining metrics on an adjusted basis while updating our full-year GAAP financial outlook for pension plan termination expenses and M&A costs related to the sale of the Business Solutions business.\nThe pension plan termination is expected to accelerate the recognition of approximately $110 million of non-cash expenses on a pre-tax basis, lowering GAAP earnings per share by approximately $0.22 in the fourth quarter and will be recorded to other expense in the P&L.\nWith our plan over funded by more than $35 million as of June 30, we believe it is a good time to transition the plan to an annuity provider.\nWe continue to expect full-year 2021 revenues will grow mid- to high single digits on a GAAP basis or mid-single digits on a constant currency basis, which also excludes the impact of Argentina inflation.\nGAAP operating margin is expected to be approximately 21% and adjusted operating margin is expected to be approximately 21.5% with the difference attributable to M&A costs.\nWe anticipate our effective tax rate will be in the mid-teens range on a GAAP and adjusted basis.\nGAAP earnings per share for the year is now expected to be in a range of $1.82 to $1.92, which now reflects the impact of pension plan termination expenses and M&A costs.\nAdjusted earnings per share is still expected to be in the range of $2 to $2.10.\nAs we move into the second half of the year, let me provide some context for how we think the results may progress over the remaining quarters.\nStarting with revenue, our underlying assumption for revenue progression includes moderate improvement in the global macroeconomic environment in line with the current prevailing economic forecast.\nHowever, as Hikmet discussed earlier, global uncertainties remain, especially related to the emergence of the delta variant and the potential risks this poses to broader economic recovery.\nAs the quarters progress, we expect moderate improvement in our business similar to the current prevailing economic forecast, although overall company growth rates will be lower than we have seen in the second quarter due to the grow-over impacts from last year.\nWe continue to expect to generate over $1 billion in digital revenue this year, along with a relatively stable retail business.\nLastly, we expect that the Business Solutions and other segments will continue to rebound this year as global macroeconomic conditions improve.\nWith respect to margins, we expect the margin for the second half of the year will be above our full-year adjusted margin outlook of approximately 21.5%, primarily driven by expected higher revenue levels.\nTo wrap up, we delivered a solid second quarter performance and are on track to achieve our financial outlook for the year.\nWith the planned divestiture of the Business Solutions business, we are also sharpening our focus on the strategy that Hikmet laid out.\nAnd operator, we are now ready to take questions.\n", "role": "user" }, { "content": "q2 adjusted earnings per share $0.48.\nq2 gaap earnings per share $0.54.\nq2 revenue $1.3 billion versus refinitiv ibes estimate of $1.25 billion.\nreaffirms 2021 adjusted financial outlook.\nqtrly consumer-to-consumer transactions increased 15%, while revenues increased 15% on a reported basis, or 12% constant currency.\nsees fy 2021 adjusted earnings per share in a range of $2.00 - $2.10 (no change from previous outlook).\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Leading today's discussion are Vince McMahon, WWE's Chairman and CEO; Nick Khan, WWE's President and Chief Revenue Officer; Stephanie McMahon, WWE's Chief Brand Officer; and Kristina Salen, WWE's Chief Financial Officer.\nTheir remarks will be followed by a Q&A session.\nActual results may differ materially, and undue reliance should not be placed on them.\nAdditionally, the matters we will be discussing today may include non-GAAP financial measures.\nYou should note that all financial comparisons are versus the year ago quarter, unless otherwise described.\nI'll talk some generalities here as weigh into the specifics later on Kristina and Stephanie and everyone.\nBut nonetheless, I think that I've never felt as confident as I currently do in terms of this -- of our new management.\nIt's really extraordinary what this has done for the entire business and other executives and much further below.\nThere's a new spirit, a new vibrance.\nAnd I don't know if you find this anywhere, there's a view of optimism, not just for optimism stake, but when you look at where we're going to go in the future and use the resources that we have as well as other things like, this is a fun, exciting place to be.\nAnd of course, that new management team is, as you mentioned, Nick Khan, who is the President and, of course, CRO, Kristina Salen, new CFO, was mentioned and, of course, other individuals that are here, that have been here before, they now feel the same way.\nThe interaction is reinvigorating, it really is.\nAnd Stephanie, who's Head of Brand Management, does now have a enhancive position to enhance growth with Nick and others as well.\nAnd there are many other things going on here.\nBut I just want to -- whether we're going through a whole bunch of numbers of stuff that you already have and going through the ThunderDome, COVID, and all those, I just want to say how I really feel about our new management team.\nAnd quite frankly, that's all that I say.\nAs an introduction, I wanted to share some of my background and motivation with you, our analysts and investors.\nAs a co-head of television at Creative Artists Agency, otherwise known as CAA, I had the good fortune of working with some of the top talent in the media business as well as the Southeastern conference, Tiger Woods and Phil Mickelson and their teams and putting together the head-to-head event a match, top rank boxing and, of course, WWE.\nI was a practicing litigator prior to that, and perhaps more importantly, as a student, I was an usher at Wrestlemania IX in my hometown of Las Vegas WWE Studios.\nLet's talk about that first, if we could.\nWe're in development of various new content.\nA few shows that were already announced and I'm going to announce to you here today that we happen to find really interesting.\nTotal Bellas, season six, premiering this November.\nA&E, a show currently titled The Quest for Lost WWE Treasurers, hosted by Paul Livek, otherwise known as HHH; and Stephanie McMahon, our Chief Brand Officer, who you will be hearing from shortly.\nThis is a multi-episode order that will take viewers on the ultimate hunt to find some of WWE's most iconic, lost memorabilia.\nThis deal furthers our relationship with Hearst Communications through A&E.\nA&E has also ordered additional episodes of our soon-to-be-released documentary series, which features stand-alone documentaries on legendary superstars like Stone Cold Steve Austin, The Ultimate Warrior and many others.\nIf you recall, the Andre the Giant documentary from 2018 was not only the highest-rated sports documentary on HBO in the last 15 years, but was the highest-rated documentary on HBO in the last 15 years.\nProduced by WWE Studios in association with HBO Sports and executive producer, Bill Simmons, founder of The Ringer.\nWith that said, I'm happy to share with you that in a groundbreaking deal, we have sold a multipart documentary to Netflix on the life of none other than our very own Vince McMahon.\nBy groundbreaking, I mean one of the highest budgeted docs in Netflix's history.\nBill Simmons, as previously mentioned, will executive produce.\nChris Smith, the amazing Director of Netflix' Fyre Festival documentary will direct and produce alongside WWE Studios.\nAs I mentioned when I first joined the company, it's rare to have an opportunity to work at a company that's not only legendary in what it has already accomplished, but also uniquely poised to expand across all lines of business to maximize current opportunities and find new paths to higher growth.\nThis includes exploring an alternative strategic option for WWE Network, realizing greater economics from WWE's international markets and cultivating new business opportunities.\nLet's discuss WWE Network for a moment.\nEven with potential partners impacted by COVID-19, conversations have resumed for alternative strategic options to our current model.\nWe're currently unable to estimate when that alternative option will be completed, but we still believe in the potential for a transaction that enables WWE to reach a larger audience and realize a greater economic return.\nIn the interim, we continue to capitalize on the growth in digital consumption, promoting content sampling and subscription with a free version of WWE Network.\nSince the pandemic began, WWE subscriptions are up.\nEven with our marquee annual event WrestleMania being presented in a nontraditional way.\nNotably, the third quarter marked an increase in network viewership and content consumption.\n2.4 million total viewers watch content across all tiers, representing a 60% increase.\nAnd those viewers watched 37 million hours of content, which was an 8% increase.\nPerhaps more importantly, average paid subscribers to the network increased by 6% to $1.6 million.\nTo realize greater economics from WWE's international markets, we remain focused on developing localized content, which utilizes local talent and is produced in local language.\nWe're excited to now be working with our content partner in India, Sony, on a 2021 event that will primarily feature our developing Indian superstars.\nThat event will air in India on the Sony platforms and will also be distributed domestically in the United States.\nWe believe partnerships like this are the best way to build engagement and to maximize the value of content for our international distribution partners and our fans.\nIn the current environment, we expect to invest in international at a measured pace, balancing near-term results and long-term growth objectives.\nWWE has demonstrated tremendous creativity in responding to today's unprecedented challenges.\nAnd in our view, we are well positioned to leverage the value of live content and growth in digital consumption.\nIn this context, we believe WWE can develop new content in distribution platforms, introduce new products and increase our returns from international markets.\nWe look forward to sharing our progress on these objectives with you in the future.\nGiven the importance of WWE's brand strength for future success, I am pleased to introduce Forbes number two most influential marketing executive, Stephanie McMahon.\nA lot of people ask me, what does a Chief Brand Officer really do.\nAnd while every company is different, my role here is to expand and strengthen WWE's brand by amplifying our presence across all media platforms, deepening engagement with our fan base, creating value for partners and driving revenue.\nEverything we do begins with what we call the WWE Universe, comprised of our fans, employees, partners and superstars.\nWe call it the WWE Universe because it is inclusive, like being a part of a giant community, which is especially important during times like these.\nWhen the pandemic hit and sports leagues and content providers began to postpone and shut down, WWE became focused on not if, but how we were going to continue to deliver our in-ring content to our fans through our media partners.\nWe needed to provide relief for our audience and escape from their fear and uncertainty and do our best to deliver on our mission of putting smiles on faces.\nSo WWE did what we do best, we pivoted and began to innovate.\nWrestleMania went from a sold-out Raymond James stadium in Tampa, Florida, with over 80,000 people to a two-night event at our performance center with no one in attendance.\nRaw, Smackdown and NXT followed suit, and we began to test and learn in what was our new normal.\nWe experimented with audio techniques and cinematic style matches.\nWe started to bring in some of our developmental talent to serve as an audience through flexiglass, but it wasn't good enough.\nAfter many months, we found a way to bring the spectacle back to WWE.\nOn August 21, we launched what we call WWE ThunderDome.\nWe returned to an arena setting and took up residency at the Amway Center in Orlando, Florida.\nWe partnered with the famous group to bring nearly 1,000 live virtual fans back to our show.\nWe're using pyrotechnics, laser displays, augmented reality and drone cameras in ways we never have before, making Raw and Smackdown feel alive again.\nAnd we have seen a lift in the ratings of 6% for Raw and 12% for Smackdown as compared to the prior four weeks without fans.\nAdditionally, we made an investment in WWE's performance center, transforming the location into the capital wrestling center, a nod to my grandfather's organization and a new location to shoot in-ring content.\nThe CWC launched on October four for NXT's live special Takeover 31.\nIt's incredible to watch production teams from Orlando, Stanford and London, all working simultaneously connected through technology and innovation to create this show.\nAnd as more and more people started to gravitate to streaming platforms, we adjusted our digital posting strategy to incorporate new original content, longer matches versus clips, and resurfaced high-performing historical content across YouTube, Facebook and WWE Network, resulting in increased digital views of 28% excluding the impact of geographical restrictions in India.\nWe recently surpassed 50 billion views on YouTube, making WWE the fifth most viewed YouTube channel in the world.\nAnd we've partnered with new and upcoming platforms, most notably TikTok, where we are the second most popular sports brand behind the NBA.\nIn order to reach new audiences, we need to expand outside of our ecosystem.\nIn addition to some of the content Nick mentioned, we also have a pop culture strategy where we work to bring celebrities and influencers into our programming as well as casting our superstars outside of our programming.\nSome recent integrations in the quarter included Adam Sandler, Chris Hemsworth, Ken Chong, and just this past Monday, Matthew McConagha was a guest in the ThunderDome on Raw.\nMost importantly, we need a reason to keep our audience coming back for more.\nIn addition to compelling content, people want to invest their time and resources in a brand that has purpose and value.\nWWE continued to support our community partners with the resources they needed to help them deliver on their mission.\nWe quickly transitioned from in-person events to virtual events, including hospital visits, career workshops through Zoom for Hire Heroes to support servicemen and women, virtual anti-bulling rallies with Boys & Girls Clubs of America and digital meet and greets for Wish kids through Make-a-Wish Foundation.\nWe also produced content to support physical and mental health for Special Olympics athletes as well as kid power-up videos for the launch of UNICEF's Kid Power at Home platform.\nAnd during the month of September, we engaged our fan base, employees and superstars to raise money and awareness for pediatric cancer research through our partnerships with the V Foundation and Hyundai Hope On Wheels.\nSpeaking of partnerships as a final measurement of our brand strength, our advertising and sales revenue outpaced industry trends.\nTop global brands continued to partner with WWE throughout the year even during the challenges with COVID, highlighted by companies such as Coca-Cola, Cricket Wireless, Hyundai, Mars, Microsoft Studios, Papa John's and Unilever.\nAnd this month, we announced a major new partnership in the beer category with Constellation Brands, the largest beer import company in the United States, focusing on their Victoria, Corona and Modelo brands beginning next year.\nIn 2021 and beyond, we remain bullish about the opportunity to focus on long-term partnerships and capitalize on our unique ability to bring engagement, scale and reach with the ease of negotiating with one party, WWE.\nWow, I wouldn't want to follow that.\nToday, I'll review WWE's financial performance, liquidity and capital structure and business outlook.\nAs a reminder, all comparisons are versus the year ago quarter, unless I say otherwise.\nWWE generated third quarter revenue of $221.6 million, up 19% and adjusted OIBDA of $84.3 million, up more than 2 times, both were driven primarily by higher rights fees from U.S. distribution agreements.\nAlthough government mandates continue to result in the cancellation of live events, WWE offset the absence of ticket sales with a reduction in event-related production expenses and other short-term cost savings.\nDuring the quarter, WWE executed a reduction in force, resulting in severance expense of $5.5 million.\nGiven the nonrecurring nature of this expense, it has been excluded from adjusted OIBDA.\nLooking at the WWE media segment, adjusted OIBDA increased approximately $60 million to $101.7 million, primarily due to higher domestic rights fees for Raw and Smackdown programs.\nDespite a challenging environment, WWE continued to produce a significant amount of content, more than 550 hours of programming for television, streaming and social digital platforms.\nAs Stephanie mentioned, with the launch of WWE ThunderDome in August and the Capitol Wrestling Center in October, WWE continues to lead the sports and entertainment industry with innovative ways to safely recreate the interactive in-arena atmosphere that has been a staple of WWE events for decades.\nThis investment in a large-scale virtual experience brings a high level of production excitement and, most importantly, brings our fans back into the show.\nAlthough third quarter ratings for Raw and Smackdown declined 29% and 2%, respectively, they showed improvement from July to September.\nAnd they achieved this result despite unprecedented competition from the return of major sports, such as the NBA, NFL, MLB and including playoffs and Premier events, such as the Kentucky Derby and the Indy 500.\nMeanwhile, while delivering Raw, Smackdown and NXT on television, WWE announced the continued second season of Miz & Mrs on USA Network and the sixth season of Total Bellas on E!\nAnd reaching beyond television, WWE also produced original content for social and digital platforms.\nIn partnership with Hyundai, WWE launched DRIVE FOR BETTER series, which is posted on WWE's digital platform and Superstars social media channels.\nAnd WWE debuted the podcast Uncool with Alexa Bliss, which is available on all major audio streaming services.\nAdjusted OIBDA from live events declined by $1.2 million to a loss of $4.1 million due to a $22.5 million decline in live event revenue.\nThese declines were primarily due to the loss of ticket revenue resulting from the cancellation and/or relocation of events.\nUntil mid-March, WWE held arena and stadium-based events in front of ticketed audiences.\nDuring the third quarter, however, WWE held no such events.\nAt this time, it is challenging to predict when ticketed live events will return, but our intention is to return as quickly and safely as possible.\nNotably, the increase in e-commerce offset the absence of venue merchandise sales.\nDuring the third quarter, WWE continued to introduce new products, expanded video game portfolio and develop partnerships across product categories.\nThe strong e-commerce business was driven by the release of six new title belts, including the Ric Flair Signature Series and by the launch of two targeted sites, WWE Legends and UpUpDownDown.\nLicensing revenue reflected a 25% sales increase from the franchise game, WWE 2K20 and continue to benefit from the build-out of WWE's video game and toy portfolios.\nWWE partnership partnered with Wargaming to launch World of Tanks: SummerSlam and with Take-Two to launch WWE 2K Battlegrounds.\nWWE also partnered with Metal to release WWE Slambulance!\n, which immediately became a top WWE product at Target and Amazon.\nAs of September 30, 2020, WWE held approximately $638 million in cash and short-term investments.\nThis includes $200 million borrowed under WWE's revolving credit facility to ensure the necessary capital to execute the company's strategy and deliver long-term value to our shareholders.\nIn the third quarter, WWE generated approximately $111 million in free cash flow, an increase of $127 million.\nThis increase was driven by improved working capital and the timing of collections associated with large-scale international events, stronger operating performance and, to a lesser extent, lower capital expenditures.\nAnd finally, a word on WWE's business outlook.\nThe spread of COVID-19 and the related government mandates have directed WWE to cancel, postpone or relocate live events since mid-March.\nWWE is continuing to adapt the business to the changing environment by investing to enhance content production value and deepen fan engagement, with examples of this being the creation of WWE ThunderDome and Capitol Wrestling Center.\nWith regard to fourth quarter performance, WWE anticipates that fourth quarter 2020 adjusted OIBDA will be below third quarter 2020 results.\nWWE anticipates $40 million to $45 million in incremental fourth quarter expenses versus the third quarter.\nThis is due to $22 million to $27 million from, one, incremental production expenses associated with the creation of WWE ThunderDome and Capitol Wrestling Center; and two, incremental personnel expenses associated with employees returning from furlough.\nBoth of these are expected to continue in the coming year.\nAlso contributing to the incremental increase in expenses is that WWE booked $18 million in production incentives in the third quarter 2020.\nThis is typical timing for the incentives.\nAdditionally, fourth quarter 2020 adjusted OIBDA will likely be below fourth quarter 2019 results based on the absence of an event in Saudi Arabia, the absence of ticketed live events and, to a lesser degree, increases in other fixed costs.\nWWE is currently developing its 2021 operating and financial plan and continues to evaluate the personnel requirements and potential investments needed to support WWE's long-term strategy.\nGoing forward, the potential impact of COVID-19 on WWE's business, which could be material, remains uncertain.\nBased on the sustained economic uncertainties, WWE is not reinstating full year 2020 guidance at this time.\nGiven the lack of visibility, WWE did not buy back any stock in the third quarter under its $500 million stock repurchase program, but may resume activity on an opportunistic basis in the future.\nWWE continues to have significant long-term opportunities.\nAs Nick stated, we believe WWE can develop new content and distribution platforms, introduce new products and increase returns from international markets, and we look forward to sharing progress on these strategies with you in the future.\nChristy, we're ready now.\n", "role": "user" }, { "content": "q3 revenue $221.6 million versus refinitiv ibes estimate of $222.3 million.\nnot reinstating guidance at this time.\nworld wrestling entertainment - qtrly wwe network average paid subscribers were 1.6 million, an increase of 6%.\nanticipates $40 - $45 million in incremental q4 expenses (4q 2020 versus 3q 2020).\ncurrently developing its 2021 annual operating and strategic plans.\nremains challenging to quantify potential impact of covid-19 on its business.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Leading today's discussion are Vince McMahon, WWE's Chairman and CEO; Nick Khan, WWE's President and Chief Revenue Officer; Stephanie McMahon, WWE's Chief Brand Officer; and Kristina Salen, WWE's Chief Financial Officer.\nTheir remarks will be followed by a Q&A session.\nActual results may differ materially, and undue reliance should not be placed on them.\nAdditionally, the matters we will be discussing today may include non-GAAP financial measures.\nYou should note that all comparisons are versus the year ago quarter, unless otherwise described.\nAs you can see, our solid financial results are pretty strong as a result of the global demand of all things WWE, including a return to live event touring, which is unlike any other media company.\nThis is where the WWE brand really comes alive in so many different respects.\nAnd as a result of the strong indication, we're going to -- we're going to raise our guidance, our 2021 guidance.\nAnd that's with the lack of one event in Riyadh.\nNormally we have 2.\nBecause of the COVID situation, we have one at end the year.\nBut nonetheless, notwithstanding, we're raising our guidance, which I think is pretty good.\nWe saw a lot of positive trends, which Stephanie will get to in a minute.\nAnd -- but even with the strong recovery, it's opened or eyes to many more ways that we can take advantage of our IP and the evolution of sports entertainment.\nIt's nice to speak with you all again.\nThis quarter, I'd like to first offer perspective on our Media segment, hitting on both near-term opportunities as well as our long-term position in a marketplace that continues to put a premium on live rights.\nAfter an update on media, I will run through a number of deals we closed over the past quarter that have created new revenue streams for WWE and increased the value of existing ones.\nLooking first at near-term media rights opportunities.\nWe have two key negotiations in our sites that will drive value for our company.\nThe first is our RIA rights for Raw on Hulu, which expire in the back half of 2022.\nThe second is the licensing of our direct-to-consumer service, WWE Network, in international markets, which we have discussed previously.\nA competitive landscape has already formed around both initiatives.\nIn terms of the Raw RIA rights, we know from the data that there is a substantial and recurring audience who watch the program via delayed viewing week-to-week on Hulu.\nWhen we closed the Hulu deal in 2018, the media landscape was quite different, as we all know.\nNBCU was an active owner of Hulu, and Peacock was just a nascent dream.\nWe now all know that in a 2021 world, NBCU is a passive Hulu owner and barring exigent circumstances, NBCU's stake will be bought out by Disney at Hulu's 2024 valuation.\nLet's keep in mind what we all know.\nIn addition to Disney's initial Hulu ownership percentage, Disney picked up Fox's ownership stake in Hulu with Disney's acquisition of a large majority of FOX two-plus years ago.\nWe also recently saw executive shifts from Hulu to Peacock, and we believe that in addition to all other platforms looking for event programming that resonates that the battle for Raw's RIA rights will be intense and fun.\nRegarding WWE Network, we continue to execute on a strategy to optimize our value across international markets.\nWe have a model that buyers are responding to.\nAs so many U.S.-based companies look to go international overnight, it sets up a competitive global landscape that none of us have seen over the course of our careers.\nWe continue to believe that will garner great results.\nOutside of those media deals tied to our live rights, we are continuing to expand our original programming slate.\nThis quarter, NBCU announced Miz and Mrs would be returning for a third season.\nEarlier in October, we debuted Escape the Undertaker on Netflix, an innovative interactive show featuring WWE Superstars.\nsix months ago, we merged our content units into one place, WWE Media.\nWe recently completed a children's animation scripted project with a streamer and will soon announce a slew of scripted and unscripted programming that demonstrates the weight of our content pipeline.\nThis is an area that will continue to be a priority for us.\nWe recognize these productions not only generate meaningful economic returns for our company, but that they also expand WWE's brand and help us establish relationships with myriad media companies while making sure that our programming remains young and diverse.\nAll of this is directly related to our next U.S. rights negotiations.\nWe are as bullish now on those rights as we were when we went into the prior negotiations, which saw an increase in the U.S. from 130 million a year AAV to 470 million a year AAV for Raw and SmackDown.\nWe have previously discussed numerous deals that demonstrate the continued rise in the value of live.\nThese included recently negotiated media rights for the NFL, NHL, Major League Baseball, the SEC, La Liga and Wimbledon.\nMedia rights that are coming up for renewal are also drawing interest from new buyers, which is expected to further the trend of meaningful increases for those rights.\nAs an example, we know the English Premier League is looking to get $300 million a year annually versus U.S. rights, doubling the $150 million a year average annual value currently paid by NBCU.\nThat bidding process is expected to be highly competitive, due in large part to the combination of traditional buyers and new buyers like Amazon, ESPN Plus and Peacock.\nThey're all looking for live with dedicated fans to quickly build up their subscriber bases.\nYesterday, Fox announced on its earnings call that they closed a multiyear deal with UEFA for its next two European Championships in 2024 and 2028 and for over 1,500 soccer matches, a rights package in excess of which Disney currently pays for its portion of it.\nWe have all read the rumors of Fox partnering with Fubo, a virtual MVPD on this rights deal.\nWith this sort of tonnage, that partnership made complete sense to us, creative and smart.\nLive continues to dominate linear while helping to build other platforms, and we are seeing scripted content continue to migrate to streamers.\nBoth Apple TV and Amazon have been considered front runners for the NFL Sunday Ticket package.\nTed Sarandos has publicly expressed that Netflix would rather buy than run sports properties.\nHe seemed to be referring to Formula One coming off of the success of their Drive to Survive program.\nSpeaking of Netflix, we have seen early cuts of our upcoming Vince McMahon multipart Netflix documentary, which is executive produced by WWE and Bill Simmons, who did the acclaimed Andre the Giant documentary with us.\nThe Vince cuts are out of this world, amazing.\nWait until you see it.\nAs it relates to Bill Simmons, who some have referred to as the godfather of podcasts or the pod father, this past quarter, we closed the deal with Spotify and The Ringer for Spotify to become the exclusive audio network of WWE.\nThe partnership jump starts us in this all-important space while allowing us to leverage the resources and reach of Spotify and its 165 million subscribers.\nThat partnership was announced this past August at SummerSlam when The Ringer hosted live shows for our fans in Las Vegas.\nWe're confident that with Spotify's expertise alongside our library of intellectual property and our talent that we will deliver an audio product that excites existing fans while also introducing WWE content to the millions of Spotify listeners.\nI would also like to discuss some new business with you.\nAs we focus on extracting more value from our IP wheel, further establishing new businesses that expand WWE's brand and drives revenue is a key for all of us.\nWe've had an active quarter creating new revenue streams and increasing the value of existing lines of business.\nOne area we've spent the last year examining is our strategic approach to pay-per-views.\nWe've looked into all parts of that business that are making adjustments that we believe will enhance our results by making each pay-per-view a special event not only in its content, but in all things surrounding each event.\nAs promised last quarter, we recently announced our pay-per-view calendar for 2022, the dates, cities, venues.\nFor the first time in our history, we're hosting at least four pay-per-view nights in stadiums in the United States.\nFirst, Royal Rumble on January 29 at the Dome at America's Center in St. Louis, a Saturday night, where there is no real competitive programming on the sports calendar.\nTypically, we have done Royal Rumble a week later during Pro Bowl weekend.\nHowever, this year, we wanted to support our NBCU partners and not go up against the Winter Olympics.\nThus far, ticket sales are off the charts, tracking as well as this year's SummerSlam, where we ended up with a gate four times the gate of SummerSlam 2019, a clear sign of the value of bringing our tentpole events to major venues on the right night.\nNext, in terms of stadium events, a 2-night WrestleMania at AT&T Stadium in Dallas, Saturday, April two and Sunday, April 3.\nIn 2016 at AT&T Stadium, we had over 100,000 fans in attendance for WrestleMania.\nLet's see what two nights brings for our Super Bowl.\nTickets go on sale next week.\nOur stadium event after that, another on of our big five pay-per-views, Money in the Bank, the weekend going into July 4, will be back at Allegiant Stadium in Las Vegas.\nOver 400,000 people are expected to travel to Las Vegas that weekend to celebrate the Fourth.\nWe expect to see many of them at Money in the Bank.\nAbout a month later, SummerSlam at Nissan Stadium in Nashville, again on a Saturday, July 30.\nIf you've been to Nashville in the summer on a weekend, it's booming and growing, and we are growing SummerSlam with it.\nWhat we found from this past SummerSlam in Las Vegas, of the 50,000 plus who attended, not one ticket was purchased from Tennessee, not 1.\nSo many similarities between those two cities on the weekends, not much crossover between those two cities on the weekends and a robust ticket buying market in each for us to tap into and grow with.\nOne other item to highlight relating to our pay-per-view events.\nFor the first time, we're holding an event on the night of New year's Day from State Farm Arena in Atlanta.\nAs we discussed previously, this upcoming New year's Eve is a Friday.\nBoth college football playoff games are on that Friday.\nUsually the NFL will go to a Saturday and Sunday schedule once the college football regular season is over.\nThat is no longer happening on Saturdays late in the season with the NFL's new 18-week regular season, and over 350,000 people are expected in Atlanta for that New year's weekend.\nWith the removal of NFL competition and the city packed with visitors, we thought it might be smart to have an event there the next night, again, Saturday, January 1.\nWe expect to benefit from all of those weakened guests looking for entertainment the night after New year 's eve.\nYou may recall seeing Atlanta Hawks NBA All-Star Trae Young interfere in one of our matches at Madison Square Garden in September, all part of our Atlanta strategy.\nLook for more integration like that across our product.\nAnother area where we've strategically pivoted in an effort to further grow our business is with a new trading card partner, Panini.\nAs all of you know, the trading card market is booming right now with a handful of companies competing for a select number of deals with the top sports properties.\nWe received multiple bids from those companies.\nPanini, with their expertise, doggedness and domestic and international knowledge, proved out to be the best partner for us in this space.\nThe deal is considered -- is a considerable financial step up from our previous trading card deal.\nWe also recently announced a new multiyear agreement with Fox to launch an NFT marketplace for licensed digital WWE tokens and collectibles.\nFox is obviously our existing partner in the U.S. for SmackDown.\nAnd coming out of the pandemic, we've been able to spend considerable in-person time with Fox's senior executive team to think of additional ways to work together.\nAs Lachlan Murdoch, Fox's Executive Chairman and CEO, said on their earnings call yesterday relating to Fox and WWE together in the NFT space, this type of deal will drive new business and the creative and entrepreneurial spirit in all of it.\nThis new collaboration will create authentic NFTs that showcases WWE's catalog of digital assets, including iconic moments, legendary superstars and premier events such as WrestleMania and SummerSlam.\nWith our wholly owned intellectual property, we have a competitive advantage in our ability to leverage the immense popularity of NFTs as well as the activities surrounding trading cards and other collectibles.\nIt's been a busy quarter with a sustained focus on strengthening our existing businesses and establishing new revenue streams.\nShe will cover a number of items, including our significant growth in sponsorship over the past year.\nAnd unfortunately, everyone, I have to start with some bad news.\nWWE Superstar The Miz was eliminated from Dancing With the Stars this week.\nHe did make it to the top 10, and his weekly appearance was seen by nearly six million viewers on ABC, raising awareness for both Miz and WWE.\nAs Nick mentioned, we are changing from an arena-based touring model to a stadium-based touring model, allowing us to better align all lines of business around our key tentpole events.\nFor example, SummerSlam was held at Allegiant Stadium, the first time SummerSlam has ever been held in an NFL stadium, attracting a record 51,000 fans and drawing a record gate.\nAs Nick mentioned, more than 4 times greater than the last SummerSlam held with fans in 2019.\nMerchandise was up 155% year-over-year and more people watched SummerSlam across Peacock and WWE networks than any other SummerSlam in WWE history, with a viewership increase of 55% from 2020.\nSummerSlam also marked the finish of The Summer of Cena, a strategic move to use one of our biggest superstars to help kick off our return to live events that began on July 16.\nJohn Cena became our top-selling talent for merchandise, especially with youth audiences, and he increased ratings for audiences two to 17 and 18 to 49 by 20% and 10% during his appearances on Raw and SmackDown.\nAn Instagram video featuring Cena became WWE's most watched native Instagram video with 4.3 million views.\nAnd while The Summer of Cena came to an end at SummerSlam, we began new storylines by surprising the audience with the return of The Man, Becky Lynch, and the Beast Incarnate, Brock Lesner.\nBrock's return broke Cena's Instagram record at 4.5 million.\nSales and sponsorship revenues for SummerSlam were up 18% year-over-year and 25% over 2019, featuring our first-ever official water with Blue Triton's Pure Life and our first-ever official beer with Constellation's Victoria beer brand.\nWe also had an array of sponsors across betting, gaming, wireless, energy and credit card categories with DraftKings, 2K, Cricket Wireless, Cellucor C4 and Credit One.\nJust as WWE's overall business is nearly 80% contractual, we have shifted our sales and sponsorship strategy from transactional to contractual, pivoting to multiyear seven-figure deals.\nIn 2021, the number of these deals has increased 60%.\nAdditionally, our client spend has increased 44% year-over-year with over 50% returning partners.\nIn the quarter, gross sponsorship sales are up over 20%, excluding a 2020 YouTube bonus payment and partnership allocation.\nTo help give perspective, there are four key areas of growth across sales and sponsorship: content integrations, superstar brands, digital, social and international.\nIn terms of content integration, would you ever see a Pure Life truck drive into Arrowhead Stadium in Kansas City and have Patrick Mahomes spray down fans with a Pure Life branded Super Soaker as part of a touchdown celebration?\nOr have zombies replace the offensive line for one down?\nMy guess is no.\nBut you can in WWE and because we have all the exciting action of a live game but are scripted like a great movie, we can write those integrations in ways that are fun and memorable for the audience and our partners.\nOr we can leverage our creative writing and media teams to create customized content across digital and social media that is relevant to that platform, like we did with P&G's Old Spice when we introduced a new WWE Superstar with the same name as their new scent, the Night Panther.\nWe produced 16 pieces of original content that delivered over 0.5 billion impressions and 40 million views with 96% of our audience saying they would take action toward Old Spice.\nIn terms of Superstars, the best comparison I can think of is Disney's Marvel Superheroes.\nEach Superhero is their own individual franchise and WWE has just begun to unlock some of our incredible IP, which dates back generations with each Superstar being their own brand with their own story.\nOur biography series with A&E is one example.\nXavier Woods' UpUpDownDown YouTube gaming channel is another.\nBecky Lynch on the cover of Golden Crisp or The Miz with his own reality show are just a few examples.\nAnd international sales are just getting up to bat as we focus on creating more localized content.\nAdditionally, engagement metrics continue to be strong for WWE, with a slight increase in television ratings for both Raw and SmackDown despite tough competition from the return of live sports.\nDigital consumption increased to a quarterly record of 410 million hours, and video views increased 38% to 12.8 billion as compared to a prior year period that had benefited from COVID-19-related viewing trends.\nAnd with our renewed emphasis on producing more content for emerging platforms and younger audiences, our video views on Snapchat and TikTok are up 22% and 29%, respectively, year-over-year.\nSpeaking of TikTok, while it is a tight race, we are the number one sports brand on TikTok over the NBA with 14.5 million followers.\nWith the continuing focus on innovation and interactivity, WWE was recently announced as one of three launch partners with Snapchat's new augmented reality division, Arcadia, in which we will be creating fun and unexpected AR experiences for fans at upcoming events.\nAnd I would be remiss if I didn't recognize how excited we are for the launch of our console game 2K 22 in March 2022.\nOn yesterday's earnings call, Take-Two President Karl Slatoff said it will be the biggest WWE 2K launch to date.\nWe are pleased with our overall performance in the quarter, highlighting our ability to deliver on strategic initiatives, captivate a passionate audience and drive value for our business partners and shareholders.\nToday, I will discuss WWE's financial performance.\nAs a reminder, all comparisons are versus the year ago quarter, unless I say otherwise.\nIn the third quarter, WWE generated solid financial results as we focused on optimizing our return to live event touring, driving fan engagement and increasing efficiency in our content production.\nTotal WWE revenue was $255.8 million, an increase of 15%, driven by higher ticket and vending merchandise sales associated with our return to live event touring, including SummerSlam.\nAdjusted OIBDA declined 8% to $77.9 million as the growth in revenue was more than offset by higher television and event-related production expenses.\nLooking at the WWE Media segment.\nAdjusted OIBDA was $85.6 million, a decline of 16%, primarily due to the increase in production expenses, which I just described.\nThat increase reflected in part the lower cost of producing televised content from our training facility in the prior year quarter.\nMedia segment revenue increased slightly as the contractual escalation of WWE's core content rights fees from the distribution of Raw and SmackDown were partially offset by a decrease in network revenue.\nThe latter was driven by the timing of license fees associated with the delivery of WWE Network content to Peacock as compared to the recognition of subscription revenue in the prior year quarter.\nIn mid-July, we transitioned our television and pay-per-view production from the Yuengling Center in Tampa Bay to the arenas and stadiums that are part of our touring model.\nRecall that in the third quarter of 2020, we were producing a barebones production out of our performance center in Orlando for much of the quarter until we established our WWE ThunderDome experience in late August 2020.\nThese changes in venue were the primary determinant of the year-over-year increase in production expense.\nLive Events adjusted OIBDA was $9.3 million, an increase of more than 3 times or $13.5 million due to a 39 times increase in revenue with the return to live event touring, including the staging of SummerSlam.\nRecall that in the year ago quarter, we staged no live events or ticketed fare.\nAs we said, we are thrilled by the return to live event touring.\nDuring the third quarter, average attendance for our 38 events in North America was significantly above 2019, reflecting heightened consumer demand for our live events.\nAnd for the fourth quarter, we continue to anticipate ticket demand and profit per event that is at least on par with 2019.\nIn our Consumer Products business, we've continued to develop new partnerships and products as we align with evolving consumer preferences, including the tremendous interest in NFTs, trading cards and memorabilia.\nEarlier, Nick described our newly formed partnership with FOX in the NFT space and Panini.\nImportantly, he also extended our global master toy licensing agreement with Mattel, a partner whose popular WWE action figures and other toy products comprise a meaningful share of our licensing revenue.\nDuring the third quarter, WWE generated approximately $45 million in free cash flow, declining $66 million primarily due to the timing of collections associated with our large-scale international events in the prior year quarter and to a lesser extent, an increase in capital expenditures.\nNotably, during the third quarter, WWE returned $31 million of capital to shareholders, including approximately $22 million in share repurchases and $9 million in dividends paid.\nTo date, we've repurchased approximately $200 million of stock, representing approximately 40% of the authorization under our $500 million repurchase program.\nAs of September 30, 2021, WWE held approximately $449 million in cash and short-term investments.\nDebt totaled $221 million, including $200 million associated with WWE's convertible notes.\nThe company has no amounts outstanding under its revolving line of credit and estimates related debt capacity of approximately $200 million.\nAnd finally, a word on WWE's business outlook.\nIn January, WWE issued adjusted OIBDA guidance of $270 million to $305 million for the full year 2021.\nDuring this third quarter, key performance metrics demonstrated positive trends, and we continue to realize heightened demand for live events and better-than-expected television production efficiencies.\nBased on outperformance to date and revised expectations for the full year, we are raising our guidance.\nAdjusted OIBDA is now expected to be within a range of $305 million to $315 million with the staging of one large-scale international event.\nThe revised full year guidance implies fourth quarter adjusted OIBDA of $75 million to $85 million as compared to $51.2 million in the fourth quarter of 2020.\nThe projected year-over-year growth reflects the impact of staging one large-scale international events, which we were unable to stage in the fourth quarter of last year, contractual increases in media rights and higher revenue and profits from the return to live event touring.\nThese factors are partially offset by an expected increase in operating expenses.\nTurning to WWE's capital expenditures.\nThrough the first nine months of 2021, WWE has incurred about $24 million in capital expenditures, primarily to support our technology infrastructure and restart the construction of our new headquarters.\nWhile we continue to anticipate increased spending in the fourth quarter to support these initiatives, we also anticipate lower capital expenditures during the remainder of the year than previously estimated.\nFor the full year 2021, total capital expenditures are expected to be within a range of $60 million to $75 million, lower than the previous guidance of $85 million to $105 million.\nThe revised range does incorporate some potential supply chain disruption and associated potential timing-related changes in spending.\nIn the third quarter, WWE generated better-than-expected revenue and adjusted OIBDA results.\nThe robust demand for our events and increased consumption programming across platforms highlights the strength of our brand and reinforces our belief that continued innovation can enhance the value of our content and our products.\n", "role": "user" }, { "content": "q3 revenue rose 15 percent to $255.8 million.\nraises full year 2021 guidance.\nsees fy adjusted oibda within $305 million to $315 million with staging of only one large-scale international event.\nfor full year 2021, total capital expenditures are expected to be within a range of $60 million to $75 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Leading today's discussion are Vince McMahon, WWE's Chairman and CEO; Nick Khan, WWE's President and Chief Revenue Officer; Stephanie McMahon, WWE's Chief Brand Officer; and Kristina Salen, WWE's Chief Financial Officer.\nTheir remarks will be followed by a Q&A session.\nActual results may differ materially and undue reliance should not be placed on them.\nAdditionally, the matters we will be discussing today may include non-GAAP financial measures.\nAs you can see we're generating some pretty strong financial results in a very challenging environment.\nWe continue to produce content, we never missed a week in terms of producing content.\nIt shows the flexibility and our commitment to our audience, which we will always have.\nWe transitioned our flagship programs through our training facility.\nAnd then of course, to the Amway Center and then continued on to to what -- to something we called the ThunderDome was a great name, any event, it's a -- most of you have seen it.\nAnd there's nothing like it on television allows us to have live fans.\nThey're just not in seats.\nAnd some of the other things I do want to mention.\nCertainly, we -- our multi-year agreement with NBC U is on the big box service.\nTo my knowledge, I don't think there's any really big deal that's been announced ever since the COVID stuff began.\nI really think that's pretty extraordinary on their part, and definitely on our part as well.\nAnd again, we just -- this agreement is really awesome for our WWE fans, our W Universe, as we call it, it's just gives them more -- more value, not just the WWE 999, which is a great value for what we do.\nBut then again, they for less money, they pick up our, our network, as well as all sorts of entertainment.\nSo it's great for our fans.\nI think that Nick and Stephanie and Kristina are going to provide a little more perspective on this development.\nLooking ahead to 2021.\nNow, we expect to continue to manage the challenges of the COVID environment, and it continues on.\nWe no doubt will expect a gradual return to ticketed audiences.\nAnd that is something that, sure, OK, we have live events, but live events make any money, you're going to get 20% capacity, 30%, 50%, whereas you breakeven, and so best to be determined by anyone who's in the live event business and hardly anyone has a handle on exactly when that's going to happen.\nNonetheless, we are ready.\nWe are the most flexible, adaptable media company in the world.\nWe can turn something around as far as a live event in six weeks.\nAnd it just speaks to our ability to innovate as a media company and continue to, in this current environment, create long term value.\nSo that's generally pretty much where we are.\nAnd, Nick, take it away.\nA week and a half ago, we made what we believe was a big announcement regarding WWE and Peacock.\nStarting on March 18, the entire WWE Network and its content will shift to Peacock in the United States.\nThis includes WrestleMania, our vast library and all of our pay-per-view events, starting with Fastlane on March 21.\nAs part of this partnership, WWE will maintain access to valuable audience data.\nAs we all know, Peacock is free to Comcast, Xfinity and Cox Cable customers.\nSo watching Fastlane and subsequently WrestleMania on April 10 and 11th will be free to all of those consumers.\nAdditionally, WWE Network will be available for $4.99 a month on the ad supported Peacock tier, which is half the price that Vince just mentioned, of $9.99 a month.\nThe price we have been charging for WWE Network in the United States and will continue to be no upcharge of any kind, for any of our events.\n499 price is the all in price for our great library and pay per view in ring action.\nIn addition to the office Saturday Night Live, Modern Family to dick wolf franchises, the English Premier League and the Olympic Games.\nI believe the last time we all spoke in October; we collectively discussed how the recent org structure changes at NBC, you and Disney are indicative of the fact that streaming had become a top priority for both companies.\nMany months in advance of those org structure changes, we started to engage in deep conversations with multiple buyers in the marketplace about a potential deal.\nUltimately, we felt like the partnership with Peacock was the right move at the right time for our fans and shareholders.\nIt was Vince McMahon and WWE who were the first movers from closed circuit to pay per view.\nIt was Vince and WWE that were the first movers out of pay per view and into the SVOD world in 2014.\nAnd WWE is now again the first mover from a stand-alone SVOD for partnering with a media conglomerate that has tremendous assets, reach and promotional power.\nWith the Peacock deal closed domestically, our focus now shifts to international markets.\nIn addition to distributing our great domestic content internationally, our focus is to also develop content that is specifically targeted to fans in certain international territories.\nTwo examples of this I'd like to discuss here today.\nWe recently produced a two hour in ring special with our partner in India, Sony, which featured our developing Indian Superstars.\nThe event, which premiered across Sony's platforms on India's Republic Day was available on Sony TEN one, Sony TEN three and Sony MAX, which have a combined reach of 50 million households, as well as on Sony's streaming platform SonyLIV.\nThe event took place at the WWE ThunderDome to an all Indian virtual audience.\nIt was announced in Hindi and English, and incorporated stunning and contemporary elements of Indian culture.\nThe international music sensation known as Spinning Canvas, executed an amazing performance in honor of India's national holiday.\nWe await for live plus seven numbers, which will obviously substantially add to the total viewership number.\nWe believe this event will further grow our product in India, which is already a robust WWE market and demonstrates our commitment to our partner, Sony, and our WWE fans in India.\nThis event is a credit to Vince, Paul Levesque, otherwise known as Triple H and the entire creative and production team who put together this event during a pandemic, while also producing three to four other live in-ring shows a week.\nYou can look forward to more from us in India along these lines.\nThe second area of our international focus is Latin America and localizing content tailored toward that region.\nA key part of our strategy is bringing in authentic talent who resonate with particular international markets.\nYou may have seen or read that on the Royal Rumble pay-per-view this past Sunday, Puerto Rican Superstar Bad Bunny performed his new hit single Booker T, which is based on our WWE Hall of Fame Superstar of the same name.\nAn internationally acclaimed recording artist, Bad Bunny's songs were streamed on Spotify more than 8.3 billion times in 2020, helping to make him the most streamed artist in the world that year.\nThen low and behold, at the instigation of one of WWE's up and coming Puerto Rican stars, Damian Priest, Bunny got physically involved later in the night, setting the stage for future storylines.\nAs of this past Wednesday, this collaboration has led to over 35 million total video views and 2.5 million engagements across YouTube, Facebook, Twitter and Instagram.\nTotal media impressions to date are nearly 170 million, and it was reported on by the top sports and entertainment properties ranging from ESPN to Rolling Stone to Telemundo to TMZ.\nAnd within 24 hours, the co-branded Bad Bunny WWE merchandise became the hottest selling drop we've had on record on our e-commerce platform, WWE Shop.\nAn idea which was born simply from seeing the cover of the New York Times Sunday Magazine last October, has evolved into one of the most engaging pop culture collaborations in our history, with a targeted focus on the Latinx community.\nLook for more of us in the -- look for more of this, excuse me, in the LATAM region.\nIn addition to our work in India and LATAM, we also closed new international deals with IV Media in Korea and Foxtel in Australia.\nAnd in China, we expanded our broadcast footprint, which already included iQiyi, Yoku and PP Sports by launching Raw on Tencent Video.\nLet's also discuss some out of the ring opportunities and deals we are excited about as we continue to expand WWE's brand Beyond The Ring.\nIn terms of original programming from our WWE Studio, we continue to develop our slate.\nAs you may know, WWE used to finance productions.\nWe stopped doing that a few years ago.\nInstead, we're licensing content, both scripted and unscripted, to buyers in the marketplace.\nWe are pleased at how quickly our portfolio has continued to grow.\nA few new developments include a multi episode unscripted series order created by and voiced by John Cena, which will be produced with WWE Studios.\nAdditionally, we have closed the deal for WWE Studios to join the NBC show Young Rock, a long time, long time WWE family member, Dwayne Johnson, and my actual family member, my sister, Nahnatchka Khan.\nThe show premieres on Tuesday, February 16, on NBC.\nAnd finally, as you may be aware, we sent championship title belts to many of the major sports lead teams who have won championships.\nAnd in some cases, our title belts are more popular than their own trophy.\nYou may have seen Lebron James hold up a WWE championship title belt after winning the NBA title.\nThe Golden State Warriors have done the same as well as the Los Angeles Dodgers and many other teams.\nThis led us to close a deal with a major sports league, where you will be seeing WWE championship title belts that will be made using the team logos of some of the most prominent pro sports franchises.\nIt's a real testament to the power of our brand.\nOne of the lessons Vince always taught me in business was to always be slightly ahead of the curve, not so far ahead that people don't understand what you're doing and certainly not behind.\nWWE was ahead of the curve with the advent of pay-per-view, bringing WrestleMania directly into people's homes.\nSocial media allowed one-to-one connection between our superstars and our fans.\nAnd when consumers started migrating to what was then a new short-form platform called YouTube, WWE became one of YouTube's original paid content partners.\nWhen research showed our audience was 5 times more likely to consume online video, we cannibalized our pay-per-view business and launched the first live SVOD service of its kind, WWE network.\nAnd now we're ahead of the curve again, licensing WWE Network, our most premium content, to one of America's premier streaming services, NBCU's Peacock.\nBecause the landscape has changed.\nCOVID-19 and quarantine accelerated a behavioral viewership shift to streaming platforms.\nStreaming behemoths are investing heavily in technology and infrastructure in order to scale with operational efficiencies creating more flexible pricing options.\nAnd the biggest thing all of these providers have in common is the need for branded content.\nIn order to be competitive, we need to pivot away from the technology necessary for an optimum user experience and allocate our resources against what we do best: content creation, production and storytelling.\nAnd we get to do it with a trusted partner we have had for over 30 years, NBCU.\nPartnering with NBCU's Peacock not only provides a greater value proposition for our current subscribers.\nIt also allows us to deliver our most premium content to a significantly larger audience, including the 33 million people who have already signed up for the service.\nAdditionally, this partnership gives greater access to NBCU's best-in-class teams across sales, marketing and promotion as well as some of the most iconic franchises in the United States and around the world.\nJust imagine, with NBCU and Peacock, every three years is a Super Bowl, every two years is the Olympics, and every year is WrestleMania.\nWe believe more than ever in the power of our brand.\nIn 2020, WWE's television viewership held steady once we transitioned out of the Performance Center and invested in WWE ThunderDome.\nIn fact, over the period from August 21 through year-end, which covers our move to the Amway Center and subsequently to Tropicana Field, Raw viewership is essentially unchanged and SmackDown viewership has increased 8% compared to the prior three-month period.\nDuring the fourth quarter, digital views increased an estimated 25% and hours consumed increased 44%, excluding the impact of geographical restrictions in India.\nIn 2020 as a whole, we saw a record 38 billion views and 1.4 billion hours consumed across our AVOD platforms, both representing a 10% increase year-over-year and an 11% increase in revenue.\nIn order to reach new audiences, we maintained our pop culture strategy, bringing celebrities and influencers into our programming and casting WWE superstars outside of our content.\nIn the quarter, Matthew McConaughey's appearance in the ThunderDome and in other WWE content generated five million impressions.\nIn fact, Jimmy Kimmel used the footage from the ThunderDome in an interview with Matthew just this week.\nThe biggest opportunity outside of WWE programming was bar none SmackDown women's champion, Sasha Banks, appearing as a recurring character in Season two of Disney's Mandalorian.\nAnd as Nick already highlighted, this past week, multi platinum artist and award-winning singer song writer Bad Bunny not only performed at the Royal Rumble, he got physically involved, diving off the top rope and then showed up again on Monday Night Raw the next night driving a Bugatti.\nI think it was the first time I've ever seen a Bugatti on Raw.\nBad Bunny, one of the most recognized Latinx performers of our generation said being a WWE Superstar has always been his dream.\nAs a final measure of our brand strength, our advertising and sales revenue outpaced industry trends throughout the year.\nThe quarter was highlighted by an increase in gaming partner activations, including Wargaming World of Tanks, Cyberpunk 2077, 2K Battlegrounds and Microsoft Gears.\nAdditionally, we signed a multiyear partnership with our first banking partner, Credit One, as well as our first official beer partnership with Constellation Brands focusing on Victoria, Corona and Modelo.\nIn fact, if you were watching the Royal Rumble on Sunday night, you would have seen WWE Superstar Rey Mysterio, a lucha legend, wearing the Victoria brand on his mask.\nRey also posted to a 3.6 million followers on Instagram in Spanish about how proud he was to partner with a brand as authentic to the Latino fan base as Victoria.\nForbes, Complex and Sports Illustrated were just a few of the outlets that highlighted this integration.\nAnd 2021 is already off to a promising start, kicking off a multiyear partnership with cricket wireless as the presenting sponsor of the Royal Rumble, a custom content series with first-time partner GM for the rollout of their Silverado campaign and the announcement of Mars' Snickers as the returning sponsor of WrestleMania for the sixth consecutive year.\nWWE is the perfect partner as more and more brands look to engage consumers with customized content creation and authentic influencers.\nWhen you couple that with our over one billion followers across digital and social platforms as well as our broadcast, cable and streaming partners, Fox, USA and Peacock in the states, WWE is poised now more than ever to deliver scale, engagement and reach.\nToday, I'll review WWE's financial performance, liquidity and capital structure and business outlook.\nAs a reminder, all comparisons are versus the year ago quarter unless I say otherwise.\nFor the year, WWE achieved record revenue and record profit.\nWWE's adjusted OIBDA of $286.2 million was at the high end of our rescinded guidance and reflected nearly a 60% increase of more than $100 million.\nThis growth was driven primarily by higher rights fees from WWE's U.S. Distribution Agreement.\nThroughout 2020, WWE managed a challenging environment, particularly for producers of live content.\nWe estimate that WWE lost more than $90 million in revenue as a result of COVID-19 restrictions, primarily from the loss of ticket sales and the postponement of large-scale international events.\nWWE never went off the air.\nThis was a remarkable achievement.\nBut it does foreshadow a tough comparison for 2021.\nIn the fourth quarter, the absence of a large-scale international event contributed to a 50% or $56.4 million reduction in fourth quarter adjusted OIBDA, which also reflected lower advertising revenue and higher TV production costs.\nLooking at the WWE's Media segment, adjusted OIBDA decreased 37% or approximately $44 million to $73 million, primarily due to the aforementioned event loss and, to a lesser extent, decreased advertising sales and higher production costs.\nOn December 11, we transitioned the WWE ThunderDome, our state-of-the-art environment for producing Raw and SmackDown to a temporary residency at Tropicana Field in St. Petersburg, Florida.\nIn that stadium setting, we bring nearly 1,000 live virtual fans back to our show and surround them with pyrotechnics, laser displays, augmented reality and drone cameras.\nThis staging increases production costs by approximately 25% per episode.\nWe expect this investment to continue through at least the first half of 2021 as it brings a high level of excitement to our programs and most importantly, brings our fans back into the show.\nDespite a challenging environment, WWE continued to produce a significant amount of content.\nMore than 700 hours of programming in the quarter and more than 2,300 hours for the year across television, streaming and social and digital platforms.\nAs we prepare to transition the WWE Network to Peacock, we continue to utilize on the growth in digital consumption, promoting content sampling and subscriptions with the free version of WWE Network.\nSince the pandemic began WWE subscriptions and consumption have been up meaningfully.\nIn the fourth quarter, 2.2 million total viewers watched content across all tiers, representing a 40% increase and those viewers watched 35 million hours of content, which was 14% higher.\nPerhaps most importantly, average paid subscribers to the network increased 6% to 1.5 million.\nAdjusted OIBDA from Live Events declined by $4.9 million to a loss of $6.7 million due to a $26.7 million decline in Live Events revenue.\nThese declines were due to the loss of ticket revenue resulting from the cancellation of events.\nUntil mid-March, WWE held arena and stadium based events in front of ticketed audiences.\nDuring the fourth quarter, however, WWE held no ticketed events.\nWe are delighted to have announced the return of WrestleMania to Tampa Bay on Saturday, April 10 and Sunday, April 11, 2021 and at Raymond James Stadium with ticket availability and safety protocols forthcoming.\nHowever, it remains challenging to predict the pace at which we will return to a weekly live event schedule.\nWe do not anticipate the staging of other ticketed events until at least the second half of 2021.\nThe drop in video game sales was anticipated as WWE and Take-Two had previously determined to delay the release of WWE's franchise game until 2021.\nWWE continued to introduce new products, expand its video game portfolio and develop partnerships across product categories.\nFor example, during the quarter, WWE continued to build out its video game portfolio, launching WWE Undefeated and WWE Racing Showdown in partnership with Indway and JetSynthesys, respectively.\nAs of year-end, WWE had 140 million installs across its games portfolio.\nDemonstrating our commitment to product innovation, WWE released 2,000 new products on its e-commerce platform including 18 new championship title cells, which generated category growth of more than 100% for the year.\nIn 2020, we generated approximately $292 million in free cash flow, an increase of $240 million.\nThe increase was driven by improved working capital, the timing of collections associated with large-scale international events, stronger operating performance and to a lesser extent, lower capital expenditures.\nAs of December 31, 2020, WWE held $593 million in cash and short-term investments.\nThis included $100 million borrowed under WWE's revolving credit facility which was repaid just in January 2021.\nAnd finally, a word on WWE's business outlook.\nLast week, we issued guidance for 2021 adjusted OIBDA.\nAs previously indicated, WWE expects restrictions related to the spread of COVID-19, particularly related to ticketed live events to continue at least through the first half of 2021.\nAdditionally, we anticipate a significant year-over-year increase in expense due to continued higher TV production expenses at WWE's ThunderDome as well as the return of employees from furlough.\nWe estimate that WWE can achieve 2021 adjusted OIBDA of $270 million to $305 million as revenue growth driven by the Peacock transaction, the gradual ramp-up of ticketed live events, including large-scale international events, and the escalation of core content rights fees is offset by the increase in production and personnel expenses.\nIn our view, the stated 2021 adjusted OIBDA guidance range will be approximately 15% to 20% higher without the ongoing impact of COVID-19, which includes the loss of ticket and merchandise sales of live events and the increased investment in production to further fan engagement.\nTurning to WWE's capital expenditures.\nIn early 2020, and we deferred spending on the company's new headquarters.\nGiven increasing visibility regarding WWE's projected performance and liquidity, we are planning to restart this project in the second half of '21.\nFor 2021, we estimate total capital expenditures of $65 million to $85 million, including funds to begin construction as well as funds to enhance WWE's technology infrastructure.\nWe are in the process of reevaluating the headquarters project, and we will provide further guidance on future capital expenditures when that work is completed.\nFor the first quarter of 2021, we estimate adjusted OIBDA will decline as incremental profits from Peacock and higher content rights fees are more than offset by the absence of ticketed events, including a large-scale international event, and increased production costs.\nThe timing and rate of returning ticketed audiences to WWE's Live Events remains subject to significant uncertainty.\nAnd as such, we are not reinstating more specific quarterly guidance at this time.\nAnd finally, I'd like to take a moment and talk about WWE's financial outlook in a post-COVID world, whenever that may be.\nAs analysts and investors will likely use the ex COVID range of 2021 adjusted OIBDA guidance to estimate future performance, I would note that 2022 and future years will be impacted by a variety of factors.\nCertainly, the contractual escalation of WWE's core content rights fees will continue to be an important source of growth.\nHowever, other factors may temper that growth.\nBased on the accounting treatment of Peacock revenue, for example, we expect the highest incremental impact of the Peacock transaction to be booked in 2021.\nAnother key factor to note in the WWE post-COVID business model is that while TV production costs may decline somewhat in 2022 relative to 2021, costs will likely remain higher than in 2019.\nThis is due to the shift in 2020 to a Monday/Friday production schedule compared to a Monday/Tuesday schedule previously.\nIncremental costs related to this change were masked in 2020 by residency in various locations, particularly in WWE's own Performance Center in the early months of COVID.\nWWE continues to adapt its business to the changing environment.\nAs Vince, Nick and Stephanie indicated, we believe WWE can and will continue to innovate across all business lines as we execute our strategic objectives.\nWe look forward to sharing progress on these initiatives with you all in the future.\nCarina, we're ready now.\n", "role": "user" }, { "content": "world wrestling entertainment - anticipates a significant year-over-year increase in wwe's expense base due to return of employees from furlough.\nestimates can achieve 2021 adjusted oibda of $270 - $305 million as revenue growth.\nworld wrestling entertainment- estimates that stated 2021 adjusted oibda guidance range would be 15% - 20% higher without ongoing impact of covid-19.\nworld wrestling entertainment- estimates of future performance beyond 2021 will be impacted by return of businesses and various other factors.\nmanagement is not reinstating quarterly guidance at this time.\nworld wrestling entertainment - timing and rate of returning ticket audiences to its live events remains subject to significant uncertainty.\ncontinues to believe that wwe has significant long-term opportunities and is well positioned.\ncash, cash equivalents and short-term investments were $593 million as of december 31, 2020.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: On the call today are Blake Krueger, our Chairman and Chief Executive Officer; Brendan Hoffman, our President; and Mike Stornant, our Senior Vice President and Chief Financial Officer.\nThese disclosures were reconciled in attached tables within the body of the release.\nI hope everyone on the call is safe and well.\nE-commerce led the way, growing 84% during the quarter as our global digital strategy continued to deliver results.\nOur two largest brands exceeded expectations with Merrell up nearly 25% year-over-year, and Saucony up nearly 60% in the quarter.\nBoth brands easily beat their 2019 Q1 revenue levels with Saucony up over 75% versus 2019.\nThe Company's international business was up 40% with every region growing over 35%.\nOur DTC channels are outpacing the market and our wholesale order book is very healthy.\nAs we look to the rest of the year, demand for our brands is very strong and we've raised our full year guidance on the strength of this demand and robust outlook.\nFor today's call, I'll start by providing some additional insight on our Q1 performance and then Mike Stornant will detail our financial results, and update you on our financial outlook for the year.\nFinally, Brendan Hoffman will share the latest on our strategic growth priorities, before I conclude.\nIn the first quarter, the Wolverine Michigan group revenue was up 20.1% on a reported basis and up 18.2% on a constant currency basis.\nThe Wolverine Boston group revenue was up 10.3% on a reported basis and up 8.2% on a constant currency basis.\nLet me now focus on key brand performance starting with Saucony.\nSaucony grew revenue nearly 60% and expanded operating margin nearly 800 basis points in Q1, a great start to what we anticipate will be a spectacular year for the brand.\nAll regions delivered strong growth, led by North America and EMEA [Phonetic].\nSaucony.com revenue increased by over 150% driven by compelling digital storytelling and impactful product launches.\nProduct design and innovation remain at the core of Saucony's growth momentum, delivering both superior technical product in trend-right lifestyle collections to the global marketplace.\nThe brand's road running category nearly doubled in Q1 with the launch of new models for several of its biggest product franchises.\nThe new Guide 14 and Kinvara 12 drove significant growth with the Guide more than doubling year-over-year.\nNew colors and collection packs also drove excellent growth and freshness for the innovative Endorphin series.\nSaucony also grew its trail running business with the launch of the Peregrine 11, which received the coveted Runner's World Editors' Choice Award.\nNew product launches that are fueling momentum in the brand's technical product category with existing runners and with the many new enthusiasts to the sport.\nSaucony Originals, the brand's heritage lifestyle sneaker business also grew double-digits in Q1.\nThe brand continues to leverage its Italian product design and marketing hubs to build on its pinnacle positioning and success in Europe with elevated trend right product.\nThe new Jazz Court, a sneaker made with 100% natural materials and zero plastic launched at the end of Q1, driving substantial buzz in social media and immediately becoming the brand's top-selling product on Saucony.com.\nLooking ahead, Saucony will continue its steady introduction of new product launches.\nBoth the new Ride 14 and Freedom 4 launched within the last few weeks and are off to a fast start.\nOver the next several months, the brand will also roll out the next generation of all three models of the Endorphin collection, the Pro, the Speed and the Shift which has quickly become one of its largest franchises.\nThe brand will also introduce the new Triumph 19, a follow up to the award winning predecessor.\nThe momentum in the Saucony business continues to accelerate across both its performance and lifestyle offering.\nRevenue grew nearly 25% in the quarter.\nAll regions delivered increases led by especially strong performance in EMEA.\nNorth America grew double-digits, including DTC with Merrell.com up approximately 135% and Merrell stores comping up 30%.\nMerrell kicked off its Future 40 campaign at the start of the quarter, celebrating the brand's 40th anniversary and amplifying its inclusive commitment to sharing the power of the outdoors with everyone.\nThe brand announced a significant partnership with Big Brothers Big Sisters of America aiming to provide greater accessibility to the outdoors for nearly 200,000 youth.\nMerrell continues to focus on cultivating its well-established product franchises, as well as delivering innovation across new product introductions.\nIn Q1, performance footwear grew by nearly 30% as the brand continued to advance its vision of faster and lighter footwear for the trail.\nBuilding on the unmatched success of the world's number one hiker, the Moab, Merrell launched the all-new Moab speed and Moab flight collections, quickly exceeding sell through expectations, including selling out on Merrell.com and helping to drive very strong double-digit growth for the Moab franchise overall.\nThe Antora 2 and Nova 2 trail runners also continued to perform exceptionally well in the quarter.\nMerrell has a steady stream of new performance offerings scheduled for the remainder of the year.\nMerrell's lifestyle business grew approximately 20% in the quarter driven by the growth of the classic Jungle Moc and newer hydro Moc which more than tripled year-over-year.\nThe brand plans to continue to leverage the easy on-off trend throughout 2021 with new products in the Hydro Moc, Hut Moc and Jungle Moc franchises.\nMerrell is well positioned with both its outdoor performance and lifestyle businesses, and we expect the brand's growth will continue to accelerate going forward.\nOur work business, which represented almost 20% of our revenue in Q1 also delivered significant growth led by Wolverine, up nearly 30% and Cat footwear up over 30% with strong contributions from a couple of our smaller brands.\nWe are the market share leader in the U.S. work boot category which is currently trending with consumers and it's been an important consistent performer for the Company over time.\nWe expect growth in this category to accelerate in Q2.\nTurning now to Sperry.\nRevenue was down approximately 10% in Q1, a continued sequential improvement compared to prior quarters.\nDespite more than $10 million of expected revenue which slid into Q2.\nDuring the quarter, Sperry.com was up 40% and Sperry stores grew more than 20%.\nThe brand's full price business remains very healthy with gross margin expanding nearly 500 basis points in Q1.\nLooking ahead, Sperry is back on the growth path for the remainder of the year.\nSperry possesses unique elasticity across genders, product categories and price points.\nIts new float collection, a fun and affordable injected version of the boat shoe for younger consumers launched at the end of the quarter and quickly became Sperry.com's best selling product introduction in several years.\nThe brand expects to build on the success of the float throughout the year with seasonal drops, including the cozy float collection this fall.\nSperry also plans to capitalize on the easy on-off trend with the launch of the new Moc Sider collection later this summer and to drive energy through several product capsules, leveraging fashion, entertainment and pop culture icon, including collaborations with John Legend, Rebecca Minkoff, and the Netflix hit series, Outer Banks, Good Humor Popsicles Ice-cream and Rowing Blazers.\nBefore Brendan and I share some additional insight regarding our strategic growth priorities, I'm going to hand it off to Mike to review the first quarter financial results in more detail.\nLet me start by providing additional detail on the Company's first quarter performance, and then some insight on our improved outlook for 2021.\nFirst quarter revenue of approximately $511 million represents growth of 16% compared to last year.\nAs Blake pointed out, most elements of our global growth agenda delivered excellent year-over-year growth on the strength of expanding digital platforms and innovative product offerings.\nThis strong growth performance was achieved despite a meaningful shift of customer shipments into the second quarter.\nAdjusted gross margin improved 290 basis points versus the prior year to 44.3%, due to our continued e-commerce expansion and favorable wholesale product mix.\nAdjusted selling, general and administrative expenses of $174.4 million in the quarter were about $23 million more than last year, primarily due to the higher mix of DTC revenue, $8 million of additional investment in digital e-commerce marketing and more normalized incentive compensation costs.\nQ1 adjusted operating margin was 10.2%, an improvement of 330 basis points over last year, as a result of healthy operating leverage.\nNet interest expense was up $1.9 million and the effective tax rate was 16%.\nAdjusted diluted earnings per share were $0.40 compared to $0.28 in the prior year.\nReported diluted earnings per share were $0.45 versus $0.16 last year, and reflect a partial settlement of certain insurance claims related to our ongoing legacy litigation, offset by a legal defense costs and specific COVID related costs.\nLet me now shift to the balance sheet.\nAt the end of the quarter, inventory was down approximately 21% year-over-year.\nOur global sourcing team continues to adjust to the supply chain headwinds, impacting our industry.\nOur inventory position has improved nicely in the second quarter allowing us to fill nearly all of the orders that slipped from Q1 into Q2.\nIn Q1, we generated $26.3 million of cash flow from operating activities.\nThe Company finished the quarter with $506 million less debt compared to the prior year and total liquidity of approximately $1.2 billion, including $365 million of cash on hand and nearly $800 million of revolver capacity.\nOur bank defined leverage ratio continued to improve, ending the quarter at a low 1.5 times.\nI will now provide details on our improved outlook for 2021.\nAs we have shared, the trends in our business remained very encouraging, with revenue assumptions improving since we offered our annual guidance in February.\nOur wholesale order book remains strong.\nOur D2C business is performing well.\nInternational regions have returned to strong growth and our inventory position continues to improve.\nAll of this provides us with a heightened level of confidence as we manage the business and invest in future growth.\nAs a result the Company now expects fiscal 2021 revenue in the range of $2.24 billion to $2.30 billion.\nGrowth of 25% to 28% compared to the prior year.\nAt the high end of the range, this is a raise of $50 million from our original outlook and nicely exceeds 2019 revenue.\nWe now expect reported diluted earnings per share in the range of $1.70 to $1.85 and adjusted diluted earnings per share in the range of $1.95 to $2.10.\nIn the face of unpredictable near term supply chain delays, the Company will continue to invest in air freight to ensure our ability to service the very strong demand we are seeing in the business.\nThese COVID-19 related air freight costs above normal levels are included in our updated guidance and will be adjusted from our reported results for the remainder of the year.\nThe Company is in an enviable position to invest in meaningful growth for 2021 and to continue to drive momentum in our brands.\nWith that, I'm going to hand it over to Brendan to share additional insight on our strategic growth drivers.\nAs we emerge from the pandemic, the power and relevance of our brands is evident as we execute our global growth agenda across the portfolio.\nWith roughly two-thirds of our business in running, outdoor and work, our brands are well positioned in the lifestyle and performance-oriented product categories favored by consumers and macro trends.\nIn addition to the unique positioning of our brand portfolio, our global growth agenda is driving strong momentum through three key pillars.\nFirst, the brand's new product and marketing stories are resonating well with consumers including Sperry's Float, Merrell's Moab Speed and Moab Flight and Saucony's Guide 14, new Endorphin collections and several other new launches.\nOur brands are focused on developing big, innovative and impactful product collections based on consumer insights, trend intel [Phonetic] and testing.\nAnd recent investments in our advanced concepts and innovation Center of Excellence are proving invaluable.\nSecond, our ongoing investments in digital capabilities continues to fuel e-commerce growth, which is exceeding our expectations at this early stage in the year as we track toward our bold revenue goal of $500 million through our brands.com in 2021.\nIn Q1, we leveraged increased digital marketing investments to drive more traffic, richer digital content and storytelling to engage consumers, better merchandising to optimize conversion and additional testing and learning to improve site user experiences.\nThese assets and investments are also helping drive the online business of our global distribution partners and wholesale customers.\nIn the coming months, we anticipate integrating and launching several new innovations and technologies including a Merrell mobile app.\nWe are excited about the substantial runway that remains for our digital business.\nFinally, our international business has recovered quickly from last year's shutdown with every region delivering very strong Q1 growth.\nAs Blake mentioned, our Saucony Italy business and its product design and marketing hub are helping drive upper tier distribution for our fastest growing brands.\nOverall, EMEA continues to outperform and the investments in our Merrell and Saucony JV targeting a significant opportunity for our two biggest brands are beginning to pay dividends.\nOur brands are well aligned with today's marketplace and consumer trends and our global growth agenda is fueling our biggest and most profitable growth opportunities.\nI could not be more excited about 2021 and the future beyond.\nOur strong start to the year is reflective of our intense focus on the consumer and our continued investments in talent, product design and innovation, digital and consumer research and insights.\nThe Company drove meaningful growth in Q1, despite the impact from short-term industry logistic headwinds and we are increasingly optimistic about the year ahead.\nVaccination rollouts appeared to be tracking well, consumer confidence continues to improve and our demand outlook remains very strong.\nOur DTC business is performing well and our wholesale order book continues to provide good visibility to accelerated growth for the year ahead.\nWe are clear on our strategic priorities and enthused about the opportunities in front of us.\nThe Company's strong position is a testament to our team's tremendous vigilance, focus and hard work over the last 15 months.\nThroughout this period, we focused on managing our brands for the post COVID world and continued to invest.\n", "role": "user" }, { "content": "wolverine worldwide raises full-year outlook.\nsees fy adjusted earnings per share $1.95 to $2.10.\nsees fy earnings per share $1.70 to $1.85.\nq1 adjusted earnings per share $0.40.\nq1 earnings per share $0.45.\nsees fy revenue up 25 to 28 percent.\nsees fy revenue $2.24 billion to $2.3 billion.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We will discuss non-GAAP financial measures and a reconciliation of GAAP can be found in the earnings materials on our website.\nAdjusted EBITDA was $1.1 billion, a 68% increase over the fourth quarter of 2020 and a 167% increase compared to the year ago quarter.\nThis represents the highest quarterly adjusted EBITDA on record, surpassing the third quarter of 2020 by 48%.\nI'm extremely proud of the operational and financial results delivered by our team, notwithstanding winter weather interruptions and supply chain challenges throughout the quarter.\nThe hard work we've been doing over the last several years has positioned us well to capitalize on these current favorable market conditions and we remain focused on delivering superior value for our shareholders.\nNancy brings more than 20 years of leadership and financial and operating roles across a broad range of industries.\nShe's hit the ground running and we're excited for the energy and expertise she is bringing to Weyerhaeuser and our leadership team.\nWith Nancy now on board, Russell Hagen has fully transitioned in his new role as Chief Development Officer.\nI'm confident this organizational change will deliver meaningful portfolio management benefits as we align our Real Estate Energy and Natural Resources, acquisitions and divestitures and business development activities under one umbrella.\nI am equally excited for the work this team is doing to support the company's increasing focus on emerging carbon and other natural climate solutions opportunities.\nIn a moment, I'll dive into our first quarter business results, but first let me make some brief comments on the housing market.\nFirst quarter housing starts averaged 1.6 million units on a seasonally adjusted basis, an improvement of 2% over the fourth quarter.\nActivity dipped briefly in February, driven by severe winter weather, but March activity rebounded sharply March housing starts totaled 1.7 million units on a seasonally adjusted basis, the highest level since 2006.\nSingle family starts in March, reached the highest rate for any month since June of 2007 at nearly 104,000 units.\nAdditionally, housing permits in the first quarter average nearly 8 million units on a seasonally adjusted basis, surpassing last quarter by 10%, and surging to its highest quarterly average since before the great recession.\nContinued improvement in this key leading indicator points to increasing demand for new home construction in 2021.\nWith these encouraging tailwinds, our housing market outlook is very favorable and further supported by macroeconomic fundamentals that will continue to drive strong US housing activity, including record low supply of new and existing homes for sale, strong homebuilder sentiment, favorable demographic trends, flexible work arrangements, driving increased mobility and migration to the suburbs, higher savings rates, and continued post COVID improvements in GDP and unemployment.\nRepair and remodel activity also remained robust in the first quarter.\nSupported by rising home equity additional federal stimulus and limited resale inventory.\nFeedback from our customers indicates a shifting trend from small do-it-yourself projects to larger professional remodels.\nWe expect repair and remodel demand to remain strong throughout 2021 as project backlogs continue to expand.\nWe are keeping an eye on certain cautionary factors including the impacts of increasing home prices and mortgage rates on affordability and challenges for homebuilders resulting from rising material costs, supply chain disruptions and labor availability.\nHowever, we do believe the supportive fundamentals considerably outweigh these headwinds.\nWith the additional prospect of a federal infrastructure bill and growing demand for mass timber, we anticipate very favorable demand for wood products for the foreseeable future.\nTurning now to our first quarter business results.\nI'll begin the discussion with Timberlands on pages 6 through 8 of our earnings slides.\nTimberlands contributed $108 million to first quarter earnings.\nAdjusted EBITDA increased by $5 million, compared to the fourth quarter.\nTurning to Western Timberlands starting with domestic market conditions.\nDemand remained strong throughout the quarter as mills maintained healthy log inventories to capitalize on record lumber prices.\nLog supply in the first quarter continue to improve as salvage harvest activity in Oregon increased substantially.\nSimilar to the fourth quarter, salvage operations resulted in an abundance of smaller diameter logs in the market.\nThis in turn is driving stronger demand and pricing for larger diameter logs.\nOur fee harvest volume was comparable to the fourth quarter and our proportion of salvage volume increased significantly.\nAverage domestic log sales realizations were slightly lower than the fourth quarter as salvage operations resulted in a greater mix of smaller diameter logs.\nWe continue to make great progress on our 2021 salvage plan.\nAnd as of the end of the first quarter, we've harvested approximately 40% of our planned salvage volume.\nWe did not experience any downgrades in realizations on our salvage logs during the quarter.\nLog and haul costs increased slightly during the first quarter due to increased salvage activity and forestry costs were seasonally lower in the quarter.\nTurning to our export markets.\nIn Japan, demand for our logs remained strong in the first quarter.\nReduced lumber imports into Japan, resulting from strong US domestic lumber markets and a global shortage of shipping containers, allowed our customers to increase market share and drove stronger demand for our logs.\nOur Japanese log sales volumes increased moderately compared to the fourth quarter with a slight increase in realizations.\nSimilar to Japan, the market for US logs in China, remained strong in the first quarter as supply headwinds persisted, including lower overall lumber import volumes, a lack of container availability and restrictions on Australian log imports.\nLog inventories at Chinese ports increased in February as manufacturing activity paused over the Lunar New Year period, but were drawn down rapidly in March as strong take away resumed.\nAverage realizations for our China export logs increased modestly compared with the fourth quarter, but this was offset by higher ocean freight rates.\nOur sales volumes to China decreased significantly as we intentionally flex volume to the domestic market to capitalize on the strong pricing for our large diameter logs.\nMoving to the South.\nSouthern Timberlands adjusted EBITDA increased $5 million compared with the fourth quarter.\nSouthern sawlog market strengthened in the first quarter as record lumber and panel pricing drove strong demand and supply was limited by severe winter weather and seasonally wet conditions.\nFiber markets also improved as demand increased following the fourth quarter maintenance outages by many of our pulp log customers.\nOur fee harvest volume was slightly lower than the fourth quarter as we lost several operating days due to the snow and ice in February.\nAverage sales realizations were slightly higher than the fourth quarter due to improved sawlog and fiber log realizations as well as favorable mix.\nRoad and forestry costs decreased seasonally.\nOn the export side, we continue to see growing demand from both China and India.\nSouthern export log pricing increased substantially in the first quarter but volumes were comparable to the fourth quarter as container availability and increased freight rates were notable headwinds.\nNorthern Timberlands adjusted EBITDA increased $1 million compared to the fourth quarter due to improved sales realizations for hardwood logs.\nTurning to Real Estate Energy and Natural Resources, Pages 9 and 10.\nReal Estate ENR contributed $66 million to first quarter earnings and $96 million to adjusted EBITDA.\nFirst quarter adjusted EBITDA was $73 million higher than fourth quarter due to timing of transactions.\nSimilar to 2020, our 2021 real estate sales activity is heavily weighted toward the first half of the year.\nAverage price per acre was down significantly compared to the unusually high fourth quarter, but still substantially higher than one year ago.\nAs was the case in fourth quarter, first quarter included a number of high-value retail -- retail transactions in the US South.\nWood products, Pages 11 and 12.\nWood Products contributed $840 million to first quarter earnings and $889 million to adjusted EBITDA.\nFirst quarter adjusted EBITDA was 68% higher than the fourth quarter and surpassed by 45% the previous quarterly record, which was established in the third quarter of 2020.\nOur lumber, OSB, and distribution businesses delivered the highest quarterly adjusted EBITDA on record during the first quarter.\nDemand remained extremely strong across our product lines with continued strength in the new residential construction and repair and remodel end markets.\nThe framing lumber composite entered the first quarter near the record levels achieved in the third quarter of 2020.\nAfter a slight pullback in January, prices reentered record territory and continued to increase as the quarter progressed, notwithstanding a low-end consumption in the south following the severe winter weather event in February.\nInventory and the distribution channels remained lean throughout the quarter as buyers delicately balanced their need to replenish inventory with buying at record high price levels.\nAverage lumber composite pricing increased 41% compared with the fourth quarter.\nEBITDA for lumber increased $259 million compared with the fourth quarter, a more than 100% improvement.\nAverage sales realizations increased by 42%.\nCost for Canadian logs increased significantly and Southern log costs increased slightly during the quarter.\nOur lumber production decreased slightly compared with the fourth quarter as a handful of mills lost production days due to severe winter storms in the US South.\nSales volumes decreased by 5% compared with the fourth quarter as customer takeaway and supply chains in the South were temporarily disrupted following the severe winter weather.\nOSB markets performed at an unprecedented pace in the first quarter.\nLimited resin availability added incremental constraints to an already lean supply of OSB in the market.\nThis dynamic, coupled with continued strong demand, resulted in a record setting price run that persisted for the entire quarter.\nAverage OSB composite pricing increased 30% compared with the fourth quarter.\nOSB EBITDA increased $80 million compared to the fourth quarter, a 36% increase.\nAverage sales realizations improved by 22%.\nProduction and volumes increased slightly compared with the fourth quarter and unit manufacturing costs improved, as a reduction in planned maintenance more than offset weather-related downtime at one of our Southern mills.\nAlthough resin availability was a challenge across the OSB market, our supply chain and transportation teams did a fantastic job of effectively navigating the disruption, resulting in no material impact to our OSB production volumes or mix in the first quarter.\nWe continue to benefit from proactive initiatives to diversify our resin supply.\nEngineered Wood Products EBITDA increased $5 million compared to the fourth quarter.\nAverage sales realizations for solid section and I-joist products improved, as we continue to benefit from our August 2020 price increase and quickly began capturing the benefit of a second increase announced in January.\nThis was partially offset by higher raw material costs for oriented strand board web stock, resin, and veneer.\nProduction volumes also decreased slightly across several product lines as a result of weather-related downtime.\nIn distribution, EBITDA increased $15 million compared to the fourth quarter as strong demand drove sales volumes across all products and the business captured improved margins.\nTurning briefly to operational excellence.\nAfter exceeding our 2020 operational excellence target, we remain focused on opex in 2021, targeting another $50 million to $75 million across our businesses.\nWith one quarter of 2021 behind us, we are on track to achieve our full year 2021 target and look forward to sharing some accomplishments as the year progresses.\nFinally, I'd like to comment briefly on two recent timberland transactions.\nAs we've noted previously, we're continuously evaluating opportunities to optimize and grow the value of our timberland holdings.\nToday, we reported the closing of our previously announced acquisition of 69,000 acres of Alabama Timberlands.\nThese are high-quality acres that are accretive to our portfolio and exhibit strong [Technical Issues] to our existing footprint.\nHampton is a strategic buyer with a complementary manufacturing footprint in the area.\nThis transaction is part of a multi-year effort to strategically optimize our Western Timberlands portfolio and completes our targeted large scale divestitures in the region.\nThe North Cascades is our least productive acreage in the West.\nIt's primarily high elevation white wood with high operating costs and is not serving any of our internal mills or export customers.\nThis property does not materially contribute to EBITDA.\nIt was not expected to generate a competitive return within our portfolio, even considering future alternative sources of value.\nWe're really pleased with this transaction and plan to redeploy the proceeds in line with our priorities for opportunistic capital allocation, including continue to enhance and grow our Timberlands portfolio in a disciplined manner.\nI'm looking forward to meeting many of you in the coming months.\nOver the past two months, I've spent a great deal of time with the senior leadership team, as well as the finance team here at the company, immersing myself in the business and getting to know our employees and operations.\nI've come away from that with tremendous excitement about the future and our ability to create significant long-term value for shareholders.\nI'm looking forward to the work ahead.\nI'll begin with the first quarter results for our unallocated items as summarized on page 13.\nFirst quarter adjusted EBITDA for this segment improved by $7 million compared to fourth quarter 2020.\nThis improvement was mainly due to lower corporate function and variable compensation expenses, partially offset by higher charges for the elimination of intersegment profit in inventory and LIFO.\nThis charge was primarily driven by higher lumber inventory in the South, where customer takeaway was disrupted after the severe winter weather.\nTurning now to our key financial items, which are summarized on Page 14 cash from operations totaled nearly $700 million for the first quarter.\nThis is our highest quarterly operating cash flow since fourth quarter 2006, and our highest first quarter cash flow on record.\nWe generally expect cash from operations to decrease significantly in the first quarter, primarily due to seasonal working capital increases.\nHowever, operating cash flow improved by over $250 million compared with the fourth quarter, as these factors were more than outweighed by higher pricing for lumber and oriented strand board.\nWe reinvested a portion of this cash in our Timberlands and Wood Products businesses through capital expenditures, which totaled $53 million for the first quarter.\nAdjusted funds available for distribution or FAD, for first quarter 2021, totaled $645 million as highlighted on Page 15.\nIn the first quarter, we returned $127 million to our shareholders through payment of our first-quarter base dividend of $0.17 per share.\nAs a reminder, we plan to target a total annual return to shareholders of 75% to 80% of our annual adjusted FAD.\nWe will deploy the remaining 20% to 25% of our annual FAD consistent with our stated priorities for opportunistic capital allocation.\nTurning to the balance sheet, we ended our first quarter with over $1 billion of cash, an undrawn line of credit, and just under $5.5 billion of outstanding long-term debt.\nAs a reminder, we have cash earmarked to repay our $150 million 9% note, when it matures in the fourth quarter.\nOur strong balance sheet position, in addition to our record EBITDA performance, has resulted in a net debt to adjusted EBITDA leverage ratio of 1.5 times.\nAlthough our leverage ratio is significantly below our over the cycle target of 3.5 times net debt to EBITDA, we believe that's appropriate given the extremely strong commodity markets we're experiencing today.\nLooking forward, key outlook items for the second quarter are presented on page 16.\nIn our Timberlands business.\nWe expect second quarter earnings and adjusted EBITDA will be comparable to the first quarter.\nIn our Western Timberlands operations, we expect our second quarter domestic log sales volumes will be significantly higher than the first quarter.\nDomestic mill inventories ended the first quarter at moderate level and log demand in the West remains favorable due to strong lumber market.\nDomestic average sales realizations are expected to be moderately lower compared with the first quarter.\nAdditionally, while we expect average sales realizations for large logs to improve, we believe that this will be offset by an unfavorable mix of small logs as we continue to work through salvage wood.\nWe anticipate second quarter fee harvest volumes will be significantly higher and that forestry and road spending will increase as we enter the spring and summer months.\nMoving to the export markets.\nIn Japan, log demand remains strong.\nJapanese Douglas-fir lumber producers continue to experience very favorable demand as lumber imports into Japan remained limited due to the high price of US lumber and low availability of shipping containers.\nOur second quarter average sales realizations on log imports to Japan are expected to increase modestly compared to the first quarter.\nOur average sales volumes are expected to be comparable in the first quarter.\nFor China, average export log sales realizations are expected to increase significantly.\nDemand for imported logs is strong due to significant economic growth, limited lumber imports, and continued disruptions in the supply of imported log.\nHowever, our average log sales volumes are expected to be lower compared with the first quarter.\nWith strong US domestic demand for large log and high ocean freight cost, we'll flex more logs to the domestic market to capture the highest margin.\nIn the South, we anticipate fee harvest volumes will be significantly higher than first quarter due to seasonally higher thinner activity -- thinning activity, as well as the deferred harvest activities related to the adverse weather we experienced during the first quarter.\nWe expect average log sales realizations will be comparable to first quarter.\nForestry spending in the South is expected to increase, which is typical coming into the spring months.\nIn the North, average log sales realizations are expected to increase slightly compared to first quarter while fee harvest volumes are expected to be significantly lower as we enter the spring breakup season.\nI'll wrap up the Timberlands segment with a few comments on our recent timberland transaction.\nIn the second quarter, we will report a cash outflow of approximately $149 million for the 69,000 acre Alabama Timberlands acquisition that we completed this week.\nAnd as Devin mentioned, we have also announced the sale of our North Cascades acreage and we expect to complete that transaction in the third quarter.\nThe gain on sale will be reported as a special item within the Timberlands segment.\nTurning to our Real Estate Energy and Natural resource segment.\nReal estate markets remain strong into the second quarter, as the sale preferences during this time, continue to drive robust demand for rural recreational properties.\nWe expect second quarter net earnings and adjusted EBITDA to be moderately lower than first quarter due to timing of transactions.\nWe continue to expect full year 2021 adjusted EBITDA of approximately $255 million, although we now expect land basis as a percentage of real estate sales to be approximately 35% to 45% for the year due to the mix of properties sold.\nWe continue to anticipate our 2021 real estate activity will be heavily weighted to the first half of the year, similar to our cadence in both 2019 and 2020.\nFor our Wood Products segment, new residential construction activity has remained at very favorable levels and our builder and dealer customers are anticipating a strong second quarter following the already strong first quarter.\nIn repair and remodel markets, we are seeing a shift from small do-it-yourself improvement project to larger remodel activity, further solidifying the demand for structural wood products within this market.\nExcluding the effect of changes in average sales realizations for lumber and oriented strand board, we expect second quarter adjusted EBITDA will be significantly higher than the first quarter.\nFor lumber, we expect production volumes to increase during the quarter as operating rates are expected to improve following weather related mill downtime in the first quarter.\nWe expect these higher production volumes to have a favorable impact on our manufacturing costs.\nWe also anticipate this increased supply as well as higher seasonal inventory drawdown to drive higher sales volumes during the quarter.\nOriented strand board is expected to have a slightly lower production level and sales volume and slightly higher manufacturing costs due to an extended outage to complete a planned capital project at our Elkin OSB mill.\nThis equipment has been on-site but installation has been delayed multiple times due to COVID related travel restrictions and vendor resource availability.\nLog costs are expected to be comparable to the first quarter.\nEntering the second quarter, benchmark pricing for oriented strand board and the framing lumber composite has continued to rise beyond the record levels experienced in the first quarter.\nFor lumber, our quarter-to-date average sales realizations are approximately $105 higher and current realizations are approximately $130 higher than the first quarter average.\nFor OSB, our quarter-to-date average sales realizations are approximately $135 higher and our current sales realizations are approximately $185 higher than the first quarter average.\nAs a reminder for lumber, every $10 change in realizations is approximately $11 million of EBITDA on a quarterly basis.\nFor OSB, every $10 change in realizations is approximately $8 million of EBITDA on a quarterly basis.\nFor engineered wood products, we expect higher average sales realizations for our solid section and I-joist products as we continue to capture the benefit of price increases announced in August 2020 and January 2021.\nAdditionally, in March 2021, we announced a third increase, which ranges from 10% to 25% and will be captured over the next several quarters.\nThis will be partially offset by higher raw material costs.\nI'll wrap up with a few additional comments on our total company financial items.\nWe continue to expect full year 2021 interest expense will be approximately $315 million.\nAdditionally, we continue to anticipate 2021 capital expenditures to total $420 million, with most large projects executing in the second half of the year.\nTurning to taxes, we continue to expect our full-year 2021 effective tax rate will be between 18% and 22% before special items.\nBased on our forecasted mix of earnings between our REIT and taxable REIT subsidiary.\nAs previously discussed, the $90 million tax refund, associated with our 2018 pension contribution, remains in process.\nWe anticipate receiving this refund in second quarter 2021.\nExcluding this refund, we continue to expect our 2021 cash taxes will be generally comparable to our overall tax expense.\nIn closing, our first quarter financial performance was the strongest on record.\nAnd I'm incredibly proud of the work our teams are doing to achieve these results.\nWhether it's navigating winter conditions and supply chain disruptions, keeping our people safe through a pandemic, or the relentless focus to capture opex opportunities across our portfolio, our employees have done an outstanding job positioning the company to capitalize on the strong markets we're experiencing today.\nLooking forward, the demand for our products is extremely favorable, supported by encouraging macroeconomic conditions, and continued resiliency in the US housing and repair and remodel markets.\nWe remain committed to serving our customers and delivering industry-leading performance across our operations.\nWhen combined with a strong balance sheet and a dividend framework that returns meaningful cash to shareholders, we're well positioned to drive superior long-term value into the future.\n", "role": "user" }, { "content": "sees q2 earnings and adjusted ebitda to be moderately lower than q1 2021 for real estate, energy & natural resources segment.\ncompany expects q2 earnings and adjusted ebitda will be significantly higher than q1 for wood products segment.\nexpects q2 earnings and adjusted ebitda will be comparable to q1 for timberlands segment.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: They will provide their perspective on Xylem's first-quarter results and our outlook.\nA replay of today's call will be available until midnight on June 2.\nAdditionally, the call will be available for playback via the Investors section of our website under the heading Investor Events.\nAll references will be on an organic or adjusted basis, unless otherwise indicated.\nThese statements are subject to future risks and uncertainties, such as those factors described in Xylem's most recent annual report on Form 10-K and in subsequent reports filed with the SEC, including in our Form 10-Q to report results for the ended -- the period ending March 31, 2021.\nIn the appendix, we have also provided you with a summary of our key performance metrics, including both GAAP and non-GAAP metrics.\nThe quarter's growth was broad-based, reflecting increasing demand across all of our segments, our end markets and geographies.\nOur momentum coming into the year accelerated through the quarter with the team taking full advantage of economic recovery and pent-up demand in our markets.\nOrders were up double digits in all three of our business segments, and backlog was up 23% organically.\nBoth Western Europe and emerging markets delivered exceptional organic revenue growth, with Western Europe up 11% and emerging markets up 33% year on year and with momentum up strong sequentially.\ndemand also continued to recover with orders up 18%.\nAlongside top-line growth, our results reflect considerable margin expansion.\nI credit the team's discipline, building on the benefit of volume effects and positive impact from the cost actions we took in 2020.\nOur financial position, which was robust coming into the quarter, strengthened even further on the combination of revenue growth and margin expansion.\nLooking forward, we are confident about the remainder of 2021 and beyond.\nTherefore, we are raising our full-year guidance on the top line, margin and EPS.\nI'll talk a bit more shortly about trends and focus areas for the team.\nBut first, let me hand it over to Sandy to provide more detail on performance in the quarter.\nThe first quarter was clearly a meaningful step forward.\nThe team delivered exceptional performance, capitalizing on demand recovery in the majority of our markets.\nRevenue grew 8% organically versus the same period last year with performance better than our expectations across the board.\nStrong double-digit revenue growth in wastewater utilities was paired with broad-based industrial demand recovery.\nGeographically, emerging markets in Western Europe both grew double digits, while the U.S. was down 1%.\nI'll touch on revenue performance in more detail covering each of the segments.\nBut in short, utilities were up 3%; industrial was up 14%; commercial, up 5%; and residential was up 31%.\nOrganic orders grew 19% in the quarter as all three business segments contributed double-digit order gains.\nImportantly, it was also the third consecutive quarter of sequential orders improvement.\nLooking at the key financial metrics.\nMargins were above our forecasted range with EBITDA margin coming in at 17.1% and operating margin at 11.4%.\nThe 480 basis points of EBITDA expansion came largely from volume and productivity, partially offset by inflation.\nEarnings per share in the quarter was $0.56, which is up 143%.\nWater infrastructure orders in the first quarter were up 14% organically versus last year with revenues up 11%.\nGeographically, Western Europe grew on healthy demand, while emerging markets delivered strong performance, recovering from a COVID-impacted quarter last year.\nThe U.S. was flattish as double-digit growth in wastewater transport was offset by soft industrial performance.\nEBITDA margin and operating margin for the segment were up 430 and 490 basis points, respectively, as strong productivity and volume leverage offset inflation.\nIn the applied water segment, orders were up 25% organically in the quarter, driven by recovery in demand in North America and strength in Western Europe.\nRevenue was up 13% in the quarter with growth in all end markets and geographies.\nResidential and industrial grew 31% and 15%, respectively, while commercial grew 5%.\nGeographically, the U.S. was up modestly as residential and industrial gains were offset by lagging commercial end markets.\nBy contrast, improving commercial demand in Western Europe contributed 15% growth with additional strength in residential.\nEmerging markets were up 51% due to the timing of prior-year COVID shutdowns, as well as commercial recovery in Middle East and Africa.\nSegment EBITDA margin and operating margins grew 250 and 280 basis points, respectively.\nThe expansion came from volume, absorption and productivity.\nIn M&CS, orders were up 19% organically in the quarter with double-digit growth across both water and energy applications, driven by large metrology projects.\nSegment backlog is up 29%.\nAs anticipated, organic revenue growth showed solid quarter sequential improvement but finished flat year on year.\nWater applications grew in the mid-single digits with strong demand in the test business.\nIn energy applications, revenue was down mid-teens as certain large deployments were completed in the same period last year.\nGeographically, the U.S. was down mid-single digits, but we anticipate project deployments will ramp through Q2 on loosening site access restrictions and then accelerate through the second half.\nEmerging markets were up 8%, and Western Europe grew 9% from metrology project deployments and demand in the test business.\nSegment EBITDA margin and operating margins in the quarter were up 770 and 600 basis points, respectively.\nModest price realization and strong productivity savings, as well as a prior year warranty charge, more than offset inflation.\nOur balance sheet continues to be very strong.\nWe closed the quarter with $1.7 billion in cash.\nFree cash flow was in line with our expectations, as well as our historical seasonality patterns.\nManaging working capital remains an enterprisewide priority, and we are especially pleased with our accounts receivable performance.\nNet debt-to-EBITDA leverage was 1.6 times at the end of the quarter.\nI'd like to revisit the three focus areas we highlighted coming into the year: the performance of our growth platforms, the team's operational discipline and our progress on sustainability.\nTurning first to our growth platforms.\nYou've already heard about our emerging markets team's exceptional first-quarter performance with revenue and orders up 33% and 21%, respectively.\nUp until now, China and India have taken the spotlight.\nIn both countries, our investments in capabilities and localization have created strong engines for sustainable growth.\nBut of course, other areas of the emerging markets also represent great opportunity for us.\nMany countries in Eastern Europe, for example, continue to modernize their economies and represent a long runway of investment in water infrastructure.\nAnd in Africa, there are clearly big water challenges to solve as the higher-growth nations continue to urbanize.\nWe expect emerging markets, overall, will continue to be a source of healthy, sustainable growth for the foreseeable future.\nThe second platform that continues to underpin sustainable growth is our digital strategy.\nOur broad portfolio enables us to combine multiple digital technologies into integrated offers, including AI-enabled software platforms, advanced communications networks and automated end points.\nThose capabilities have been key to our commercial momentum over the last several quarters with customer adoption of digital solutions accelerating through the pandemic.\nWe've spoken previously about our headline wins in Texas and Ohio.\nIn Q1, we added a large transformation project in Greensboro, North Carolina, and we have just signed another exciting deal to be announced in the next few weeks.\nAll of these projects deliver network as a service, software as a service and advanced analytics.\nIn each case, Xylem's ability to bring a suite of transformational capabilities distinguished us and was essential to winning.\nAnd just last week, we further extended the digital capabilities we can offer our customers by partnering with Esri.\nEsri is the global leader in geographic information systems, GIS for short.\nThese systems are an essential component of utility's operating environment.\nBy integrating their technology with our advanced digital solutions, water operators achieved unprecedented network visibility and a clear path to increased operational efficiency and sustainability.\nAnd with last week's agreement, Xylem and Esri are bringing that powerful combination to the water sector together.\nOur partnership includes developing joint solution road maps and joint selling to water utilities around the world.\nWe are very excited about this partnership and about the value we can deliver to customers together.\nTurning next to operating discipline.\nOur operational capabilities were absolutely key to coming through 2020 on strong foundations.\nAs you know, last year, we made difficult but essential decisions on structural cost.\nAnd we're now clearly seeing the benefit of those actions.\nIn addition, the team drove strong productivity gains in the first quarter, which offset the early impact of rising inflation.\nThe result was solid margin expansion with incremental margins coming in at 55%.\nOver the last year, we've learned that we can do more with less, and we will remain absolutely vigilant on cost as economies reopen and demand continues to recover.\nThat said, we are expecting some impact from the broad-based inflation and component supply challenges that are affecting the industrial and tech sectors.\nNow we've already taken action by strategically investing in inventory to support areas of strong demand, and we will continue driving productivity and pricing to mitigate inflation.\nStill, the supply environment is likely to remain challenging for some time.\nThe third focus area we highlighted coming into the year was sustainability.\nI think many of us worried that the cause of sustainability might suffer setbacks through the economic hardships of 2020.\nHowever, instead of a retreat, we've actually seen a broad and energetic global embrace of sustainability.\nAs an enterprise over the last year, we've taken several meaningful steps toward our signature 2025 sustainability goals.\nWe'll be highlighting those in our annual sustainability report to be published in June.\nWe'll be reporting, for example, that, in 2020, we helped our customers prevent 1.4 billion cubic meters of polluted water from entering local waterways.\nNow the report is largely retrospective, but, of course, we continue to move forward.\nIn 2021, we've deepened and broadened the link between compensation and sustainability performance.\nIt is now a component in the long-term incentive program for a range of key executives.\nOur commitment and our action has put us in a leadership position, which is both gratifying and a tribute to the team.\nThat said, we all know we have a lot more work ahead of us to deliver on our goals and on our mission and purpose.\nWith that, I'll now hand it back over to Sandy to provide the forward view of our end markets, along with guidance for the remainder of the year.\nThe outlook for our end markets remains mostly consistent with our view from last quarter with a couple of notable changes.\nFirst, in utilities, we continue to see strong commercial momentum in both wastewater and clean water, and anticipate our utility business will grow in the mid to high single digits.\nOn the wastewater side, operators remain focused on mission-critical applications and opex needs in the developed markets of Europe and North America.\nCapital spending outlook and bid activity in China and India remains robust, although we expect some lumpiness in India due to high COVID case rates there.\nOn the clean water side, we are encouraged to see large project deployments beginning to ramp again.\nWe're clearly positive about the prospect of investment in modernizing the country's water infrastructure.\nMore broadly, the plan could represent an opportunity for communities across the U.S. to invest in greater resilience in several infrastructure categories, which would have the effect of reducing pressure on municipal budgets.\nWe are encouraged by those possibilities.\nBut to be clear, it's too early to know whether and in what form the plan may emerge from Congress, who have not built specific upside into our expectations.\nThe second notable change in our outlook is in the industrial end market.\nWe have seen a rebound in global industrial activity and sentiment across all three of our business segments.\nWe expect healthy growth in emerging markets in Western Europe to continue in the first half, while North America will deliver modest growth.\nAnd then we anticipate those relative market performances will flip in the second half, primarily because of the compares.\nImportantly, the industrial dewatering business is recovering, driven by demand in construction, mining and other verticals.\nAnd we now expect the industrial end market to grow in the mid-single digits for the year.\nOur outlook in the commercial segment remains unchanged.\nWe continue to expect our commercial end market to be up low single digits.\nreplacement business is stable, although new commercial building is expected to be soft for most of 2021.\nIn residential, we now anticipate high single digit to low double-digit growth for the full year, which is up modestly from our previous expectation of mid to high single digits.\nWe do expect growth will moderate through the second half, due largely to prior-year comparisons.\nAs you can see, we are raising our previous annual guidance.\nFor Xylem overall, we now see full-year 2021 organic revenue growth in the range of 5% to 7%, up from our previous guidance of 3% to 5%.\nThis breaks down by segment as follows: mid- to high single-digit growth in water infrastructure, up from low to mid-single-digit growth previously; mid- to high single-digit growth in applied water, up from low single-digit growth; and in measurement and control solutions, we expect -- we continue to expect mid-single-digit growth.\nWhile we anticipate delivering a number of large project deployments, growth may be somewhat constrained by component supply challenges.\nFor 2021, we expect adjusted EBITDA margin to be at 90 to 140 basis points to a range of 17.2% to 17.7%.\nFor your convenience, we are also providing the equivalent adjusted operating margin here, which we now expect to be in the range of 12% to 12.5%, up 120 to 170 basis points.\nThis higher range reflects our expectation that volume, price and productivity gains will more than offset inflation.\nBenefits from restructuring savings remain unchanged, and this yields an adjusted earnings per share range of $2.50 to $2.70, an increase of 21% to 31% over last year.\nWe continue to expect free cash flow conversion of between 80% to 90%, as previously guided, putting our three-year average right around 130%.\nAnd we expect to continue delivering cash conversion of greater than 100% going forward.\nOur balance sheet will remain very strong even after $600 million of senior notes are retired in the fourth quarter, which clearly offers considerable room for capital deployment.\nWe are continually assessing inorganic opportunities to strengthen our strategic position, differentiate our portfolio and enhance market access.\nWe have provided you with a number of other full-year assumptions to supplement your models.\nThose assumptions are unchanged from our original guidance, including our euro to dollar conversion rate of 1.22.\nAnd as you know, foreign exchange can be volatile and, therefore, we have included a foreign exchange sensitivity table in the appendix.\nNow drilling down on the second quarter.\nWe anticipate total company organic revenues will grow in the range of 8% to 10%.\nThis includes high single-digit growth in water infrastructure, low teens growth in applied water and mid-single-digits growth in M&CS.\nWe expect second-quarter adjusted EBITDA margin to be in the range of 16.7% to 17.2%, representing 140 to 190 basis points of expansion versus the prior year.\nXylem is clearly in a strong position coming out of Q1, and we expect this momentum to continue throughout the rest of the year and beyond.\nDemand recovery and strong commercial performance will drive organic growth.\nOperating discipline will deliver margin expansion and strong cash conversion, and a robust balance sheet will continue to underpin our strategy.\nMore broadly, our business and mission have never been more relevant than they are today.\nThe economic and social value of critical infrastructure is more apparent than ever.\nNot only is it critical in times of crisis, but also as a driver of economic recovery, and it's a prerequisite for broader prosperity.\nFrom the shocks of the last year, the world has embraced the need for greater resilience and the imperative of a sustainable future.\nIn that context, our mission, our business and our values put us in a privileged position, which will enable us to continue creating both economic and social value for our stakeholders over the medium and long term.\nWe look forward to providing an update on our strategy and long-term plans at our next investor day, which is currently planned for September 30.\nIt will most likely be a combined virtual and physical format, but we do hope to host as many of you as possible, COVID restrictions permitting.\nMatt and the team will follow up with more details as soon as they're pinned down, now with that, we'd be happy to take any questions you may have.\nSo operator, please lead us into Q&A.\n", "role": "user" }, { "content": "sees fy adjusted earnings per share $2.50 to $2.70.\nq1 adjusted earnings per share $0.56.\nraising full-year organic revenue guidance to a range of 5% to 7%.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: They will provide their perspective on Xylem's second-quarter results and their outlook.\nA replay of today's call will be available until midnight on September 1st.\nAdditionally, the call will be available for playback via the investors section of our website under the heading investor events.\nAll references will be on an organic or adjusted basis unless otherwise indicated.\nThese statements are subject to future risks and uncertainties, such as those factors described in Xylem's most recent annual report on Form 10-K and in subsequent reports filed with the SEC, including in our Form 10-Q to report results for the period ending June 30, 2021.\nIn the appendix, we have also provided you with a summary of our key performance metrics, including both GAAP and non-GAAP metrics.\nFor purposes of today's call, all references will be on an organic and adjusted basis, unless otherwise indicated.\nSo by now, you will have seen that second quarter performance exceeded our expectations on all major metrics, including orders, revenue, margin, and earnings per share.\nI'm very beating the healthy pace we set in the first quarter and to delivering a very strong first half of the year.\nUnderlying demand for our solutions was robust across all segments and end markets.\nThe key to a great job converting that into better-than-expected performance and continuing to expand margin.\nThey delivered even more exceptional results on orders, which grew 29% on an underlying demand across all regions.\nIn addition, backlog is up 35% versus this point last year.\nThat broad expansion reflects commercial momentum that puts us in a strong position, both now and into the future as we continue to invest in sustainable growth.\nAt the end of the first quarter, we raised full-year guidance on revenue and earnings.\nThe second quarter's performance shows a continuing strong trajectory into the second half, and we're reflecting that by further raising full-year revenue guidance.\nThe top-line benefits are likely to be moderated somewhat by inflation and a challenging supply chain environment.\nBut we've been proactive on price and are working with our supply chain partners to mitigate the impact of those headwinds.\nSo we are also raising the midpoint on earnings per share guidance for the full year.\nIn a moment, I'll provide some additional color on what we're seeing globally.\nBut first, let me hand it over to Sandy to provide more detail on performance in the quarter.\nThe second quarter offered a strong story of continuing demand recovery as revenue grew 11% organically compared to the prior year.\nWe also saw momentum across most end markets on a quarter-sequential basis.\nUtilities, our largest end market, was up 6% compared to the prior year, driven by clean water applications and continued wastewater utility OpEx demand.\nIndustrial was up 17% on broad-based strength as economies reopened and activity continued to ramp.\nCommercial grew 12% and also improved sequentially, was by strength in the U.S. and Western Europe, while residential, our smallest end market, grew 29%.\nGeographically, Western Europe and China were both up mid-teens with increasing demand seen across all end markets.\nThe U.S. returned to growth with site access restrictions easing during the quarter.\nAs Patrick mentioned, the team delivered exceptional organic orders growth of 29% on strong underlying demand across all segments and regions, with particular pace in M&CS, which grew orders 70% on large water metrology contracts.\nThis is our fourth consecutive quarter of sequential order improvement and reflects higher orders growth than in the same period in 2019.\nImportantly, we exit the quarter with overall backlog up 35%.\nLooking at the key financial metrics, margins were above our forecasted range with EBITDA margins coming in at 17.3%.\nThe 200 basis points of year-over-year EBITDA margin expansion came largely from productivity, volume, and favorable mix, partially offset by inflation and investments.\nEarnings per share in the quarter was $0.66, which is up 65%.\nWater infrastructure delivered strong results during the quarter.\nOrders were flat, but up 22%, excluding the large prior-year deal in Telangana India, order intake was robust in treatment globally.\nRevenues were up 6% organically.\nWastewater utilities remained resilient, and we are now seeing recovery in the industrial end markets.\nGeographically, emerging markets delivered mid-teens growth from industrial recovery, driven in part by increasing mining demand in Latin America and Africa, while Western Europe delivered double-digit growth from continued strong utility OpEx activity.\nIn the U.S., healthy utilities OpEx demand reflected in strong orders growth was offset by the lapping of prior year treatment project delivery.\nEBITDA margin was in line with the prior year as strong productivity savings and volume effects offset inflation and investments.\nThe applied water segment had a very strong quarter, driven by continuing market recovery across all regions and end markets.\nOrders were up 43% organically in the quarter, with particular strength in the U.S. and Western Europe.\nRevenue grew 18% in the quarter with double-digit industrial demand driven by reopening activity and especially in marine and food and beverage applications.\nResidential growth continues to be robust and strong market demand.\nGeographically, the U.S. was up double digits, while Western Europe contributed 27% growth on increasing industrial demand.\nEmerging markets were up 24%, due in part to broad industrial recovery and momentum in China.\nSegment EBITDA margin grew 200 basis points compared to the prior year the expansion came from strong volume leverage and productivity more than offsetting material and freight inflation.\nM&CS delivered a strong quarter as large project deployments began to ramp.\nWe also realized gains in our industrial water quality testing business.\nOrders for the segment were up 70% organically on strong demand.\nOur M&CS backlog now stands at 1.5 billion, which is a historic high and almost 50% higher than at this time last year.\nWe have secured more than $400 million in large contracts in the last 18 months.\nThat reflects a number of major projects, which increasingly include our broader digital solutions in combination with our core metrology applications.\nRevenue was up 11%, led by 17% growth in water applications, driven by large project deployments and double-digit growth in water quality applications.\nEnergy applications were down modestly due to project timing and supply chain constraints.\nUnpacking the results by geography, emerging markets in Western Europe were up 20 and 25%, respectively.\nThe U.S. was up mid-single digits on strong demand for water quality applications and assessment services.\nAs a reminder, for this segment in particular, growth rates can be uneven due to the impact of project timing.\nSegment EBITDA margin in the quarter was up 460 basis points compared to the prior year.\nStrong productivity savings from prior year restructuring actions, favorable mix, and volume leverage more than offset inflation and investments.\nOur balance sheet continues to be very strong.\nWe closed the quarter with 1.8 billion in cash and cash equivalents.\nIn the third quarter, $600 million of senior notes will mature to be paid with cash.\nFree cash flow conversion was 172% in the quarter, in line with our expectations and historical seasonality patterns.\nNet debt-to-EBITDA leverage was 1.3 times at the end of the quarter.\nI'd like to touch on three areas briefly.\nOur operating discipline, our growth platforms, and sustainability.\nOn operating discipline, the team did an excellent job on margins in the quarter, delivering 200 basis points of EBITDA margin expansion year on year in addition to quarter-sequential improvement.\nWe do anticipate some inflation and component supply challenges in the second half, but we're confident in our ability to manage through them and to mitigate their impact.\nEarlier, I noted our extremely healthy backlog.\nAs we work through these volumes, the team is doing a great job making sure we manage the pressure on working capital this can create.\nIn fact, despite serving spiking demand, we've improved working capital both year over year and quarter sequentially.\nAs Sandy just mentioned, that performance puts us firmly on track to deliver our commitment on attractive free cash flow conversion.\nWe clearly have significant capacity for capital deployment.\nOn top of strong organic growth investment options, we have an attractive and active pipeline of M&A opportunities.\nOur growth platforms are an area we'll be delving into at our Investor Day in September, so I'm going to refrain from too much detail here today.\nI do want to draw attention to two things, however.\nLast quarter, we highlighted the pace of growth in emerging markets.\nThis quarter, that pace has continued.\nDespite India's hard acceleration through the quarter due to COVID impact there.\nI'm very proud of the entire Xylem team's discipline and compassionate response in all countries affected by COVID, both in terms of our own operations and also how we've leaned in to support customers and help serve our communities.\nI also want to take a moment to draw a connecting line between our portfolio and some of the dramatic water-centric events we've been seeing recently around the world, by which I mean the flooding in Europe, China, and Central Asia and the drought in American West.\nThese events reflect a trend as the effects of climate change become more and more apparent.\nAnd that trend requires an affordable response to keep communities safe, resilient, and water secure.\nSo we continue to invest in specific technologies in our portfolio that respond to these challenges.\nAs an example, automated wastewater network optimization is among our most advanced digital solutions.\nIts job is to manage overflows and prevent flooding.\nAnd our customer deployments are already preventing 1.4 billion cubic meters of water from flooding communities.\nSimilarly, we also continue to innovate in the technologies that make communities more resilient to drought, technologies like leak detection, smart metering and especially water reuse.\nAlready 1 trillion gallons of water are being recycled using Xylem technology, which brings me to the topic of sustainability more broadly.\nThe numbers I just quoted come from our annual-sustainability report, which we published in June.\nAnd I think they bear out what we've said for some time.\nOur sustainability strategy is fundamental to our business strategy.\nWe were pleased to report, for example, that almost half of our major facilities are now operating on 100% renewable energy, helping reduce our greenhouse gas emissions intensity by more than 7% year over year.\nBeyond our own footprint, our solutions have enabled our customers to reduce their carbon emissions by 700,000 metric tons last year.\nThe report details progress on all of our signature sustainability goals and shows how sustainability is deeply embedded in who we are as a company.\nNow with that, I'll hand it back over to Sandy to provide commentary on our end markets and guidance for the remainder of the year.\nOur full-year outlook for our end markets remains largely consistent with our view from last quarter with some positive evolution as a few end markets are showing even faster recovery.\nIn utilities, demand continues to be strong in both wastewater and clean water, affirming our anticipated growth of mid-to-high single digits.\nOn the wastewater side, we have seen steady demand in Western Europe and North America as operators continue to focus on mission-critical applications while also investing in larger scale upgrades on affordable funding from capital markets.\nBid activity and long-term capital spending outlook in emerging markets remains solid, though some COVID concerns linger in certain markets.\nOn the clean water side, demand for smart water solutions and digital offerings continues to be robust as utilities increasingly turn their focus to more resilient infrastructure and affordable water delivery.\nConsistent with other technology companies, the connected nature of our solutions raises some risk in the second half, given prolonged supply chain constraints for electronic components.\nOur teams are working closely with our suppliers and manufacturing partners to optimize deliveries.\nLooking at the industrial end market, where we had expected mid-single digits growth for the year, we are now anticipated growing in the high single digits.\nThe growth is broad-based with rebounding industrial activity across all segments and regions.\nWe're seeing upticks in demand, particularly in our industrial dewatering business in emerging markets.\nWe're also seeing higher demand in marine and food and beverage, driven by recovery in outdoor recreation and the hospitality sector.\nWe are increasing our outlook in the commercial end market as well.\nThe U.S. replacement business is growing at a first pace.\nNew commercial building is expected to lag the recovery somewhat, but key leading indicators reflect optimism for late 2021 recovery in the institutional sector.\nWith growth in Western Europe and China sustained through the second half, along with modest share gains and supply chain resiliency, we now expect the commercial end market to be up mid-to-high single digits, up from the low single digits previously.\nIn residential, we now anticipate low teens growth for the full year, up modestly from our previous expectations of high single-digit to low double-digit growth.\nWe do expect growth will moderate through the second half, due largely to a more difficult year-over-year comparisons.\nAs you can see, we are further raising our previous annual guidance.\nFor Xylem overall, we now see full year organic revenue growth in the range of 6 to 8%, up from our previous guidance range of 5 to 7%.\nThis confidence is based on clear demand recovery, combined with the pricing actions we are taking to offset inflation.\nThis revenue guidance breaks down by segment as follows.\nFor water infrastructure, we expect mid-single-digit growth from a previous expectation of mid-to-high single digits.\nWe expect low double-digit growth in applied water, up from mid-to-high single digits.\nAnd in measurement & control solutions, we expect mid-single-digit growth.\nWe also expect EBITDA margins in the range of 17.2 to 17.7%.\nThis guidance represents full-year margin expansion of 120 basis points at the midpoint.\nThat's grounded in a strong first-half performance with 300 basis points of expansion from restructuring savings on actions we took late last year, as well as volume leverage from the top line growth.\nThe third quarter is more challenging, primarily driven by the timing of inflation and price realization.\nHowever, price realization will increase into the fourth quarter as we work through the large backlog built over the last several quarters.\nOverall, we expect strong second-half margins compared to the first half of the year.\nThis yields an adjusted earnings per share guidance range of $2.55 to $2.70, reflecting increased confidence in our ability to lift the bottom end of the range while still managing through inflation and supply chain challenges.\nThat range now reflects a 28% increase in earnings per share guidance at the midpoint over last year.\nWe continue to expect full-year 2021 free cash flow conversion of 80 to 90% as previously guided, putting our three-year average right around 130%.\nWe have provided you with a number of other full-year assumptions to supplement your models.\nThose assumptions are largely unchanged from our original guidance.\nHowever, one item worth noting is our updated assumption on foreign exchange for the second half of the year.\nBecause of the recent dip in the euro and the disproportionate effect it had on our results, we've updated our euro to dollar conversion rate assumption for the second half from 1.22 to 1.18.\nThis change, along with some other currency movements has a $0.04 negative impact on our second-half outlook.\nAs you know, foreign exchange can be volatile, so we've included our typical foreign exchange sensitivity table in the appendix.\nAlso, we are making an adjustment to our restructuring and realignment guidance from 50 to 60 million to now 30 to 40 million, while still expecting to realize similar restructuring savings due to high natural attrition and the timing of actions.\nAnd now before wrapping up, let me share some thoughts on our third-quarter outlook.\nWe anticipate total company organic revenues will grow in the range of 5 to 7%.\nThis includes mid-single-digit growth in water infrastructure, high single-digit growth in applied water, and low single-digit growth in M&CS.\nWe expect third-quarter adjusted-EBITDA margin to be in the range of 16.7 to 17.2%, largely in line with our strong second quarter.\nWhile inflation and component supply are likely to present some headwinds in the third quarter, we are addressing them with the pricing and supply chain actions previously mentioned.\nThe team has been doing an outstanding job capturing market demand, giving us exceptional orders and backlog growth.\nWe expect to continue capitalizing on that underlying demand.\nAnd the team will manage through the near-term supply chain environment with the same spirit and discipline they've demonstrated through the many external challenges of the past year.\nLooking forward, trends toward new investment in infrastructure and particularly in the modernization of infrastructure are accelerating hand-in-hand with demand to make communities more resilient to climate change and to do it in a more affordable way.\nThose trends only reinforce the strength of our investment thesis, that our differentiated portfolio of leading technologies, addressing scarcity, resilience, and affordability will drive increased revenue growth and margins, and sustainable growth with strong cash flow generation and increased opportunity for capital deployment.\nThis puts us in a privileged position to create both economic and social value for our stakeholders now and over the medium and long term.\nWe are genuinely excited about providing an update on our strategy and long-term plans at our upcoming Investor Day, which is scheduled for September 30th.\nIt will be the first opportunity for many of you to meet all of our business leaders and our entire senior leadership team, especially those who joined us over the past year.\nSo it's a great chance to provide a full-strategic update, including our long-term financial targets, and a deep dive into our vision of how digital solutions are transforming outcomes for our customers, including discussions with a few of those customers who've deployed some of our most advanced technologies.\nMatt and the team will follow up with invitations and logistical details in the coming days.\n", "role": "user" }, { "content": "compname posts q2 adjusted earnings per share $0.66.\nsees fy adjusted earnings per share $2.55 to $2.70.\nq2 adjusted earnings per share $0.66.\nraises full-year organic revenue guidance to a range of 6% to 8%, and raises mid-point of earnings per share guidance.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: They will provide their perspective on Xylem's third-quarter results and their outlook.\nI'll ask you please keep the one question and a follow up and then return to the queue.\nA replay of today's call will be available until midnight on November 30.\nAdditionally, the call will be available for playback via the investors section of our website under the heading investor events.\nAll references will be on an organic or adjusted basis unless otherwise indicated.\nThese statements are subject to future risks and uncertainties such as those factors described in Xylem's most recent annual report on Form 10-K and in subsequent reports filed with the SEC including in our Form 10-Q to report results for the period ending September 30, 2020.\nWe have provided you with a summary of our key performance metrics including both GAAP and non-GAAP metrics.\nFor purposes of today's call, all references will be on an organic and adjusted basis, unless otherwise indicated.\nI hope all of you and those close to you are keeping safe and well.\nThe team's operational execution was strong right around the world.\nYou'll recall that after the low point of April, we saw sequential improvements in May and June, and we continue to build on that positive trajectory through the summer.\nOur team took advantage of the market regaining pace and exceeded our revenue and margin guidance for the quarter, while generating very strong cash flow.\nThis performance reflects the team's focus on serving our customers and managing what we can control, whatever the dynamics are of the macroenvironment.\nThrough the quarter, we saw solid foundations of recovery in a number of places, and we are well positioned to further capitalize on that momentum.\nThe pandemic's impact hasn't been uniform, of course.\nConditions varied significantly both by geography and by end market.\nFor example, China revenue returned a healthy growth of 17%.\nWestern Europe, overall, was back to relative stability at 2% growth.\nThe U.S. saw only slight recovery, still dealing with pandemic response and coming in at down 11%, although improving sequentially.\nIn our end markets, we've seen ongoing resilience in the wastewater side of utilities, and our wastewater solutions returned to solid growth in the quarter.\nOn the clean water side, we're delivering strong commercial momentum including winning large, long-term transformational metrology deals, leveraging our differentiated platform, particularly in advanced metering infrastructure.\nIn addition to big wins with England and in Winston-Salem which we mentioned last quarter, the team recently won another marquee project in Columbus, Ohio, worth $94 million.\nThis customer is a combined utility, meaning we will provide both water and electricity meters plus advanced software and services.\nIt's worth noting how compelling our value proposition is for combined utilities, addressing both water and energy applications with one portfolio and leveraging our unique Flexnet communication capability across both platforms to achieve economies of scale.\nThe Columbus, Winston-Salem and England deals have together added about $250 million to Xylem's backlog.\nOur metrology and communications offerings are clearly differentiated in their own rights, but we also have the advantage of delivering unique value by combining infrastructure platforms with complementary digital solutions.\nEach value proposition enhances the other.\nAs anticipated, COVID impacts are causing delays in some metrology projects where time lines have shifted to the right.\nAnd in parts of the U.S., replacement meter installations have been pushed out in the short term.\nPipeline assessment services, a business that requires putting people on-site, has been affected by COVID-driven restrictions on travel and field work.\nAt the same time, the pace of interest in digital solutions for remote monitoring and automated operations has accelerated.\nThe pandemic has not only spot-led essential services, it has also eliminated utilities need for much greater operational and financial resilience which is now at the top of every utility operators' agenda.\nDigital transformation has gone from being attractive to becoming an imperative, and that's reflected in strong quoting activity in our digital solutions business which has also increased by 50% its number of revenue-generating clients.\nThe revenues are still a small part of our top line, but the acceleration of interest further strengthens our view on digital adoption in this sector.\nAnd as the number and size of those projects grow, we are seeing a broadening scope of opportunities across software, services and infrastructure products.\nWhile we don't expect this to be a straight-line recovery, Xylem is well positioned irrespective of how the pandemic plays out.\nWe anticipate quarter sequential improvements.\nOur financial health and liquidity are both strong.\nWe're successfully running in cost, executing the actions we announced earlier this year.\nAnd we're shifting investment to adapt quickly to customers' evolving needs and new ways of working.\nOur supply chain has been exceptionally resilient, with the team keeping customers supplied even through the pandemic's peaks.\nSo we are operating with discipline, strengthening our competitive position and helping our customers serve their communities with uninterrupted essential services despite whatever macro uncertainty may present.\nBut since Mark was in the Chair through the end of the reporting period, he'll carry the commentary on our third-quarter performance.\nSo Mark, over to you.\nRevenue declined 7% which was better-than-anticipated as we entered the third quarter.\nWe had strong performance in our wastewater utility businesses and the residential end market, both of which grew mid-single digits in the quarter.\nThe return to growth in these markets was offset by the expected declines in our metrology project deployments and industrial and commercial businesses which continue to be impacted by project delays and site restrictions.\nGeographically, as various countries have reopened and recovered, so has our business.\nIn China, for example, we saw a very strong performance with double-digit year-over-year growth.\nDespite the China business returning to pre-pandemic growth rates, emerging markets overall declined 7%.\nIndia was down only modestly, while the Middle East and Latin America declined double digits as they continue to be impacted by shutdowns throughout the quarter.\nAcross North America, recovery remains mixed.\nWhile revenues improved quarter sequentially, they were down year over year.\nWhile our wastewater business remained resilient, we continue to see timing effects on metrology deployments and softness in industrial markets.\nWestern Europe grew 2% in the quarter as countries reopened and activity resumed, with revenue growing in each of our end markets with the exception of industrial.\nWe also saw operating margins expand quarter sequentially to 13% which drove earnings per share of $0.62, both better than expected.\nI'll cover the margin impacts by segment shortly.\nOverall, our teams maintained very sharp focus and executed well operationally by driving strong productivity and cost reductions.\nWater Infrastructure orders declined 5%.\nOrder trends in our wastewater utility businesses continued to be solid.\nTreatment orders were up 20%.\nWastewater transport orders down 9% for the quarter would have been up mid-single digits but for lapping the large deal we won last year in India.\nOrders in the industrial end market were soft due to double-digit declines in our dewatering business.\nLong-term backlog continues to build as we're up over 30% for backlog shippable in 2021 and beyond.\nSegment revenues declined 2% in the quarter compared to the prior year.\nThis was better-than-anticipated and reflects the resilience of utility spending to run and maintain their wastewater operations.\nOur wastewater transport business grew 4% in the quarter.\nAnd we saw continued strength in our treatment business which grew 3% in the quarter.\nThe growth in treatment reflects what has been, to date, the relatively uninterrupted deployment of wastewater capex projects.\nThe dewatering business experienced continued softness.\nRevenues declined 14%, most of which was in the North American construction and industrial markets which have seen -- which have been significantly impacted by site closures and access restrictions.\nOperating margin in the quarter was 18.5%, down modestly year over year from higher inflation, lower volumes and unfavorable mix.\nHowever, the margin performance exceeded our expectations as the team's strong execution on cost reductions and productivity initiatives delivered 630 basis points in margin expansion.\nOrders in the applied water segment declined 1% in the quarter, and revenues declined 4% as softness in the industrial and commercial markets continued, particularly in the United States and the Middle East.\nThe commercial end market declined 5% in the quarter.\nAs a reminder, this business is roughly two-thirds weighted toward repair and replacement work which held up relatively well in the quarter despite shutdowns in some regions.\nIndustrial was affected by similar regional dynamics including site access restrictions and declined 7%.\nA bright spot in the quarter was residential which grew 4%.\nWe saw a particularly strong growth across Western Europe and from China.\nOverall, emerging markets declined 8% in the quarter.\nChina had a very strong performance, growing 23% as the team executed well, delivering on pent-up demand.\nThis was more than offset by the declines in the Middle East and Latin American regions due to the ongoing lockdowns.\nRevenue in the United States declined 6% but improved quarter sequentially, with some softness across end markets driven by continued virus impacts.\nOperating margin in the segment was 15.9%.\nVolume declines and inflation impacts reduced margins in the quarter but were largely offset by 530 basis points of cost reduction and productivity benefits.\nMeasurement and control solutions orders declined 19% in the quarter and revenue declined 15%.\nWe saw project timing significantly impact our metrology business and COVID-19 restrictions push out our project revenues in our pipeline assessment services business.\nIn metrology, we've seen relative stability in our opex replacement business from water metrology products.\nAs a reminder, our opex exposure accounts for about 70% of our revenues.\nWe've seen much more variability in the 30% of our metrology business that's tied to large project deployments or capex, particularly in our gas segment, where project revenues were down 60% in the quarter.\nHere, we've been significantly impacted by project timing, particularly from lapping a large gas metrology project deployment which was largely completed at the end of last year and delays in another large gas project this year due to home access restrictions.\nDespite these challenges, our underlying North American water metrology book and bill business has remained relatively stable and commercial momentum in winning new projects remains robust.\nThis is highlighted by the large contract wins we had in the first half of the year and continued into the third quarter with the Columbus, Ohio and Winston-Salem, North Carolina wins.\nPatrick already covered Columbus, but I'll quickly highlight a couple of important points on the Winston-Salem win.\nThis is a $60 million contract to provide water metrology products under our network as a service offering, leveraging our Flexnet communications network.\nImportantly, our teams differentiated the value of our offering by introducing several components from our digital solutions platform, enabling our customer to also seamlessly address critical needs around non-revenue water and the wastewater network.\nOur pipeline assessment services business has also been subject to significant near-term delays in project revenues driven by COVID-19 travel restrictions and site closures.\nAs a reminder, there are two businesses within AIA, digital solutions and pipeline assessment services.\nIt's in the latter business where we've experienced deferrals of pipe inspection work.\nAnd we expect those pushouts to continue into early 2021.\nAs a result, we booked an accounting charge to reflect the impacts of those delays.\nWe continue to strongly believe that the medium and long-term value proposition of this business is compelling, particularly as utilities move to address budget challenges by using pipeline assessment services to reduce future spend on pipe replacement.\nWe expect the project timing for deploying new metrology projects and the COVID-19-related delays in pipeline assessment services to continue to impact us through the fourth quarter.\nThis is reflected in our fourth quarter guidance which Sandy will cover later, as shippable backlog for the fourth quarter is down roughly 25%.\nThat said, it's significant that we've not had any project cancellations.\nRather, we're seeing an acceleration of growth in our project pipelines, and we continue to win large new contracts.\nAs a result, MCS shippable backlog in 2021 and beyond is up over 30% which is a pretty good indication of the power we're seeing with our digital platform.\nSo while these projects aren't currently reflected in the orders metric, they are the latest in a series of important wins that give us confidence in the medium and long-term growth profile of this segment.\nEBITDA margin in the segment was 14.8%.\nThe year-over-year margin decline was driven by lower revenues of high-margin North American metrology and pipeline assessment services due to project timing and COVID-19.\nThis impact was partially offset by 630 basis points of cost reduction in the quarter.\nWe ended the quarter with approximately $1.6 billion of cash and short-term investments and $2.4 billion of liquidity driven by our very successful green bond issuance last quarter, combined with our strong cash flow performance throughout the year.\nIn the face of substantial challenges presented by the pandemic, I'm very proud of the work of our teams in managing all aspects of our working capital performance.\nAt quarter end, working capital was 20.3% of sales, representing an improvement of 30 basis points versus this time last year.\nThe team's focus on working capital, disciplined capex spending and cost control through the quarter have continued to pay off, enabling us to generate free cash flow of $234 million, a conversion rate of over 200% in the quarter which did see some benefit from favorable timing on payments primarily related to taxes and interest.\nHaving worked with Sandy previously, I wasn't at all surprised by how quickly she's come up to speed on our businesses and our markets and the pace with which she's developed relationships, all virtually, and taken on the leadership of the global finance team over the past month.\nI couldn't be more confident about the future of Xylem or in Sandy's capability to help Patrick and the team accomplish our mission and take the company's performance to the next level.\nSo with that, I'll hand it back to Patrick for the last time.\nBefore turning to our outlook, I just want to take a moment to reiterate two overall trends we're seeing as we look forward.\nThe first is the influence of regional differences around the world.\nin the third quarter.\nSo long as the impact of COVID-19 continues to influence demand, we believe those geographic effects will be considerable to at least the end of the year.\nXylem's global diversification puts us in a strong position as we serve the international markets that are furthest along in the recovery curve.\nThe second overall trend to highlight is a shift of attention from reactive operational imperatives to medium and longer-term resilience.\nThe pressured utility space at the beginning of the pandemic are well known.\nYou simply can't stop providing an essential service, even if you're struggling to put crews in the field, and more end users than usual are having trouble paying their bills.\nOur customers have come through the most intense part of the crisis serving their communities heroically.\nIt's also been a wake-up call for the sector.\nUtilities leaders and operators have become acutely aware of the pressing need to invest in greater operational and financial resilience.\nPart of that investment will go to conventional infrastructure.\nThat will have to be combined with new approaches if utilities are to address their overarching challenges, making the cost of infrastructure more affordable, extending asset life and dramatically increasing labor efficiencies while maintaining safety.\nSo we've seen interest continue to ramp-up in digital transformation, remote monitoring, automated operations and smart infrastructure, more broadly.\nOf course, the implications of digitizing utility network goes deeper than the software platforms in our digital solutions business.\nBeyond software and end points, transformation also requires the digitally enabled pumps and drives that make up the backbone of a smarter network which is why we are implementing an integrated digital strategy across our entire portfolio.\nWe're very excited about the opportunity of working with our customers to build the digital water and energy networks that will carry their communities into the future.\nTurning from those trends to outlook.\nIn general, we have a much clearer view on Q4 than we had on Q3.\nWe were seeing stabilization in a number of markets.\nWe have even greater supply chain confidence, and we're executing well on cost, all of which leads us to expect quarter sequential improvement in margins.\nSo by end market, I'll start with our outlook for utilities.\nThe wastewater side has been exceptionally resilient.\nWe expect opex to continue holding up well given the need to service mission-critical applications.\nAnd capital projects with secured funding continue to move forward.\nOn the clean water side, as I mentioned, we have strong commercial momentum with multiyear projects like Anglin, Winston-Salem and Columbus, setting us up for healthy growth in 2021 and beyond.\nIn the short term, we expect performance to trail wastewater due to more pronounced COVID impacts, but we're not seeing structural changes in demand, and the growth profile of this segment is expected to remain highly attractive.\nWe simply anticipate some continuing COVID impacts on deployment timing.\nAnd standard meter replacements are likely to remain soft until physical distancing eases.\nLooking at industrial and commercial end markets, the accessibility of industrial sites varies widely by region.\nWhere COVID response has lagged, there have been site access restrictions, and work has been deferred.\nSo we're still anticipating softness to the fourth quarter, especially in North America construction and industrial markets, affecting our dewatering business.\nAnd in commercial, it's a mixed picture that varies by end customer.\nDemand in hospitals, data centers and apartment buildings, for example, is very different than for offices and hotels.\nBut less building use overall and soft North America construction suggest continued softness in the near term.\nNow, I have the great pleasure of turning over to Sandy for the first time so she can provide some more specifics on our Q4 guidance.\nI just want to kick off by expressing how excited I am to have joined the Xylem team.\nI joined Xylem because of the unique combination of strong commercial opportunities for growth and the compelling mission of the company.\nXylem is also complementary to my previous experiences which has included bringing together cutting-edge technologies with industrial products.\nI spent the last month getting up to speed with the team alongside Mark, and I look forward to all we have ahead of us, rounding out 2020 and beyond.\nWith that, let's get into a few more details on our fourth-quarter guidance.\nOn the top line, we expect organic revenues in the range of down 6% to down 8%.\nThis is a modest improvement in sequential performance versus the third quarter.\nAs we break it down by segment, we anticipate being down low-single digits in Water Infrastructure, down mid-single digits in applied water and down mid-teens in Measurement and control solutions reflecting the project deployment delays we have continued to see through October.\nOperating margin in the quarter is expected to be in the range of 13 to 13 and a half percent.\nAlso, a modest quarter sequential improvement.\nI also want to highlight a few full-year items.\nWe expect to end 2020 with free cash flow conversion of greater than 100% for the full year.\nRestructuring and realignment costs are now expected to be between $75 million and $85 million, slightly lower than our previous guidance, while structural annual cost savings remain unchanged at approximately $70 million.\nWe are lowering our estimated tax rate this year to 18 and a half percent to reflect our updated mix of earnings.\nHaving worked with Mark before, I know he and I bring similar perspectives and share a common approach to operational excellence and driving investment in innovation to support sustainable growth.\nMark has built a great team, and I'm confident we have the organizational capability to focus to deliver.\nIt's great to have you on the team.\nAnd we will execute from a position of competitive strength, even in the more challenging environments.\nOur discipline on cost and cash will continue to pay off, both in the coming quarter and through 2021.\nLooking ahead, that quality of operational execution will enable us to continue driving sustainable margin expansion.\nOur robust financial health which gives our customers confidence that they can rely on us in uncertain times, is built on the foundations of a strong balance sheet and cash generation.\nOur leading market positions are paired with a differentiated product portfolio and a durable business model at the heart of essential services.\nAnd our strategy places Xylem in the lead as the water sector's digital adoption curve accelerates, providing a multiyear runway of attractive growth.\nWe will deploy capital to continue strengthening our portfolio, investing in the solutions and services that anticipate our customers' needs.\nBoth the economic and the social returns of those investments will be attractive over the medium and long terms.\nAnd our commitment to create value for all our stakeholders will continue to underpin the sustainability and resilience of our company, our customers and our communities.\nSo let me take this opportunity to say once again, as I've said before, that all of Xylem stakeholders have benefit profoundly from Mark's leadership and tenure at Xylem, but none more than me, as I have benefited tremendously from his counsel.\nSo operator, pleased to listen to Q&A.\n", "role": "user" }, { "content": "q3 adjusted earnings per share $0.62.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Tony Milando, our chief supply chain officer, is also joining today's call.\nThey will provide their perspective on Xylem's third quarter results and our outlook.\nA replay of today's call will be available until midnight on November 9th.\nAdditionally, the call will be available for playback via the Investors section of our website under the heading Investor Events.\nAll references will be on an organic or adjusted basis unless otherwise indicated.\nThese statements are subject to future risks and uncertainties, such as those factors described in Xylem's most recent annual report on Form 10-K and in subsequent reports filed with the SEC, including in our Form 10-Q to report results for the period ending September 30, 2021.\nIn the appendix, we have also provided you with a summary of our key performance metrics, including both GAAP and non-GAAP metrics.\nFor the purposes of today's call, all references will be on an organic and adjusted basis unless otherwise indicated.\nBy now, you will have seen that the team delivered a solid third quarter performance with earnings and margins above our expectations.\nThe fast pace of orders growth that we saw in the first half of the year has continued with orders up 20% in the quarter, driving our backlog up 34%.\nThat commercial momentum reflects a really strong underlying demand for our solutions, which continues to be robust in all segments, markets and geographies.\nNevertheless, supply driven constraints on volume slowed the conversion of orders to revenue.\nA month ago, we indicated a probable $100 million impact on full year revenue, driven by the global supply chain environment.\nThe continuing shortage of electronic components, especially microcontrollers and other chips, is in particularly affecting players with large digital solution businesses like Xylem.\nSo we're reflecting those ongoing challenges in our full year view.\nHaving raised guidance at the end of the first and second quarters, we now anticipate that the constraints on volume will moderate our full year revenue growth to between 3% and 4%, and bring adjusted earnings per share into a range of $2.40 to $2.50, which represents roughly 20% earnings per share growth over last year.\nThe growth in orders and earnings per share reflects the privileged position we're in.\nMacro trends in our sector are driving durable and increasing demand for sustainable digital water solutions, our team is executing on a clear strategy to drive above-market growth and expand margins as our portfolio continues to digitize.\nThis quarter has been a vivid demonstration of those trends.\nThe team has also shown its ability to capture that demand while showing real discipline on cost.\nStill, given the impact that supply headwinds are having on volume, we'll provide some additional color on what we've -- we're seeing and how the team is addressing those conditions.\nI've invited Tony Milando, our chief supply chain officer, to join us on the call today.\nBut first, let me hand over to Sandy to look at the third quarter in more detail, and then we'll turn to a discussion of the market landscape that we see through the end of the year.\nSandy, over to you.\nRevenue grew 2% organically compared to the prior year.\nUtilities, our largest end market, was down 5% despite continuing strong demand.\nThe decline was driven by supply chain impacts on order conversion, especially chip shortages, slowing M&CS deliveries.\nIndustrial was up 11%, led by our continued growth in the emerging markets and Western Europe.\nCommercial grew 10%, led by the ongoing recovery in the United States.\nWhile residential, our smallest end market, was up 4%.\nGeographically, emerging markets was up high single digits with particular strength in Eastern Europe and Latin America.\nWestern Europe was up mid-single digits while the U.S. declined modestly.\nAs Patrick has mentioned, the team delivered exceptional organic orders growth of 20%, which was broad-based across all segments and regions.\nIn fact, year-to-date order volume is higher at this point of the year than in any previous year in company history.\nM&CS led the way with nearly 40% -- 42% orders growth, driven by large smart metering contract wins, the impact of longer lead times, and pent-up demand from the COVID-19-impacted prior year.\nWe're exiting the quarter with an overall backlog of about 34%.\nAs expected, we are seeing positive momentum on price realization, which will continue ramping through Q4 and into 2022.\nLooking at other key financial metrics.\nMargins were above our forecasted range with EBITDA margins coming in at 17.9%, reflecting strong productivity and good cost control by the team.\nYear over year, EBITDA margin contracted 30 basis points as inflation and strategic investments were largely offset by productivity, price realization, and cost containment.\nOur earnings per share in the quarter was $0.63.\nIn Water Infrastructure, orders were up 9% on strength in wastewater transport applications in the U.S. and Western Europe.\nRevenues were up 2% organically.\nThe Wastewater Utilities were down modestly, mostly due to delays in ocean shipping.\nIndustrial demand was broad-based across all regions.\nAnd so regionally, emerging markets delivered high single-digit growth, led by increasing industrial dewatering activity.\nWestern Europe was also up, driven by resilient wastewater opex spending and recovery in industrial applications.\nThe U.S. was down modestly due to the shipping delays I just mentioned.\nEBITDA margin expanded over the prior year as strong productivity savings, price realization, and volume leverage more than offset inflation and investments.\nPlease turn now to Slide 6.\nIn Applied Water, orders were up 17% organically in the quarter on broad industrial strength and commercial recovery.\nRevenue grew 8% in the quarter from continued commercial momentum and industrial growth in most regions.\nResidential growth moderated slightly due to volume constraints.\nand Western Europe both contributed 6% growth due to the uplift from commercial and industrial.\nEmerging markets were up 13% on continued strength in China and gains in Eastern Europe.\nSegment EBITDA margin contracted 60 basis points compared to the prior year as inflation and the investments to -- more than offset productivity benefits and price realization.\nIn M&CS, orders were up 42% organically, as I mentioned a moment ago.\nOur M&CS backlog now stands at roughly $1.6 billion.\nThe bidding pipeline remains very active as customer demand for advanced digital technologies accelerates.\nAnd organic revenue was down 5%, which is a tangible effect of chip shortages.\nWater applications were down modestly as growth in our test and assessment services businesses largely offset lower sales from smart metering.\nSo due to the digital composition of our metrology portfolio, it has a greater exposure to chip shortages.\nBy geography, Western Europe was up 1% while emerging markets was flat.\nwas down mid-single digits.\nSegment EBITDA margin in the quarter was down by 60 basis points compared to the prior year as volume declines from component shortages and higher inflation offset productivity and price realization.\nOur financial position continues to be very strong.\nWe closed in the quarter with $1.3 billion in cash after paying down $600 million of debt in the third quarter.\nFree cash flow conversion was 57% in the quarter, in line with our expectations, and we continue to expect full year of free cash flow conversion of 80% to 90%.\nNet debt-to-EBITDA leverage was in 1.3 times at the end of the quarter.\nThe team has clearly done a great job delivering a solid quarter's earnings in difficult circumstances.\nI want to give a special shout-out to our sales, service, and supply chain teams.\nThey've been really pulling out all the stops to care for our customers despite the unusual challenges.\nLet's turn to the quarter now and look forward.\nSince the supply chain environment has everybody's attention, we want to also provide more detail on what we're seeing and the actions we've been taking so I've asked Tony Milando, our chief supply chain officer, to walk us through that.\nTony, over to you.\nI'm sure many of you are already familiar with the various dimensions of stress on the supply chain across all sectors.\nMaterial shortages are having at least some effect on each of the segments with particular challenges in microcontrollers and other chips.\nIn addition, logistics times have continued to lengthen and carry reliability is at an all-time low.\nWe're also seeing labor tightness in markets where we have significant manufacturing, and particularly in the U.S. Of course, all of this has contributed to inflation across commodities, logistics, and labor.\nWe're managing the challenges with both short-term mitigations and longer-term actions.\nIn the short term, we're committing freight with carriers nearly two months further ahead than usual.\nWe're using these boat options to gain access to smaller ports and thus improve lead times, and we've accelerated value engineering and dual sourcing.\nTo create more resilience that's beyond that, we're working directly with our technology manufacturers to firm up allocations well into 2022 and beyond.\nWe've dedicated teams to accelerate product redesign rounds around components that are unavailable or nearing the end of life, we're taking advantage of this opportunity to take strategic actions around some SKU rationalization.\nOne more thing to mention, albeit with a slightly greater time horizon, there's been a lot of discussion about cross-border supply chains.\nOur developed markets largely depend on global supply chains.\nWhat we've seen is that in several cases, the current challenges aren't hitting our emerging markets nearly as hard, simply and because we have well-established localization strategies there.\nSo to that point, we'll continue to drive our strategy of making where we sell, always evaluating the benefit of shortening domestic supply chain.\nPatrick, that's the overview.\nOf course, I'm happy to go into more detail perhaps in response to questions when we get to Q&A.\nSo now turning from supply to demand.\nIt's essentially the opposite story.\nBidding pipelines are very active, orders pace continues to be brisk, and we are not seeing project cancellations.\nWe're staying as close to our customers as we are to our suppliers and doing everything we can to keep them served and, in turn, to help them serve their communities.\nJust here in last week, we had about 500 of our customers join us at our annual Xylem Reach User Conference.\nThese are utility operators who are at the forefront of digitizing their networks with AMI and advanced analytics.\nWhat we continue to hear from them is that the value they're getting from these technology deployments continues to grow.\nIn the short term, supply constraints are top of mind for about nearly all of them.\nAnd from their vantage point, they're seeing the same challenges industrywide.\nSo they're being patient and staying as flexible as possible.\nOn longer-term demand, the trends driving the water sector are more durable than the causes of the supply headwinds.\nOne example is the growing market for sustainable solutions.\nA month ago, we announced Xylem's commitment to net zero greenhouse gas emissions and to Science-based targets.\nOver the next two weeks, the water sector will be turning out in force at the COP26 Climate Conference in Glasgow to encourage utilities around the world to do the same.\nXylem will now be sharing platforms at COP to the utility leaders as they call on their peers to also make net zero commitments with the aim of decarbonizing the entire sector.\nMore than 65 water utilities around the world have already done so and it's a movement that's gaining momentum, which is just one reflection of the trend toward technologies that we affordably decarbonize water systems.\nTurning back to the near-term drivers in our end markets, I'm going to hand it back over to Sandy to share some detail on what we're seeing and to lay out our guidance for the balance of the year.\nThe full year outlook for our end markets remains largely consistent with our view from last quarter with the exception of utilities.\nIn utilities, underlying demand for our technologies continues to be very strong in both wastewater and clean water but in the immediate term, we expect growth will come down from just a range of the mid- to high single digits to flat.\nOn the wastewater side, we have seen steady performance in Western Europe on resilient utility opex and continued growth in emerging markets as a result of large capital projects and our localization efforts there.\nOrder rates that remain solid in the U.S., but revenue growth is challenged by constraints on volume.\nOn the clean water side, demand for smart water solutions and digital offerings continues to be robust.\nHowever, consistent with our earlier commentary, the impact of chip shortages is particularly acute in the clean water end market.\nLooking at the industrial end market, we continue to anticipate growing in the high single digits.\nThe growth is this broad-based with rebounding industrial activity across all segments and most regions.\nWe're seeing healthy demand in our industrial dewatering business in emerging markets as well as share gains with some OEMs and its impact of the new product introductions in Western Europe.\nWe're also seeing continuing strength in marine and food and beverage, driven by ongoing recovery in outdoor recreation and the hospitality sector.\nWe are also maintaining our high to mid-single-digit outlook in the commercial end market.\nThe U.S. business continues to recover at a brisk pace as new commercial building begins to ramp, and key leading indicators reflect such optimism for continuing recovery in the institutional sector.\nSustained growth in Western Europe and China is coming from new product introductions in the -- and energy efficiency mandates.\nIn residential, we're maintaining our expectations of low teens growth for the full year on strength of backlog and continuing market momentum.\nFor Xylem overall, we now see full year organic revenue growth in the range of 3% to 4%, down from the previous range of 6% to 8%.\nThis reflects the adverse effects of chip shortages and other supply chain disruptions that -- this revenue guidance breaks down by segment as follows: for Water Infrastructure, we maintain our expectations of mid-single-digit growth.\nWe expect high single-digit growth in Applied Water, down from low double digits.\nAnd in Measurement & Control Solutions, we now expected to be down mid-single digits rather than up mid-single digits.\nWe are now expecting EBITDA margins in the range of 17.1% to 17.4% compared to our previous guidance range of 17.2% to 17.7%.\nThis guidance represents full year margin expansion of just roughly 100 basis points.\nOur adjusted earnings per share guidance is now $2.40 to $2.50 which, at the midpoint, reflects a 19% increase in earnings per share over last year.\nFull year 2021 free cash flow conversion is in line with previous guidance at 80% to 90%, putting our three-year average right around 130%.\nWe've provided you with the number of other full year assumptions to supplement your models.\nThose assumptions are largely unchanged from our original guidance.\nWe have updated our euro to dollar conversion rate assumption for the fourth quarter from 1.18 to 1.16.\nAs you know, foreign exchange can be volatile so we've included our typical foreign exchange sensitivity table in the appendix.\nNow before wrapping up, let me share some thoughts on our fourth quarter outlook.\nWe anticipate total company organic revenues will be down roughly 4% to 6% in the quarter.\nThis includes flattish growth in Water Infrastructure and in the Applied Water, and M&CS down high teens.\nWe expect fourth quarter adjusted EBITDA margin to be in the range of 16% to 17%.\nJust in the last couple of days, we've been recognizing Xylem's 10-year anniversary.\nThe Xylem ticker started trading a decade ago when the company spun out of ITT.\nTen years ago, it wasn't nearly as obvious to the market that water was an investable piece, much less than it was about to become a growth sector.\nOur anniversary has been a good reminder to reflect on how much progress we've made.\nI genuinely believe our team has created something special.\nAnd along the way, we've been creating a lot of value.\nXylem's total shareholder returns have been nearly double the S&P 500 over the decade.\nBut what's most exciting to us are the opportunities that lie ahead.\nThe immediate challenge around supply chain are a good reminder that growth rarely happens in a straight line but these trends that are driving demand in the water sector are only intensifying and we're strongly positioned on those trends.\nWe have an outstanding purpose-driven team that's passionate about solving the world's water challenges.\nWe built technology leadership on the foundation of a durable business model.\nWe're benefiting from the growing market for our sustainable solutions and we're driving growth and margin expansion on the back of digitization, all of which underpins our commitment to growth framework that we laid out last month at our Investor Day.\nSo I'm confident here in our current market momentum will carry us strongly into 2022 and beyond and keep us on pace to deliver our 2025 strategic and the financial milestones.\nOperator, please lead us into Q&A.\n", "role": "user" }, { "content": "q3 adjusted earnings per share $0.63.\nq3 earnings per share $0.63.\nsees fy adjusted earnings per share $2.40 to $2.50.\nlowers full-year organic revenue and earnings per share guidance to ranges of 3% to 4%, and $2.40 to $2.50, respectively.\nglobal demand for water solutions continues to be robust, across our business.\nfull-year free cash flow conversion outlook remains unchanged at 80 to 90 percent.\nrevised guidance reflects impact of increased supply chain challenges, partially offset by strong cost discipline.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: They will provide their perspective on Xylem's fourth quarter and full-year 2020 results and discuss the first quarter and full-year outlook for 2021.\nA replay of today's call will be available until midnight on March 5.\nAdditionally, the call will be available for playback via the Investors section of our website under the heading Investor Events.\nThese statements are subject to future risks and uncertainties such as those factors described in Xylem's most recent annual report on Form 10-K and in subsequent reports filed with the SEC.\nWe have provided you with a summary of our key performance metrics, including both GAAP and non-GAAP metrics, in the appendix.\nEvery segment and every end market made considerable gains on a quarter sequential basis.\nAnd for Xylem overall, the team outperformed expectations across the major metrics.\nThose being revenue, earnings and cash.\nAs the year came to a close, we took full advantage of stabilizing markets.\nBoth Water Infrastructure and Applied Water Systems showed quicker resilience than anticipated.\nAnd we also affirmed our growth trajectory in Measurement & Control Solutions, building on the large project wins we talked about last quarter by adding another headline AMI deal in Houston, Texas.\nWe also gathered pace with our industry-leading digital portfolio as the pandemic accelerated customer adoption of digital transformation.\nRevenue and orders trends both improved significantly.\nOne caveat is that orders were still down slightly due to a scope reduction and a previous large win in India.\nOtherwise, orders grew in all three of our segments.\nXylem's large installed base of core products and established markets provided exceptional resilience on underlying demand for essential services.\nAt the same time, our global presence allowed us to capture the benefits of early recovery in places like China, which grew 18% in the quarter; and also in Europe, where we grew 6%.\nAs a result of that positioning on a large and resilient installed base, combined with a vibrant growth platform, we entered 2021 with healthy backlogs.\nThey're up 16% overall, and up 30% shippable in 2022 and beyond.\nWe know growth really happens in a straight line.\nAnd clearly, the global challenges of 2020 put a hitch in year-on-year numbers, including margin.\nBut I am very pleased with how we responded given these conditions.\nWe took quick action on spending and on structural cost, and we also made significant productivity improvements.\nAs a result, we returned to progress on margins in the third and fourth quarters, although we didn't entirely offset COVID's effects.\nOur supply chain execution ensured we kept customers served in pandemic, and we help them to deliver the essential services their communities depend upon.\nOur operational discipline delivered favorable bottom line outcomes, even in unfavorable market conditions, strengthening our financial position through the year.\nThe team corrected for the volatile conditions so quickly that, in fact, we delivered free cash flow conversion north of 180%.\nLooking ahead, we are encouraged by early signs of market recovery.\nThe ramp-up of vaccinations offers hope for an eventual return to normalcy, but we're not there yet.\nWe are still in uncertain times.\nBut we've nevertheless entered 2021 in a very strong position, and we are on course to capitalize on our increased competitiveness, financial strength and commercial momentum.\nWith that, I now want to hand it over to Sandy for more detail on how our segments performed.\nWe have continued to see steady quarter sequential growth improvement across our businesses since the low point in April.\nAnd this quarter, we took another meaningful step forward.\nFourth-quarter revenue growth was down 2% organically versus the same period last year.\nThat performance exceeded our expectations with upside in all of our end markets and geographically strong growth in China and Europe.\nI will touch on revenue performance in more detail covering each of the segments.\nBut in short, utilities and industrial were both down 3%.\nCommercial was flat and residential was up 15%.\nWe also saw quarter sequential improvement in orders.\nOrganic orders were down 1% in the quarter as we delivered a second consecutive quarter of sequential orders improvement.\nThis result most notably reflects the return to growth in M&CS orders, which delivered double-digit gains, including the large win in Houston, which Patrick mentioned.\nApplied Water contributed solid mid single-digit growth, and Water Infrastructure orders grew mid-single digits, excluding the scope reduction of a project in India.\nWe're still negotiating with the customer, but felt it was most prudent to reflect the scope reduction now.\nOtherwise, orders growth would have been high single digits for Xylem overall.\nWith orders accelerating and several large contract wins contributing to double-digit growth in backlog, we have good visibility of future revenue streams heading into 2021.\nI'm very pleased with the team's operational execution and cost discipline.\nFourth-quarter operating margin and EBITDA margin of 13.8% and 18.8%, respectively, are above our forecasted range.\nCompared to the prior year, lower volumes and unfavorable mix were partly offset by strong productivity and cost discipline.\nI'll review operating margin performance by segment in a moment.\nOur earnings per share in the quarter was $0.81 due to higher-than-forecasted revenue and earnings and from a lower tax rate due to favorable jurisdictional mix.\nWater Infrastructure orders in the fourth quarter were down 16% organically versus last year.\nAs I mentioned a moment ago, that decline was driven by the descoped India project.\nOtherwise, orders would have been up mid-single digits, reflecting healthy momentum in the segment as a whole, particularly in the wastewater utility businesses.\nNotably, treatment was up 10% as wastewater utility capex budgets continue to show resilience globally.\nWater Infrastructure revenue was flat organically in the quarter.\nModest growth in wastewater utilities was offset by modest declines in our industrial businesses.\nGeographically, results were mixed.\nThe U.S. was down high single digits, while Europe and emerging markets were up low single digits and mid-single digits, respectively.\nThese results generally reflect the stage of COVID recovery in each region.\nOperating margin and EBITDA margin for the segment were down a modest 60 to 70 basis points, respectively.\nSignificant savings from productivity and cost reductions were offset by inflation, the recognition of reserves and negative mix from declines in our U.S. dewatering rental business.\nPlease turn to Page 6.\nRevenue declined 1% in the quarter.\nMid-teens growth in residential was offset by softness in industrial.\nCommercial revenue was flat.\nwas down mid-single digits as COVID impacts drove declines in the industrial and commercial businesses, offset by that strong residential growth that I just mentioned.\nEurope delivered high single-digit growth, primarily driven by good pace in commercial and modest growth in residential.\nEmerging markets were down low single digits.\nSoftness in industrial markets in the Middle East were partially offset by strength in the residential and industrial markets in China.\nSegment operating margin and EBITDA margin declined 90 and 170 basis points, respectively.\nVolume declines in the industrial end market and overall inflation more than offset solid productivity gains, favorable mix and some price realization in the quarter.\nIn M&CS, orders returned to growth in the quarter, up 13% organically.\nThis was largely driven by double-digit growth in both water and energy.\nOrders in our test business were up low mid -- were up low single digits.\nRevenue improved considerably on a sequential basis.\nFrom the mid-teen declines we experienced in the second and third quarters, this quarter we finished the quarter down 5%.\nWhile our core U.S. metrology business continued to experience COVID-19 related softness, the largest decline is related to the timing of project deployments.\nLarge-scale projects that were in process pre pandemic in both the U.S. and the Middle East have been completed.\nAnd new projects, which are part of our backlog, have been temporarily delayed due to site access restrictions.\nWe expect that large project deployments will resume toward the end of the second quarter and further accelerate in the back half of the year.\nThese declines were partly offset by high single-digit growth in our analytics and advanced digital solutions businesses.\nwas down mid-single digits for the reasons I just mentioned.\nEmerging markets was down double digits due to the timing of prior year project deployments in the Middle East.\nAnd Europe grew double digits from demand in the test business and from the start of the Anglian Water metrology project in the U.K. Segment operating income and EBITDA margins in the quarter were down 330 and 350 basis points, respectively.\nLower volume, inflation and unfavorable mix were partially offset by strong productivity and cost discipline.\nI was particularly pleased with our strong cash performance for the year.\nWe grew free cash flow by 5% for the full year, exceeding our pre-pandemic free cash flow outlook, and delivered free cash flow conversion of 181%.\nOur team has been focused on driving continuous improvement on working capital for a number of years.\nIn the difficult operating environment of 2020, they took that work another step forward, finishing at 17.6% of revenue.\nThis is a 40 basis point improvement year on year, excluding foreign exchange impacts, and reflects the team's progress in managing inventories and driving solid improvements in accounts receivable collections.\nWe benefited from favorable timing related to the settlement of restructuring, tax, interest and payroll liabilities, some of which will reverse in 2021.\nOur balance sheet is well positioned and includes a $1.9 billion cash balance.\nNet debt-to-EBITDA leverage is one and a half times.\nAs a reminder, we'll take advantage of our cash position to repay one of our senior notes amounting to $600 million in the fourth quarter.\nAnd lastly, we announced an annual dividend increase of 8%.\nThis is our tenth consecutive annual increase.\n2020 reminded us all that it's prudent to be humble about the fidelity of our foresight.\nWhen COVID first began to spread around the world, we said we would focus on managing what we could control, while maintaining our investment for growth.\nAnd that's exactly what we've done.\nSo with 2021 still presenting some uncertainty, we will apply the same kind of focus that guided us throughout 2020.\nIn our earnings call almost exactly a year ago, I said that I expected operational discipline would be a key capability for us.\nI couldn't have anticipated then how much we could benefit from that capability.\nWhen 2020's big challenges arrived, the team delivered on cost, on working capital, on free cash flow and on driving commercial value from our large installed base.\nWe're still in a challenging environment, so we'll continue to face spending until we further see improvement in our markets.\nWe'll keep executing the structural cost program begun in 2020, which is going to deliver savings through 2021.\nAnd given some of the inflationary headwinds we're already seeing, we are redoubling our efforts to manage the price-cost dynamic.\nWe're keeping a very close eye on our supply chains, and proactively managing potential inflationary and logistics impacts.\nDespite varying by market and geography, there are clearly opportunities for growth in a recovering environment.\nIn digital transformation, the pandemic demonstrated the imperative of operational and financial resilience for utilities, which is precisely the value proposition of our advanced digital solutions.\nPre-pandemic, the business case was already very compelling.\nBut as utility operators worked heroically to keep essential services running, the stresses of the pandemic made it clear that new approaches are required.\nRemote monitoring, automated operations and smart infrastructure more broadly continue to see increased demand.\nBacklog in our advanced digital solutions grew 70% year on year.\nAlthough it's from a small base, the trajectory is clear.\nIt puts us in a very attractive position as we grow not only in software platforms, but in all of the digitally enabled parts of our portfolio.\nGeographically, India and China will continue to drive high growth.\nDespite experiencing COVID's earliest impacts, China actually grew last year.\nAnd in the three years leading up to 2020, India and China posed a combined average annual growth rates in the double digits.\nWith localization strategies well advanced in both countries, our China and India teams are set to continue delivering impressive growth.\nIt's also worth mentioning a very solid financial foundation underpinning our growth.\nWith the current cash balance of nearly $1.9 billion, capital deployment is clearly top of mind for us.\nEven with some debt repayment during the fourth quarter, that number still offers a lot of capacity.\nAlongside organic investment, M&A remains a top priority, and we intend to be proactive in our deployment of capital, wherever the investment case warrants.\nWe remain disciplined about valuations, but we do see opportunity for additional investments over the next 18 months.\nGrowth is also important to our creation of social value.\nWe are in the very privileged position that sustainability is baked into our business model and strategy.\nOur portfolio of solutions has a net positive impact, not only on water, but on a wide range of sustainability outcomes.\nWe took several bold steps on sustainability in 2020, most notably, our green bond offering.\nAnd performance across these metrics continues to put us in a unique leadership position, both in the water sector and more broadly.\nThe team's progress has strengthened our position on a number of sustainability indices.\nWe were recently added to Bloomberg Barclays MSCI Green Bond Index.\nDespite that gratifying recognition, we have so much more work to do to achieve our 2025 sustainability goals and to deliver on our mission.\nThrough 2020, utilities have been reassuringly resilient, down only mid-single digits.\nAs you see in the fourth-quarter results, M&CS and Water Infrastructure revenues held up better than anticipated.\nStill, our outlook for 2021 reflects a tempered view that utilities have not seen the end of the pandemic impacts quite yet.\nWe anticipate our utility business overall, which is just north of 50% of Xylem revenues, will grow in the low to mid-single digits in 2021.\nWe expect that same growth rate on the wastewater side as utilities continue to focus on mission-critical applications.\nAnd we expect modest recovery in opex growth on a global basis through the year.\nIn the U.S., wastewater capex is likely to be down modestly.\nHowever, the decline should reflect postponements rather than reductions in projects.\nAs you would expect, we have kept close to our utility customers to understand how they are thinking about budgets and funding for this year.\nAnd while some uncertainty remains, their deepest concerns have largely abated since the low point of the pandemic.\nOn the clean water side, we anticipate mid single-digit growth.\nAs I mentioned, large project deployments should begin ramping again from the second quarter, accelerating through the end of the year.\nThe large multiyear metrology deals that we won in 2020 set us up for solid growth this year and beyond.\nIn industrial markets, we've seen good sequential improvement.\nShort-cycle orders and project activity are definitely beginning to pick up, but are still likely to be limited by COVID impacts in the near term.\nWe expect industrial to be flattish to up low single digits.\nOur commercial end market outlook varies quite a bit by geography.\nThe U.S. will continue to be sluggish.\nEurope, on the other hand, should continue recovering, although not at the double-digit pace we saw in the fourth quarter.\nAnd overall, we anticipate the commercial market to be flattish to down slightly for the year.\nOn Slide 12, you will see that we are reinstating annual guidance.\nWhile uncertainty remains especially regarding the timing and cadence of recovery, we are confident our team will deliver results in line with the following framework.\nFor Xylem overall, we foresee full-year 2021 organic revenue growth in the range of 3% to 5%.\nThis breaks down by segment as follows: low to mid single-digit growth in Water Infrastructure, with solid growth in wastewater utilities being partially offset by flattish performance in the industrial markets, predominantly in our dewatering business; low single-digit growth in Applied Water.\nWhile we see pockets of recovery in this segment globally, particularly in residential, the outlook for growth in the commercial building end market is more muted.\nOn top of that, our exposure to North America is heavier and the region has lagged on pandemic recovery.\nIn Measurement & Control Solutions, we expect mid- single-digit growth.\nCustomers indicate project deployments will likely resume late in the second quarter and further accelerate through the second half of the year.\nWe also expect to see our test assessment services and advanced digital solutions businesses, building on the momentum they delivered finishing 2020.\nWhile we have typically provided you with both the adjusted operating margin and adjusted EBITDA margin in the past, you will notice that we are increasing our focus in reporting around adjusted EBITDA.\nWe believe that this measure more accurately reflects the cash performance of our businesses and will enable us to more transparently report margin performance after M&A without purchase accounting impacts.\nFor 2021, we expect adjusted EBITDA to be up 40 to 140 basis points to a range of 16.7% to 17.7%.\nFor your convenience, we're also providing the equivalent adjusted operating margin here, which we expect to be in the range of 11.5% to 12.5%, up 70 to 170 basis points.\nThis predominantly reflects the benefits from our restructuring savings, combined with volume leverage and favorable price/mix, more than offsetting inflation and investments.\nThis yields an adjusted earnings per share range of $2.35 to $2.60, an increase of 14% to 26%.\nFree cash flow conversion is expected to be in the range of 80% to 90%, following free cash flow conversion of 181% in 2020 and 124% in 2019.\nWhile we continue to drive continuous improvement, we expect to see increases in working capital as we return to growth, and some of the timing benefits we realized in 2020 related to the settlement of liabilities will reverse in 2021.\nWe believe this is purely a dynamic related to 2021, and we expect to drive 100% cash conversion in 2022 and beyond.\nWe have provided you with a number of other full-year assumptions on the slide to supplement your models.\nOne key item that I do want to draw your attention to is foreign exchange.\nWe're assuming a euro to dollar conversion rate of 1.22.\nFX can be volatile, and so an FX sensitivity table is included in the appendix, which will help you if we continue to see variations in the rates.\nNow drilling down on the first quarter, we anticipate that total company organic revenues will grow in the range of 1% to 3%.\nThis includes low single-digit growth in Applied Water and low to mid single-digit growth in Water Infrastructure.\nM&CS is expected to decline low to mid-single digits as we anticipate continuing delays from COVID before projects begin to deployment in Q2.\nWe expect first quarter adjusted EBITDA margin to be in the range of 14% to 15%, representing 170 to 270 basis points of expansion versus the prior year, with the largest expansion coming from M&CS due to operational improvements and a prior year warranty charge.\nWe recognize both that the marketplace is stabilizing and that it's still likely to be unsettled for some time.\nBut we come into the new year with good momentum and an even stronger position emerging from the pandemic than when we entered it.\nThat position is built on a durable business model.\nWe have vital products at the heart of essential services.\nAnd we have differentiated technology that provides a multiyear runway for attractive growth.\nOur mission has perhaps never been more relevant.\nAnd our underlying investment thesis remains robust.\nOur near-term performance is delivering results, and we continue to invest for sustainable growth.\nThat's in line with our long-term strategy to create both economic and social value for our shareholders, our customers and our communities.\nWe'll provide an update on our key strategic priorities and our long-term plans at a virtual Investor and Analyst Day planned for later this year, where I look forward to sharing more detail on our technology and solution capabilities and to discussing our growth strategies.\n", "role": "user" }, { "content": "compname posts q4 adjusted earnings per share $0.81.\nq4 adjusted earnings per share $0.81.\nsees fy 2021 revenue up 6 to 8 percent.\nsees fy adjusted earnings per share $2.35 to $2.60.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: On behalf of U.S. Steel, I'd like to wish everyone a happy and healthy 2022.\nSteel President and CEO, Dave Burritt, who will begin on slide four.\n2021 was an exceptional year.\nIt puts us on a path for another strong year in 2022.\nWe delivered for our stakeholders in 2021, achieving record performance across nearly every part of our business, record earnings, record EBITDA, record EBITDA margin, record free cash flow, and record safety, quality, and reliability performance.\nCollectively, we are pursuing best here at U.S. Steel, and 2021 is a great example of our progress.\nBut this is just the beginning.\nOur progress will continue in 2021 beyond.\nWhile the market is certainly looking for every reason to be negative about the prospects for this year, we remain overwhelmingly positive.\nAs expected, the first quarter will be seasonally weak, including the normal impacts of our mining operations, but we believe this is just temporary.\nWhile markets continue to self-correct, the macro backdrop is favorable.\nSupply chain issues will ease, inflationary pressures will abate, saving rates remain high, cash remains on the sidelines and demand remains pent up for the markets we serve.\nThis is a recipe for success in steel, and we are optimistic that 2022 demand will accelerate.\nWe have, after all, double through cycle prices.\nClearly, a great place to be.\nWe know about the risks, the Fed taking rates up too fast, unexpected changes to import restrictions, geopolitical risk, existential risks.\nThe risks are many, but we've seen it all before.\nWe know where we're headed, and we know how to get there.\nWhen you are in pursuit, constant pursuit of best, you were never satisfied, and challenges will always remain.\nWe are taking the necessary steps to become less capital and carbon intensive.\nWe are executing on strategic investments to expand our capabilities, capabilities that will make us a better, not bigger steel company.\nAnd we are going to move faster, not slower in 2022 because as we like to say, we can't get to the future fast enough.\nThis isn't your great, great grand path for U.S. steel anymore.\nU.S. Steel's future is incredibly bright.\nThe solution remains the same, execute our best for all strategy by constructing a second mini mill greenfield facility and expanding finishing lines through our investments in an electrical steel line and coating line at Big River while returning capital to stockholders.\nWhen we execute, we expect to unlock $850 million of additional through cycle EBITDA through state-of-the-art mini mill steelmaking and finishing line capabilities.\nAnd we will have further differentiated our sustainability advantages by customers as we continue to deliver against our responsible steel and 2050 decarbonization objectives while growing our offering of sustainable steel solutions, including verdeX.\nWe know you know this.\nBut we clearly know this is a show-me story.\nSo we will keep our heads down, remain focused and disciplined and we will continue our progress toward our best for all path forward because after all, we have to keep showing our stakeholders what best for all means.\nIt's about continuing to reimagine how steel gets made more sustainably like efforts earned by Big River facility Daimler's 2021 Sustainability recognition award.\nAnd it also means continuing to innovate to accelerate and further our best for all progress.\nJust this week, as an example, we announced a strategic investment and partnership in Carnegie foundry, a leading robotics and artificial intelligence studio in Pittsburgh, supported by Carnegie Mellon University.\nWe look forward to beginning our partnership together as we work to accelerate and scale industrial automation to find new ways to serve our customers.\nOur customers are seeing and embracing the transformation that's taking place at U.S. Steel, and we are pleased to be a like-minded regional partner for them.\nWe look forward to deepening our partnerships to create unique solutions that build on our long-term relationships, industry-leading innovation and constantly increasing focus on products our competitors haven't imagined.\nFor our employees and communities, best for all means investments in their future in our recent announcement that we have selected Osceola, Arkansas as a home for our second mini mill, means jobs.\nIt means a commitment to that community.\nIt means a more secure future for the region, and it means a more responsive U.S. steel to meet the needs of our customers.\nOsceola is our newest home, and we continue to invest in regions that have supported U.S. Steel throughout our history, integrated mills and mini mills, our Best of Both enabling our best for all future.\nAnd for investors, best for all means increasing our future earnings power while returning capital to stockholders.\nWe don't believe the market is rewarding us yet for continued strength in 2022, improve through-cycle earnings or for the long-term value, our best for all strategy.\nSo we will continue to buy back our own stock and are pleased to announce an incremental $500 million authorization.\nWe are generating excess cash, and we have an obligation to reward stockholders.\nAs I said before, this isn't our great, great grand path with U.S. Steel, and we look forward to continuing to show all our stakeholders the power of best for all.\nLet's get into the agenda for today's call on slide five.\nFirst, we will spend some time recapping our 2021 performance and strategic milestones.\nSecond, we will provide some additional context on why we are confident.\nAnd third, we will spend some time providing definition on our capital allocation framework and key priorities, priorities aligned with showing our stakeholders what best for all means for them.\n2021's record performance has fundamentally changed our business.\nAs you see on slide six, our record performance in safety and environmental, in customer and operational excellence and in our financial performance, is a direct result of executing our strategy over the past several years.\nTake safety and environmental as an example.\nSafety is and will always be first at U.S. Steel and is at the core of our steel principles.\nWe delivered our best safety and environmental performance on record and continue our progress toward our ambitious 2030 and 2050 carbon reduction goals.\nWe also demonstrated exceptional quality and reliability performance when it mattered most to deliver for our customers in 2021.\nWe also delivered record financial performance in 2021.\nWe acted boldly in 2020 to announce the acquisition of the remaining stake in Big River Steel, best as the market was gaining momentum.\nWe moved quickly and our well-timed acquisition allowed us to capture the remarkable earnings power of Big River Steel in 2021, including nearly $1.4 billion of EBITDA and 39% EBITDA margin.\nSteel Europe segments also delivered record financial performance.\nOur integrated operations continue to run well to drive what is expected to be another impressive year in 2022.\nI'll begin on slide seven.\nAs Dave mentioned, 2021 was a year of record financial performance.\nWe ended the year with adjusted EBITDA of approximately $5.6 billion and an adjusted EBITDA margin of 28%.\nThis translated into record free cash flow generation of approximately $3.2 billion, including over $1 billion in the fourth quarter alone.\nWe expect to generate meaningful levels of free cash flow in 2022 as well.\nAdjusted earnings per share in the quarter was $3.64 per share and was significantly impacted by a noncash year-end true-up to our tax valuation allowance.\nExcluding this impact, we outperformed expectations on earnings per share just like we did on revenue and adjusted EBITDA.\nOur strong performance in 2021 allowed us to transform our balance sheet by repaying over $3 billion in debt in the year and ending the year with 0.7 times leverage.\nThis type of financial performance allows us to enter 2022 from a position of strength.\nThe remaining debt on the balance sheet is manageable with over 80% due until 2029 and beyond.\nOur pension and OPEB plans are overfunded.\nWe have no mandatory cash contributions for the foreseeable future and have already derisked a component of the plan to further strengthen our balance sheet.\nAnd we're also ending the year with nearly $5 billion of liquidity, including over $2.5 billion of cash.\nBefore I hand it back to Dave to expand on our 2022 opportunities, I'll spend a few minutes on our segment performance on slide eight.\nIn our flat-rolled segment, we delivered record EBITDA and EBITDA margin in 2021 of over $3.1 billion and 25%, respectively.\nIn the fourth quarter alone, we generated over $1 billion of EBITDA and an EBITDA margin of 30%.\nIt was a similar scenario for our mini mill segment.\n2021 delivered record EBITDA and EBITDA margin of nearly $1.4 billion and 39%, respectively.\nThis included $406 million of EBITDA in the fourth quarter and an industry-leading 41% EBITDA margin.\nThe fourth quarter marked the second consecutive quarter of $400 million plus of EBITDA and over 40% EBITDA margins.\nOur European operations also posted record EBITDA and EBITDA margin in 2021.\nEBITDA was nearly $1.1 billion for the year or 25% EBITDA margin.\nLastly, our tubular segment reported nearly $50 million of EBITDA in 2021, including $42 million in the fourth quarter alone.\nWe are leveraging new trade actions where we can and continue to expect the tubular segment to be a more meaningful contributor to our financial performance in 2022.\nWe remain bullish for 2022 and slide nine highlights just a few items that support our point of view.\nAt its core, consumer demand remains very good.\nAs I mentioned in my earlier remarks, there is a lot of cash sitting on the sidelines with saving rates at elevated levels.\nBut supply chain issues have prevented the full potential of consumer demand to shine through.\nIn auto, pent-up demand continues into 2022 and easing supply chain pressures are driving increased auto production expectations.\nAuto builds in North America are expected to increase by 2 million units in 2022 and accelerate as the year progresses.\nThis is a significant improvement for 2021 with room to run as broad supply chain issues are resolved.\nIn appliances, production in 2022 is expected to be on pace with last year's record output.\nAnd these expectations are materializing in our order book.\nIn the U.S., we're seeing the auto and appliance original equipment manufacturers or OEMs order book increased each month in the first quarter.\nMany of these OEM orders carry new, higher fixed-contract prices to begin the year.\nAlso, the tin packaging business is expected to remain strong in 2022.\nThis is a market we are uniquely positioned to serve and where pricing was also negotiated significantly higher for 2022.\nMake no mistake, the success we had on fixed-price contracts has generated significant year-over-year uplift on our fixed book of business.\nOn steel market pricing, recent price movement still positions spot indices at two times historical averages.\nDemand is in line with normal seasonality, and auto and appliance activity keeps us bullish for consumer demand.\nMeanwhile, the import arbitrage is starting to fade and lead times are normalizing, which we believe are precursors to increase spot market activity and positive price momentum.\nIn Europe, pricing has already stabilized close to $1,000 per ton and our order book has been steady.\nWe expect order entries to accelerate into the similarly stronger second quarter and are on pace for another strong year from our European operations.\nIn tubular, rig counts have increased, supported by higher oil and natural gas prices.\nThis is driving increased demand and higher pricing for our OCTG products.\nDemand is expected to accelerate in 2022 and our EAF and proprietary connections will continue to support higher earnings in 2022.\nWe are enhancing the customer experience and are seeing tangible results for 2022.\nThe customer is core to everything we do.\nWe recently partnered with Norfolk Southern and Greenbrier to develop a railcar that utilizes U.S. steel proprietary grades, resulting in a stronger, lighter and more capable railcar.\nThrough collaboration with U.S. Steel, Norfolk Southern and Greenbrier are able to extend the useful life, improve their sustainability and increase the efficiency of each gondola railcar.\nThis type of product innovation create sustainable solutions is just the latest example.\nWe are focused on continuing these mutually beneficial partnerships in 2022.\nOur transformed balance sheet is another reason we're excited for 2022.\nToday's strong balance sheet fully funds the strategic projects we've already discussed, creates a clear path to strategy execution and is a foundation for our balanced and disciplined approach to capital allocation, including direct returns to stockholders.\nThis is in addition to our existing $300 million authorization announced in October 2021, of which approximately $200 million has been repurchased to date under the existing authorization.\nWe will continue to repurchase our own stock, especially when it is trading at what we believe is a significant discount.\nBefore I detail our enhanced capital allocation priorities, Christie will provide an outlook on our first quarter performance.\nWe are on pace to deliver another strong performance in the first quarter.\nSlide 10 outlines some key considerations for first quarter performance.\nOur flat-rolled segment is expected to report increased shipments and higher selling prices from reset annual contracts versus the fourth quarter.\nAs you know, the seasonality of mine will impact the first quarter, along with higher coal and natural gas costs, which will more than offset the commercial steel tailwinds.\nRecall, each year, the lots on the Great Lakes closed from mid-January through the end of March.\nThis not only limits our ability to ship pellets to our own operations but also to ship to third-party customers.\nGiven our increasing presence as a merchant seller of iron ore, the seasonal impacts of our mining operations have increased from historical levels.\nIn our mini mill segment, the shifting hot-rolled coil pricing dynamic in the U.S. will be more fully reflected in our average selling price.\nWe expect temporarily lower volumes due to more hot-rolled coil product mix than our flat-rolled segment.\nimports of sheet steel increased over 70% to a six-year high.\nThis quarter, we continued to monitor surges of low-priced imports and their impact on the market and on our operations.\nIn Europe, steel prices and volumes are expected to be similar to the fourth quarter, while raw material and energy costs will be likely headwinds.\nIn tubular, higher prices have increasingly been reflected in our performance, as well as lower scrap costs for our Fairfield EAF.\nAs a result, we expect Tubular's EBITDA to improve again in the first quarter.\nDave, back to you.\nOver the past year, we've talked a lot about our strategy and the continued progress toward our best for all future.\nWith each passing quarter, we have transformed the balance sheet, announced an advanced critical capability and sustainability-related strategic projects to improve our through-cycle earnings power and reduce our capital and carbon intensity and enhance our direct returns to stockholders.\nToday, I want to reinforce some important messages and provide more definition around our business priorities and capital allocation framework on slide 11.\nA framework that we believe will create long-term stockholder value.\nThe major theme should be familiar to you.\nWe will maintain a strong balance sheet.\nWe will invest in capabilities, not to become bigger, but to become better, and we will return capital to stockholders as the business continues to perform exceptionally well.\nLet's discuss each component of our capital allocation framework in more detail.\nFirst, we consider a strong balance sheet to be foundational to the success of our strategy.\nWe are pleased with the significant progress we've made to reduce our debt, extend our maturity profile, lower our debt service costs and improve our credit ratings.\nAs we continue to execute our strategy, we are targeting a through-cycle total debt-to-EBITDA leverage metric of 3 to 3.5 times.\nBased on the progress we've already made to delever the balance sheet and the improved through-cycle earnings power of our integrated and mini mill business model, we are confident that our mid-cycle performance capability more than support this target.\nWe will continue to evaluate more modest near-term opportunities to repay debt and optimize our capital structure.\nSecond, we believe the highest value-added use of our cash is to fund the announced investments that will transform our earnings profile and increase the consistency of our free cash flow.\nU.S. Steel is executing from a position of strength, a position that we've earned through operational and commercial excellence and record-setting EBITDA and free cash flow performance.\nIt is a position that is tremendously valuable and is a catalyst to advancing our strategy, which our customers demand from us.\nAs we accelerate our transition toward best for all, we will protect the successful execution of mini mill No.\n2 and the strategic investments we are making in non-grain-oriented electrical steel and galvanizing capability at Big River Steel by maintaining a cash position no less than our next 12-month capex.\nThis will ensure that our strategic investments will be fully funded by existing cash and free cash flow while preserving our ability to maintain a balanced and disciplined capital allocation strategy.\nThird, as you would expect, we will continue to evaluate investment opportunities to further our best for all strategic transition.\nAs we seek to lower the sustaining capital requirements of the business, we are sharpening our focus on the types of projects we may pursue in the future.\nFor us, best for all starts with enhancing our focus on expanding our competitive advantages: low-cost iron ore, mini mill steelmaking, and best-in-class fishing capabilities, and by returning and by delivering returns of at least 15%.\nThere are no additional capability investments to announce at this time as our focus is on completing the announced projects ahead of schedule and under budget, something our Big River Steel team has demonstrated they are highly capable of doing.\nLastly, an important component of our capital allocation framework is stockholder distributions.\nLast quarter, we were pleased to announce our restored $0.05 per share quarterly dividend, and our first priority for direct returns is to maintain that dividend policy.\nWe plan to supplement commitment to a quarterly dividend by returning excess cash through measured and opportunistic stock buybacks.\nThis allows for direct participation in capital returns for our investors as we successfully deliver our strategy.\nAs mentioned earlier, I am pleased to say that our Board has authorized a new and incremental repurchase program of $500 million.\nOur best for all future has never been clear, and we believe the framework described today provides even more definition on how we will advance our disciplined approach to creating stockholder value.\nWe believe our best for all strategy and capital allocation framework delivers a compelling investor proposition, a proposition that balances financial strength, investments that sustainably advance our competitive advantages and long-term through-cycle value creation by increasing our earnings power, improving our free cash flow and distributing capital to stockholders.\nI'm pretty pumped up about where we are today and what our future holds.\nWith that, let's get to Q&A.\n", "role": "user" }, { "content": "q4 adjusted earnings per share $3.64.\nboard of directors has authorized a new $500 million stock repurchase program to commence in q1.\nexpect 2022 to be another strong year.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: On our call today are David Gibbs, our CEO; Chris Turner, our Chief Financial Officer; and Dave Russell, our Senior Vice President and Corporate Controller.\nFollowing remarks from David and Chris, we'll open the call to questions.\nAll system sales results exclude the impact of foreign currency.\nCore operating profit growth figures exclude the impact of foreign currency and special items.\nAll two-year same-store sales growth figures are calculated using the geometric method.\nFor more information on our reporting calendar for each market, please visit the Financial Reports section of our website.\nWe are broadcasting this conference call via our website.\nPlease be advised that if you ask a question, it will be included in both our live conference and in any future use of the recording.\nWe would like to make you aware of upcoming Yum!\nInvestor events and the following.\nDisclosures pertaining to outstanding debt in our restricted group capital structure will be provided at the time of the Form 10-Q filing.\nThird quarter earnings will be released on October 28, 2021, with the conference call on the same day.\nI'm excited to share our strong second quarter results as we delivered record second quarter unit development and 23% same-store sales growth.\nImportantly, each division reported positive same-store sales growth on a two-year basis, a step up from first quarter trends.\nThis sustained momentum was underpinned by our investments in digital and off-premise and the adaptability of our brands to meet the needs of consumers in an ever-changing environment.\nThough COVID obviously creates a more challenged operating environment, our confidence is stronger than ever in our ability to navigate the resulting uncertainties and in the long-term growth potential of Yum!\nAs a result, we are reinstating our long-term growth algorithm with one important change.\nWe are raising our previous guidance of 4% unit growth to between 4% and 5% unit growth.\nAs a reminder, our long-term growth algorithm includes 2% to 3% same-store sales growth and mid to high single-digit system sales growth leading to high single-digit core operating profit growth.\nThe diversification of our global portfolio, the resilience of our business model, and the agility of our teams are allowing us to compete and win in a full range of market conditions, including both those markets with accelerated recovery and markets still heavily impacted by COVID.\nLooking forward, our iconic brands and unmatched scale, in combination with the world-class talent in our restaurant teams, franchisees, and above-store leaders, have uniquely positioned us for sustained growth.\nNow we'll discuss our Recipe for Growth and our Q2 performance and the growth drivers that underpin it.\nTo start, I'll cover two growth drivers, namely Relevant, Easy and Distinctive brands or RED for short, and unrivaled culture and talent.\nThen Chris will share more details of our Q2 results, our unmatched operating capability, and Bold Restaurant Development growth drivers and our strong liquidity and balance sheet position.\nFirst, a few highlights from the quarter.\nsystem sales grew 26%, driven by 23% same-store sales growth.\nImportantly, same-store sales grew 4% on a two-year basis, which includes the impact of approximately 700 or about 1% of our stores being temporarily closed due to COVID as of the end of Q2 2021.\nThis was driven by continued strong sales momentum in North America, the U.K., and Australia, with improved performance in Europe as it began to reopen and show signs of recovery.\nAs I mentioned earlier, each of our brands delivered positive two-year same-store sales growth on a global basis, including the impact of temporary closures, and each brand also reported an improvement in the two-year trend from Q1.\nThis is a great indicator for the sustained strength and breadth of our recovery.\nEven more exciting is the extremely strong net new unit growth of 603 units that we delivered during the quarter, which was both broad-based and record-setting.\nLooking across the more than 150 countries in which we operate, we've seen that while the overall global trend is positive, the recovery will neither be consistent from country to country nor linear within a country.\nThis insight reinforces the competitive advantages of our diversified portfolio and our ability to serve customers through multiple on and off-premise channels.\nWe've seen that increased customer mobility driven by reopening trends and vaccinations contributed to strong performance in many of our markets.\nA key growth driver for our business and priority for our teams is the continued acceleration of our digital and technology initiatives across the globe, geared toward providing customers with new and seamless ways to access our brands.\nEven as economies continue to reopen, the importance of the off-premise occasion remains a top priority.\nWe delivered a second quarter record with over $5 billion in digital sales, a 35% increase over the prior year.\nEven more exciting, for the first time, on a trailing 12-month basis, we delivered more than $20 billion in digital sales.\nWe believe these sales are highly incremental and result from our investments in our digital and technology ecosystem, which enable our teams to deliver an even more RED customer experience.\nTo bring the impact of our digital efforts to life, I want to share a few proof points.\nThe Taco Bell U.S. launch of our Taco Bell rewards program in 2020 has continued to grow digital sales for the brand with features such as loyalty member exclusives and early access to crave-worthy promotions.\nWe're incredibly excited by the early results from the program and the future growth opportunity that remains.\nWe're seeing significant uptick in frequency and higher spend per visit, leading to an increase in overall spend of 35% for active customers in the Taco Bell rewards program compared to their pre-loyalty behavior.\nAs another example, at KFC U.S., we launched our internally built KFC e-commerce website and app in early 2021, replacing our previous third-party solution.\nAs a result, our 2021 digital sales are on pace to soon surpass last year's full-year digital sales amount.\nNow let's talk about our RED Brands.\nStarting with the KFC division, which accounts for approximately 51% of our divisional operating profit, Q2 system sales grew 35%, driven by 30% same-store sales growth and 5% unit growth.\nFor the division, Q2 same-store sales grew 2% on a two-year basis, which includes the impact of about 1% of our stores being temporarily closed as of the end of Q2 2021.\nAt KFC International, same-store sales grew 36% during the quarter.\nSame-store sales declined 1% on a two-year basis, which includes the impact of about 2% of our stores being temporarily closed as of the end of Q2 2021.\nWe had truly outstanding results in March, leading the recovery with double-digit two-year same-store sales growth in the U.K., Australia, Canada, and the Middle East.\nOur strong off-premise capabilities, digital strength, and value offerings have continued to meet shifting consumer demand around the globe and there is opportunity for continued recovery as reopening and mobility increases globally.\nNext, at KFC U.S., we continued to see strong momentum, with 11% same-store sales growth in Q2.\nImportantly, same-store sales grew 19% on a two-year basis, owing to the continued strength of our group occasion business, the digital capabilities mentioned earlier, and our new chicken sandwich.\nOur chicken sandwich performed exceptionally well and provides us with a solid platform to drive additional sales layers in the future.\nMoving on to Pizza Hut, which accounts for approximately 17% of our divisional operating profit.\nThe division reported Q2 system sales growth of 10%, driven by 10% same-store sales growth.\nWhile the division had a 3% unit decline versus last year, driven by the elevated COVID-related dislocations and closures of 2020, it has sustained its positive 2021 development momentum, delivering 1% unit growth relative to Q1.\nGlobal Q2 same-store sales grew 1% on a two-year basis, which includes the impact of about 2% of our stores being temporarily closed as of the end of Q2 2021.\nOverall, Pizza Hut International same-store sales grew 16%.\nSame-store sales declined 6% on a two-year basis, which includes the impact of about 2% of our stores being temporarily closed as of the end of Q2 2021.\nImportantly, the off-premise channel achieved 21% same-store sales growth on a two-year basis for the quarter and delivery continued to be the primary driver of growth as the shift toward an off-premise model continues in most of our Pizza Hut markets.\nThe top line results from our Australia, Canada, Malaysia, and our U.K. delivery business are shining examples of what it means to nail the RED Brand strategy.\nThese markets continue to unlock off-premise growth opportunities through a focus on value and innovation, a digital-first customer experience, and distinctive communications with the help of our magnetic ambassadors, spokespeople who bring our brand to life across the world.\nAt Pizza Hut U.S., we continue to see positive same-store sales with 4% overall same-store sales growth.\nOn a two-year basis, the off-premise channel grew 18% and overall same-store sales grew 9%, which includes the impact of about 1% of our stores being temporarily closed as of the end of Q2 2021.\nPizza Hut also delivered strong product news with the continued success of our iconic stuffed crust pizza and the successful return of a consumer favorite, the Edge Pizza during the quarter.\nAs for Taco Bell, which accounts for approximately 31% of our divisional operating profit, Q2 system sales grew 24%, driven by a 21% same-store sales growth and 2% unit growth.\nFor the division, Q2 same-store sales grew 12% on a two-year basis.\nThe quarter kicked off with the return of the Quesalupa as part of the fan-favorite $5 Chalupa Cravings Box, followed by the relaunch of the iconic Naked Chicken Chalupa.\nIn May, we launched our first-ever global brand campaign, #ISeeATaco, in which fans could score a free taco when the moon looked like a taco.\nWe generated over 2 billion impressions and step-change brand awareness, especially in our international markets where we have a tremendous run rate for growth.\nAnd finally, the Habit Burger Grill delivered 31% same-store sales growth and 6% unit growth.\nQ2 same-store sales grew 7% on a two-year basis.\nImportantly, digital sales continued to mix over 35%, only a modest pullback from Q1, even as dining rooms continued reopening and dine-in sales saw a steady improvement throughout the quarter.\nOn the innovation front, we introduced the Brunch Charburger during the quarter, a unique all-day breakfast offering that included crisp golden tots, house-made secret sauce and a freshly cracked egg.\nIn addition to providing customers with a seamless experience to access our brands, we continue to invest in restaurant technology initiatives that make it easier for our team members to operate and run a restaurant.\nAs previously announced in the quarter, we've agreed to acquire Dragontail Technologies, a cutting-edge restaurant technology company, whose platform is focused on optimizing and managing the entire food preparation process from order through delivery, including automating the kitchen flow, driver dispatch, and customer order tracking.\nThe acquisition is subject to various approvals and we expect to close by the end of the third quarter.\nAn important factor of RED Brands is having a positive impact and the desire to make good easy for customers.\nOur Recipe for Good framework focuses on our commitment to investing in the right recipe today.\nWe were proud to publish our 2020 Recipe for Good report this week, which highlights our strategic investments in socially responsible growth and sustainable stewardship of our people, food and impact on the planet.\nThe report includes updates on our key commitments on critical issues like climate change and equity and inclusion.\nI'm confident that our plans in these areas have the right ingredients for us to succeed and make a positive impact for our people, franchisees, customers, and communities.\nNow to unrivaled culture and talent.\nTwo of our key assets are our iconic brands and the people that bring our brands to life around the world every day.\nAs I've mentioned in previous quarters, COVID has further strengthened the collaboration partnership across our entire system.\nA great example of this is our relationship with our independent supply chain purchasing co-op in the U.S., RSCS.\nMany of you probably saw the recent announcement that the CEO of RSCS, Steve McCormick has made the decision to retire in early 2022 and that RSCS Chief Operating Officer, Todd Imhoff, was unanimously selected to succeed Steve in the role of CEO.\nSteve has had a tremendous and positive impact on our business for nearly a decade and our entire system is grateful for his leadership.\nAt the same time, Todd is the right leader to step into this role and lead the RSCS moving forward as it continues to provide a true competitive advantage for our entire U.S. business.\nOur unrivaled culture and talent has always been a towering strength of Yum!\nand I'm incredibly proud of our ability to bring our brands and people together in ways we haven't in the past.\nDuring the quarter, we hosted several virtual meetings where we fostered collaborations on a global scale for our franchisees and teams, including marketing, planning meetings, ops, development programs, a global finance summit, leaning with leaders sessions, and companywide chats just to name a few.\nIt's during these meetings that we realize we are all more alike than we are different and the power that our brands and our culture have to bring people together.\nTo wrap up, I'm pleased with the sustained momentum in our business and the agility we've shown in the last year and I'm optimistic that we are set up to win.\nOur results demonstrate the resilience of our diversified global business and confidence in our strategies, which are fueled by the underlying health of our franchise system.\nWe are poised to accelerate growth and maximize value creation for all our stakeholders for years to come.\nWith that, Chris, over to you.\nToday, I'll discuss our second quarter results, our unmatched operating capability, and Bold Restaurant Development growth drivers, and our solid liquidity and balance sheet position.\nTo begin, let's discuss Q2.\nsystem sales grew 26%, driven by 23% same-store sales growth.\nOn a two-year basis, same-store sales grew 4%, which includes the negative impact of about 1% of our stores being temporarily closed due to COVID as of the end of Q2 2021.\nWe delivered 2% unit growth year-over-year, which included a Q2 record of 603 net new units.\nEPS, excluding special items, was $1.16, representing a 41% increase compared to ex-special earnings per share of $0.82 in Q2 2020.\nCore operating profit grew 53% in the second quarter, driven by accelerated same-store sales growth in several developed markets at KFC, the combination of strong sales and restaurant margin growth at Taco Bell and a year-over-year benefit associated with reserves for franchisee accounts receivable.\nAt Taco Bell, company restaurant margins were 25.9%, 1.4 points higher than prior year.\nFavorable sales flow-through was partially offset by labor and commodity inflation, as well as increasing semi-variable costs as we return to normal operations.\nAs mentioned on our previous call, we expect these margins to return closer to historical pre-COVID levels later this year given inflationary pressures, along with increased staffing at our restaurants as a result of increases in dining room patronage and a return toward our historical daypart mix.\nDuring Q2, we continued to see recoveries of amounts past due, primarily led by KFC International.\nThese recoveries resulted in a $4 million net benefit to operating profit related to bad debt during the quarter, representing a $17 million year-over-year tailwind to operating profit growth as we lapped $13 million of expense in Q2 2020.\nAs a reminder, we ended 2020 with $12 million of full-year bad debt expense with large quarterly swings due to COVID.\nAs such, we expect year-over-year operating profit growth to be negatively impacted in the second half as we lap bad debt recoveries of $21 million and $8 million in Q3 and Q4, respectively.\nWhile difficult to forecast, at this point, we still don't expect bad debt to significantly impact our year-over-year operating profit growth on a full-year basis.\nGeneral and administrative expenses were $230 million.\nFull-year 2021 G&A is expected to be back-end weighted, as it has been historically.\nWe now estimate that our consolidated G&A expenses will be approximately $1 billion for the full year 2021, a slight increase from our Q1 estimate attributable to increased incentive-based compensation.\nOur commitment to be an efficient growth company that leverages fixed costs with our unique scale benefits is unchanged and we expect our G&A to system sales ratio to move back toward our historic ratio as sustained growth continues.\nReported interest expense was $159 million, an increase of 21% compared to Q2 2020, driven by a special item charge of $34 million related to early redemption of restricted group bonds during the quarter.\nInterest expense, ex-special, was approximately $125 million, a decrease of 5%, driven by recent refinancing actions and the elimination of revolver balances held in the prior year.\nWe still expect our 2021 interest expense to be approximately $500 million, excluding the previously mentioned $34 million special item charge similar to 2020.\nWe plan to continue to take advantage of favorable market conditions to refinance debt at attractive rates.\nAs a reminder, this will result in higher one-time expenses that will be favorable to interest expense going forward.\nCapital expenditures, net of refranchising proceeds, were $16 million for the quarter.\nAs we've discussed on prior earnings calls, we believe roughly $250 million in annual gross capex appropriately balances the inherent needs of the business, with opportunities to invest in technology initiatives and strategic development of equity stores.\nWe still anticipate at least $50 million in annual proceeds from refranchising, which will fund the strategic equity store investments.\nNow on to our unmatched operating capability growth driver.\nOur restaurants are operated by world-class franchisees who are experienced and competing and winning in any environment.\nIt's well known that the U.S. is facing a competitive labor market, which is more pronounced relative to other markets across our diverse global footprint.\nWe and our franchisees are leaning into our unrivaled culture, which differentiates our brands to compete in a tight labor market with a focus on retention and recruiting.\nI'll add some color by sharing examples from our Taco Bell company restaurants.\nI'll start first with recruitment.\nWe posted hiring parties, which have led to a significant uptick in employee hires.\nWe also launched a fast apply option to make the application process easier and more efficient by reducing the application time from eight minutes to two minutes.\nOn the retention front, we've supported and rewarded our team members by offering a variety of incentives, including paid time off, free family meals, and increased employee development activities to name a few.\nWe've always prioritized investing in our people and we recognize the importance now more than ever to ensure we maintain focus on our unmatched operating capability to deliver a RED customer experience.\nAt the same time, our system is well positioned to sustain strong unit economics while managing the inflationary environment related to labor market dynamics and commodity cost trends.\nOn the commodity front, there is no one better equipped to navigate this environment, given our massive cross-brand purchasing scale through our domestic supply chain co-op RSCS, that gives our franchisees many benefits, including advantaged end to end sourcing and supply chain costs.\nWe are also confident in the pricing power of our brands and partner closely with our franchisees as they make strategic pricing decisions in their respective markets to deal with cost pressures while still providing customers with relevant value and distinctive products.\nAs David mentioned earlier, we are also prioritizing investments in restaurant technology initiatives that make it easier for our team members to operate a restaurant while also providing an enhanced customer experience.\nAs an example, Pizza Hut International continues to demonstrate significant momentum on this front, as evidenced by increased customer satisfaction metrics.\nTheir improvements are fueled by continued adoption of frictionless restaurant technology, including our in-house intelligent coaching app called HutBot that launched at the end of 2020 and is now live in 40 markets, covering 4,000 restaurants.\nHutBot eases the daily management of our stores with the RTM, leading to a better customer experience.\nAt Taco Bell, we've continued excelling at serving more customers through our drive-thrus.\nWe had our sixth consecutive quarter of under four-minute drive-thru order to delivery time.\nSpeed for Q2 was six seconds faster than Q2 2020 and our teams served 4 million more cars compared to the same quarter last year.\nA huge shout out to our operators and team members for continuing to break records in speed with the increased demand in off-premise.\nThe drive-thru experience is an increasingly critical competitive advantage for our brands.\nSo these improvements position us well to win going forward.\nThat's a perfect segue to our Bold Restaurant Development growth driver, which I'm particularly thrilled to speak about today.\nOur net new unit growth of 603 during the quarter was broad based across brands and geographies, making this not only a record quarter, but also capping a record first half.\nThese results speak to the strength of our iconic brands in growing food categories supported by a healthy, well capitalized franchise system primed for sustained growth.\nMost notably, KFC opened 428 net new units during the quarter with significant builds in China, Russia, India, Latin America, and Thailand, contributing to 5% unit growth year-over-year.\nAs many of you know, KFC has the first-mover advantage in several emerging markets with a strong domestic footprint upon which to grow.\nThis impressive development quarter from KFC speaks to the power of this global brand and the unit economics that underpin it.\nPizza Hut has sustained its positive 2021 development momentum, delivering 1% unit growth relative to Q1, underpinned by the strength in gross openings and moderating store closures.\nPizza Hut opened 99 net new units during the quarter, led by strong development in China, India, and Asia.\nTaco Bell opened 74 net new units and we're excited to share that Taco Bell International had its best development quarter ever, opening 30 net new units led by Spain and the U.K. In the U.S., we opened our flagship Taco Bell Cantina in Times Square, with a digital forward footprint and personalized experience.\nOverall, we are pleased with the momentum in the first half of the year and we're extremely proud to announce 4% to 5% unit growth guidance, led by development from all four brands across our footprint.\nNext I'll provide an update on our balance sheet and liquidity position and priorities for capital allocation.\nWe ended Q2 with cash and cash equivalents of approximately $552 million, excluding restricted cash.\nThe strong recovery in EBITDA during Q2 drove our consolidated net leverage down to approximately 4.5 times, temporarily below our target of approximately 5 times.\nDuring the quarter, we repurchased 2.1 million shares, totaling $255 million at an average price per share of $119.\nYear-to-date, we've repurchased $530 million of shares at an average price of $112.\nFinally, our capital priorities remain unchanged: invest in the business, maintain a healthy balance sheet, pay a competitive dividend, and return the remaining excess cash flows to shareholders via repurchases.\nOverall, I'm extremely proud of our Q2 results, the resilience of our business model, and the agility of our teams.\nWith that, operator, we are ready to take any questions.\n", "role": "user" }, { "content": "compname reports second-quarter results; record 603 net-new units.\ndigital system sales of over $5 billion.\nsame-store sales growth of 23%.\nreinstates long-term growth algorithm with raised unit guidance.\nq2 earnings per share $1.16 excluding items.\nq2 worldwide system sales excluding foreign currency translation grew 26%, with kfc at 35%, taco bell at 24% and pizza hut at 10%.\nq2 worldwide system sales excluding foreign currency translation grew 26%, with 23% same-store sales and 2% unit growth.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm pleased to share our strong third quarter results underpinned by record breaking unit development, continued strong digital sales and the adaptability of our brands to meet the needs of our consumers in an ever-changing environment.\nDuring the third quarter, we delivered 5% same-store sales growth or 3% same-store sales growth on a two-year basis.\nDespite a challenging operating environment due to the ongoing COVID pandemic, I'm extremely proud that we opened 760 net new units; a Q3 record, with broad-based strength across our portfolio.\nChina continues to be a leader in development, we opened 379 net new units across the rest of our portfolio, roughly equivalent to our Q3 2019 global net new units, including China.\nOur continued positive development momentum this quarter is a testament to the strength of our iconic brands, fueled by strong unit economics and a healthy well-capitalized franchise system primed for sustained growth.\nNow, we'll discuss our Q3 results and two of the four growth drivers that underpin our Recipe for Growth: our Relevant, Easy and Distinctive brands or RED for short; and our unrivaled culture and talent.\nI will also share an update on our ESG agenda, which we call our Recipe for Good.\nThen Chris will talk about our other two growth drivers: our unmatched operating capability; and Bold Restaurant Development, in addition to providing more details on our third quarter financial performance and our strong balance sheet and liquidity position.\nFirst, the two highlights from the quarter.\nthird quarter system sales grew 8%, led by same-store sales growth of 5%.\nOn a two-year basis, same-store sales grew 3%, which includes the impact of around 500 stores or 1% temporarily closed due to COVID as of the end of Q3.\nCOVID restrictions that limited mobility in a few markets, primarily in Asia, had a significant impact on sales.\nHowever, our sales momentum remained strong, as evidenced by the fact that our global two-year same-store sales growth, excluding Asia, accelerated since last quarter.\nSales strength continued in many developed markets, including the U.S., U.K. and Canada with significant recovery seen across Europe as restrictions eased throughout the quarter.\nWe've also seen pockets of strength in our portfolio of emerging markets, including the Middle East, Latin America, Africa and India, to name a few.\nAs we previously shared, looking across the more than 150 countries in which we operate, our recovery will neither be consistent from country-to-country nor linear within a country, reinforcing the competitive advantages of our diversified portfolio and our ability to serve customers through multiple on- and off-premise channels.\nA key growth driver for our business remains the continued acceleration of our digital and technology strategy, including how we leverage our global scale with technology investments to enhance the customer and employee experience, strength in restaurant unit economics and provide a competitive advantage for our franchisees.\nWe're seeing strong and sustained momentum through our digital and off-premise channels across our global business even as customers return to our dining rooms.\nWe posted over $5 billion in global digital sales with a near 40% digital mix during Q3.\nWe continued to expand delivery capabilities across the globe, setting a record this quarter with over 41,000 stores offering delivery to our customers.\nMost recently, we acquired Dragontail Systems, which will allow us to tap into the power of artificial intelligence to streamline the end-to-end food preparation process and further enhance our delivery capabilities.\nWhere we've deployed Dragontail's cutting-edge technology, we found that it makes it easier for team members to operate and run a restaurant and helps our franchisees strengthen store operations, all resulting in a better customer experience.\nThis is the perfect segue to talk about our four RED brands.\nStarting with the KFC division, which accounts for 52% of our operating profit, Q3 system sales grew 11%, driven by 6% same-store sales growth and 7% unit growth.\nOn a two-year basis, Q3 same-store sales were up 1%, which included the impact of 1% of the stores being temporarily closed due to COVID.\nAt KFC International, same-store sales grew 6% during the quarter.\nSame-store sales declined 1% on a two-year basis.\nAs previously mentioned, increased COVID case counts and limited mobility in a few key Asian markets pressured topline trends in the quarter.\nThis quarter, several Western European markets joined the group of resilient market, leading the recovery where sales have fully recovered to pre-COVID levels.\nStrong digital and off-premise growth, newsworthy products and doubling down on value offerings have fueled topline growth in these markets, coupled with the continued strength of the chicken category across the QSR segment growth.\nNext, at KFC U.S., same-store sales grew 4% during the quarter, while same-store sales increased 13% on a two-year basis.\nThe continued success of our chicken sandwich and the strength of the group occasion remains significant drivers of our same-store sales growth.\nAdditionally, as of July, our year-to-date digital sales in the U.S. surpassed our full year 2020 digital sales.\nWe speak to the results we're seeing from our investments in this critical growth channel.\nNow on to the Pizza Hut Division, which accounts for 17% of our operating profit.\nQ3 system sales grew 4%, driven by 1% unit growth and 4% same-store sales growth.\nFor the Division, two-year same-store sales grew 1% during the quarter, which included the impact of 1% of stores being temporarily closed as of the end of Q3 2021.\nPizza Hut International same-store sales grew 6% during the quarter.\nOn a two-year basis same-store sales declined 4%.\nWhile our Pizza Hut International business continues to be pressured, given our substantial dine-in index, the sustained strength in our off-premise business as reflected by 21% same-store sales growth on a two-year basis bodes well for the future of the brand and continues to fuel franchisee interest in investing in assets focused on serving the off-premise occasions.\nOur markets continue to demonstrate what it means to be RED by focusing on strong value propositions and innovative partnerships, including Beyond Meat product offerings in two markets this quarter.\nAt Pizza Hut U.S., we continued to see positive momentum with 2% same-store sales growth.\nOn a two-year basis, same-store sales grew 8% and the off-premise channel grew 17%.\nPizza Hut continues to delight customers by bringing Only For Pizza Hut premium innovation with the launch of the Edge Pizza and a return of the successful Detroit-Style Pizza in Q3.\nAdditionally, we promoted the Dig Dinner Box during back-to-school season for offering easy dinner solution for our Pizza Hut customers.\nMoving on to Taco Bell, which accounts for 31% of our operating profit, third quarter system sales grew 8%, driven by 3% unit growth and 5% same-store sales growth.\nTwo-year same-store sales growth was 8% for the quarter.\nTaco Bell continues to focus on long-term growth opportunities by expanding into multiple category entry points, including the relaunch of breakfast in August and the fried chicken category with the Crispy Chicken Sandwich Taco during the quarter.\nMeanwhile, Taco Bell International remains focused on their mission to make Tacos cool around the world, while also ensuring the brand is culturally relevant in each market.\nIn the U.K., we gave away free taco to the country to celebrate England advancing to the finals in the European Championship.\nPlayers on the English team even tweeted on behalf of the brand, resulting in Taco Bell being one of the top trending brands on Twitter during the finals.\nAnd finally, at the Habit Burger Grill, we saw system sales grow 19% during the quarter, driven by 11% same-store sales growth and 7% unit growth.\non a two-year basis, same-store sales grew 7%, which included the impact of about 1% of stores being temporarily closed as of the end of Q3.\nWe continue to see strong results through our digital channels, even as customers return to our dining room.\nDuring the quarter, we launched the culinary-forward Balsamic Grilled Chicken and Asparagus Salad that highlighted our unmatched char-grilled chicken and seasonal ingredients.\nNow I'll discuss our unrivaled culture and talent growth drivers.\nA hallmark of Yum!\nis our people-first culture.\nWe have tremendous leaders across our organization that have been developed internally to lead our brands and because of our culture, we're able to attract world-class external talent.\nThis quarter, we have the opportunity to announce some exciting internal promotions with planned leadership transitions.\nFirst, Tony Lowings, CEO of KFC will be retiring on March 1, 2022.\nHe has embodied, what it means to be a people-first leader throughout his career and will no doubt leave a lasting legacy on the KFC brand.\nTony's successor will be Sabir Sami, KFCs Global Chief Operations Officer who is an incredibly well respected and experienced leader, who has played a pivotal role in the KFC global business.\nSabir's promotion to CEO of KFC provide us an opportunity to elevate another internal talent with Dyke Shipp stepping in as President of KFC after serving as KFCs Global Chief People and Development Officer.\nWith their combined experience of over 40 years with Yum!\n, both Sabir and Dyke will assume their new roles effective January 1, 2022.\nI couldn't be more confident in our ability to continue to unleash the power of this iconic brand with both Sabir and Dyke leading KFC.\nNext, we recently announced that David Graves, Pizza Hut U.S. General Manager, will be promoted to President of Pizza Hut U.S. effective January 1, 2022.\nAlongside Kevin Hochman, David has helped architect the Pizza Hut U.S. strategy and is the right person to lead the way forward for the brand by continuing to partner with our franchisees.\nThese internal promotions demonstrate that our deep bench of experienced leaders is a real competitive advantage for us across the restaurant industry.\nLastly, we recruited significant external talent with the appointment of Aaron Powell as Chief Executive Officer of Pizza Hut.\nAaron joined us from Kimberly Clark, where he most recently led their Asia-Pacific business.\nWe're thrilled to have Aaron join our leadership team with his seasoned CPG executive experience and believe his leadership, alongside Vipul Chawla and David Graves will help fuel the brand growth strategy.\nEqually as important as our Recipe for Growth is our Recipe for Good.\nI could not be prouder of the progress Yum!\nand our brands have made this year in sharpening the focus and execution of our ESG agenda, particularly on climate action and sustainable packaging, alongside our global Unlocking Opportunity Initiative to tackle inequality.\nWe are advancing our plans to reduce greenhouse gas emissions across our global system and supply chain by nearly half by 2030 while we work to implement, learn from, and scale pilots for reusable, recyclable and compostable packaging in the front of our restaurants to meet our 2025 public commitment.\nAcross all of our brands, we're focused on building a resilient business for the future with purpose and sustainability at the core.\nOur iconic brands and unmatched scale put us in a class of our own.\nWe're competitively advantaged, given the size and capabilities of our franchise system and I'm thrilled with our teams as we continue to be nimble and meet the consumer where they are.\nOverall, I'm proud of how our business is performing and I'm confident that we're positioned to win in a post-COVID world.\nWith that, Chris, over to you.\nToday, I'll discuss our financial results, our unmatched operating capability and Bold Restaurant Development growth drivers and our solid balance sheet and liquidity position.\nI'll start by discussing our financial results.\nOur results year-to-date, through Q3, highlighted by 15% system sales growth translating into strong core operating profit growth of 26% demonstrate the resilience and strength of our economic model.\nThe continued momentum reflected in our results reaffirms our confidence in delivering, on an annual basis, the long-term growth algorithm we reinstated on our last call, specifically 2% to 3% same-store sales growth, plus 4% to 5% net new unit growth, translating to mid-to-high single-digit system sales growth and high-single-digit operating profit growth.\nIn the third quarter, specifically, Yum!\nsystem sales grew 8%, driven by 5% same-store sales growth or 3% on a two-year basis, which includes the impact of about 1% of stores being temporarily closed as of the end of Q3.\nWe delivered 4% unit growth year-over-year, which included a record of 760 net new units this quarter.\nCore operating profit increased 3% for the quarter, in line with our internal expectations, when accounting for one-time items that impacted comparability.\nThe largest of these items was the lap of last year's bad debt recoveries, which accounted for a 5 point headwind to core operating profit growth.\nEPS, excluding special items, was $1.22, representing a 21% increase compared to ex-special earnings per share of $1.01 in the third quarter last year.\nReflected in our ex-special earnings per share this quarter, is an investment gain on our approximate 5% investment in Devyani International Limited, an entity that operates KFC and Pizza Hut franchise units in India.\nOur minority stake in Devyani was acquired in lieu of cash proceeds upon the refranchising of approximately 60 KFCs in India during 2019 and 2020.\nDuring the third quarter, Devyani completed an Initial Public Offering and we began reflecting the change in fair value of our investments in our results during the quarter.\nThis resulted in $52 million of pre-tax investment gains on our approximate 5% stake, which added $0.16 to EPS, but did not impact our core operating profit.\nDuring Q3, we had bad debt expense of $3 million.\nAs a reminder, we had large quarterly swings in bad debt last year due to COVID and were lapping $21 million in bad debt recoveries in the third quarter of last year, resulting in a year-over-year headwind of 5 points, or $24 million to core operating profit growth this quarter.\nWe expect core operating profit growth to be negatively impacted again in Q4 as we lapped bad debt recoveries of $8 million in the fourth quarter last year.\nOur general and administrative expenses on an ex-special basis for the quarter were $249 million.\nOn a full year basis this year, we now estimate consolidated G&A will be approximately $1.05 billion, an increase of about $60 million above our incoming expectations for the year, driven entirely by our above-target incentive compensation based on our strong business performance.\nOur commitment to be an efficient growth company that leverages fixed costs with our unique scale benefits is unchanged.\nWe expect our G&A to system sales ratio to move back to 1.7% next year on a full year basis.\nFinally, we note that Taco Bell company store margins have begun to normalize in the back half of this year due to increased staffing in our restaurants as we return to our historical daypart mix, wage investments and recent commodity inflation.\nWhile there will be quarterly variability due to the dynamic environment, we are confident in our ability to consistently deliver Taco Bell company store margins in line with our historical pre-COVID levels for full year 2021 and beyond.\nNext, I'll discuss our unmatched operating capabilities.\nWe continue to invest in our technology strategy to expand both our digital capabilities and restaurant technology solutions.\nWe're prioritizing, making it easier to operate a restaurant, ultimately driving efficiencies in our stores to enhance franchise unit economics, while also improving the customer experience.\nTo that end, during the quarter, we closed on the acquisition of Dragontail Systems, a restaurant technology company that enhances both the team member and customer experience.\nDragontail uses innovative technology that streamlines the order management process in the restaurant and optimizes delivery routes for drivers resulting in our customers receiving the freshest possible products.\nThus far, the Dragontail solution has been deployed in 13 markets and in over 1,700 stores across the Pizza Hut system.\nMany Pizza Hut restaurants leveraging Dragontail platform have already seen a positive impact on sales, order fulfillment and customer satisfaction scores, including product freshness and delivery times.\nI recently participated in virtual store visits in the U.K. and in Latin America where franchisees demonstrated benefits of the Dragontail system and shared their team members' excitement.\nAnother example of how our technology investments yield enhanced operating performance is Taco Bell's continued execution of its All Access technology initiative.\nThis connected suite of core restaurant technology solutions is used to optimize operations and create a frictionless customer experience.\nThese strategic efforts contributed to Taco Bell's seventh consecutive quarter with drive-thru times below four minutes, enabling the brand to serve more customers through the drive-thru, while also delivering a great customer experience.\nMoving on to our Bold Restaurant Development growth driver, I'm thrilled to discuss how we delivered another record development quarter with 760 net new units, including meaningful contributions across multiple geographies at our KFC, Pizza Hut and Taco Bell global brands.\nWhile we continue to see strong development from Yum!\nChina, our brands are also seeing broad-based development across other markets.\nThe widespread strengths in our store level economics and cash on cash returns improving relative to pre-COVID levels are key drivers contributing to the acceleration and development we're seeing around the world.\nOur KFC International markets have seen impressive development as China, Russia, India, Latin America and the Middle East continued to deliver strong unit development during the third quarter.\nAdditionally, over the past year, Pizza Hut International has driven a significant inflection in their unit growth, going from negative net new units in 2020 to opening nearly 200 net new units during the third quarter.\nWe expect this momentum to continue; a further testament to the confidence our franchisees have in the future of the brand.\nAt Taco Bell International, we continue to see strong development as key markets are approaching scale.\nNot only are we seeing strong development across our brands, but given the continued strength in digital and off-premise growth, our teams continue to evolve the asset types being developed into more digitally enabled formats.\nAs an example, we now have 23 Go Mobile locations at Taco Bell U.S. These technology-forward restaurants, which include dual drive-thru's with a dedicated mobile pickup lane, mobile pickup shelves and a faster Bellhop experience, among other things, have been a big hit, and we have more in our development pipeline.\nNext, I'll provide an update on our strong balance sheet and liquidity position.\nIn August, we completed our third whole business securitization issuance at Taco Bell in the past five years, issuing $2.25 billion of new Securitization Notes.\nThe weighted average yield of the new notes was approximately 2.24% and the proceeds were used to opportunistically repay $1.3 billion of existing higher coupon Taco Bell Securitization Notes and to support our share buyback program.\nWe still expect our 2021 interest expense to be approximately $500 million, in line with 2020.\nWe ended the quarter with cash and cash equivalents of $1 billion, excluding restricted cash.\nDue to our continued recovery in EBITDA, our consolidated net leverage continues to be temporarily below our target of approximately 5 times.\nWith respect to our share buyback program, during the quarter, we repurchased 2.6 million shares at an average share price of $127 per share, totaling approximately $330 million.\nYear-to-date, we've repurchased $860 million of shares at an average price of $117.\nCapital expenditures, net of refranchising proceeds, during the quarter were $49 million.\nWe now expect net capital expenditures of approximately $175 million for the full year, reflecting roughly $75 million in refranchising proceeds and $250 million of gross capex.\nLastly, our capital priorities remain unchanged; invest in the business, maintain a healthy balance sheet, pay a competitive dividend and return the remaining excess cash to shareholders via share repurchases.\nBefore wrapping up, I'd like to take a moment to address both labor and cost inflation pressures and how Yum!\nis well-positioned to navigate these challenges.\nWhile our franchisees are not immune to these market pressures, we believe the power of our scale and the larger average size of our franchisees relative to those of our QSR peers, enables our system to manage the inflationary environment better than most.\nFor example, while many small chains and independent restaurants experienced difficulties adapting to these market dynamics, our franchisees continue to invest through this environment, accelerating investments that help widen their strategic advantage.\nAdditionally, our people-first culture is a true competitive advantage in both attracting and retaining team members.\nWe're confident in the ability of our brands to respond to the dynamic market conditions and are working closely with our franchisees to assess strategic opportunities to take price as and when needed, while ensuring we continue to offer compelling value to our customers.\nWhile store level margins have moderated, franchisee unit economics generally remain incredibly healthy.\nOverall, I'm pleased with our performance this quarter, driven by impressive unit growth and sustained digital sales.\nWe continue to invest in our digital ecosystem to scale technologies and provide a unique competitive advantage for our franchise operators, while enhancing the customer and team member experience.\nOur franchise system is healthy and well-positioned to invest through the near-term pressures, fueling our development engine and future unit growth.\nOur unit growth and sustained sales momentum, despite lingering COVID impacts, only make us more confident in our ability to deliver on our long-term growth algorithm.\nWith that, operator, we are ready to take any questions.\n", "role": "user" }, { "content": "compname reports q3 earnings per share $1.22 excluding items.\ncompname reports third-quarter results; record 760 net-new units and same-store sales growth of 5%.\ndriving system sales growth of 8%.\nsustained digital system sales of over $5 billion.\nq3 earnings per share $1.22 excluding items.\nqtrly worldwide system sales excluding foreign currency translation grew 8%.\nq3 results, led by record-breaking unit development and sustained momentum in digital sales.\nqtrly worldwide system sales excluding foreign currency translation grew 8%, with kfc at 11%, taco bell at 8% and pizza hut at 4%.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: On our call today are David Gibbs, our CEO; Chris Turner, our CFO; and Dave Russell, our senior vice president, corporate controller.\nFollowing remarks from David and Chris, we'll open the call to questions.\nPlease note that during today's call, all system sales and operating profit results exclude the impact of foreign currency.\nWe will no longer be providing an update on temporary store closures as we ended Q4 with less than 1% of our stores temporarily closed.\nAs a reminder, temporary store closures only include stores that were fully closed as of the end of the quarter but have or are expected to reopen.\nFor more information on our reporting calendar for each market, please visit the Financial Reports section of our website.\nWe are broadcasting this conference call via our website.\nPlease be advised that if you ask a question, it will be included in both our live conference and in any future use of the recording.\nWe would like to make you aware of upcoming Yum!\ninvestor events and the following.\nDisclosures pertaining to outstanding debt in our restricted group capital structure will be provided at the time of the Form 10-K filing.\nFirst quarter earnings will be released on May 4, 2022, with the conference call on the same day.\nAs we reflect on 2021, I couldn't be prouder of the collective accomplishments of our world-class franchise partners and collaboration of our global teams, guided by our Recipe for Growth and Good.\nWhile the last two years have been the most challenging operating environment we've ever navigated, we exit 2021 stronger than ever with over 53,000 global restaurants.\nCompared to 2019, we've nearly doubled our digital business.\nSystem sales have grown over $5.5 billion, and operating profit has grown over $200 million.\nAdditionally, since 2019, we've added another iconic brand and closed on three technology acquisitions, all while launching our global Unlocking Opportunity Initiative with a $100 million commitment over five years investing in equity and inclusion, education and entrepreneurship, the cornerstones of our Recipe for Good.\nIn 2021, we opened 3,057 net new units, driven by 4,180 gross unit openings, with meaningful contributions from each of our brands, marking the strongest growth year in our history and setting an industry record for unit development.\nTo put that into context, as the world's largest restaurant company, we opened a new restaurant on average every two hours.\nThis speaks to the health of our business; iconic brands; capable, committed and well-capitalized franchise partners; and strong unit economics.\nThis is yet another significant development milestone on our ongoing growth journey, providing customers with access to our brands through a variety of restaurant formats and on- and off-premise ordering channels.\nNow more than ever, we've leaned into the structural advantages of our diversified global portfolio by leveraging our unmatched global scale, sophisticated supply chains, marketing and consumer insights expertise and our growing digital and technology capabilities to fuel growth and deliver strong results.\nEven as dining room sales recovered throughout the year, we continued to grow our digital sales that reached a record $22 billion in fiscal 2021, an increase of approximately 25% over 2020, suggesting a more permanent shift to digital channels.\nWe ended the year with over 45,000 restaurants offering delivery, representing more than a 25% increase year over year.\nWe galvanized our digital and technology strategy and accelerated the development of our ecosystem with both internal investments and the closing of the Kvantum, Tictuk and Dragontail acquisitions.\nOur teams remain focused on elevating the customer experience, expanding our off-premise capabilities and empowering our team members with tools to make it easier to run our restaurants, all ultimately fueling improved unit economics.\nExpectations of our customers, team members and franchisees have forever changed due to the experiences over the past two years, and we continue to challenge ourselves to exceed their rising bar.\nI'm confident we're poised to lead the industry as we embark on the next chapter of our growth journey.\nToday, I'll discuss our 2021 results showcasing a few examples across our brands for two of the four pillars in our Recipe for Growth: our Relevant, Easy and Distinctive Brands or R.E.D. for short; and our Unrivaled Culture and Talent.\nThen I'll share progress on our Recipe for Good.\nChris will share our fourth quarter results and provide an update on the other two pillars of our Recipe for Growth, Bold Restaurant Development and Unmatched Operating Capability, as well as an update on our strong balance sheet position and capital allocation strategy.\nTo begin, full year 2021 system sales grew 13% with same-store sales growth of 10% or 3% on a two-year basis and 6% unit growth.\nEach of our brands recorded positive same-store sales growth for the year and contributed to broad-based development strength.\nFull year core operating profit increased 18%, driven by same-store sales growth and the impact of unit development throughout the year.\nAs we ended the year, COVID outbreaks and resulting government restrictions limiting mobility continued to impact sales in a few key markets, primarily in Asia, presenting a headwind to fourth quarter results.\nHowever, our sales momentum remained strong with continued global recovery as evidenced by our two-year global same-store sales excluding Asia up 10% on a two-year basis, accelerating sequentially from last quarter.\nNext, I'll talk about our four R.E.D. brands.\nI'll begin with KFC, which accounts for 52% of our divisional operating profit.\nKFC full year 2021 system sales grew 16%, driven by 11% same-store sales growth and 8% unit growth.\nQ4 system sales increased 10% with 5% same-store sales growth or 3% on a two-year basis.\nWe continue to see ongoing recovery in emerging markets as evidenced by the fact that more than half of our 13 global KFC regions delivered system sales growth in excess of 25% for the full year.\nKFC International Q4 same-store sales grew 6% or 2% on a two-year basis.\nSales remained strong throughout the quarter despite regional impacts from COVID variants, with momentum holding in many recovered markets more than offsetting heavily impacted markets including parts of Asia and Western Europe.\nCommon themes fueling top line growth in the quarter include off-premise and digital capabilities, newsworthy products and a strong value offering.\nQ4 same-store sales grew 4% or 12% on a two-year basis.\nStrong top line momentum was fueled by strength in group occasions, growth in the digital channel and the success of our chicken sandwich.\nThe chicken sandwich continues to perform well for the business and now makes up roughly 9% of our sales mix as of Q4, a strong improvement from a 1% mix last year.\nOur sandwiches are served straight from the fryer and hot to our guests.\nWe expect the chicken sandwich platform to continue to be a significant driver of our positive sales momentum for the business going forward.\nNext, Taco Bell, which accounts for 32% of our divisional operating profit.\nBefore delving into results, I'd like to congratulate the entire Taco Bell system for ranking No.\n1 in the Franchise 500 for the second year in a row, beating our peers, as well as impressive concepts in other industries.\nEntrepreneur magazine, which produces this list, recognized Taco Bell for its franchisee collaboration and innovation.\nThis recognition is further evidence of our intentionality to be the world's franchisor of choice.\nNow I'll discuss our results for the year.\nTaco Bell full year 2021 system sales grew 13%, driven by 11% same-store sales growth and 5% unit growth.\nFourth quarter system sales grew 11% with same-store sales growth of 8% or 9% on a two-year basis, reflecting an acceleration from Q3.\nTaco Bell kicked off the quarter by introducing the new Cantina Crispy Melt Taco and later in the quarter brought back the Grilled Cheese Burrito, featuring a grilled and bubbly blend of real cheddar, mozzarella and pepper jack cheeses.\nAdditionally, the team kept value front and center with the launch of a new Crave More Value Menu featuring the $2 burritos.\nTaco Bell fans continue to adopt digital ordering channels as we set digital sales records in both the U.S. and international this year.\nWe will continue to bring distinctive products to life through our digital channels with early access to new products, digital-only campaigns and loyalty rewards.\nMoving on to Pizza Hut, which accounts for 16% of our divisional operating profit.\nFull year 2021 system sales grew 6%, driven by 7% same-store sales growth and 4% unit growth.\nQ4 system sales grew 4% with same-store sales growth of 3% or 2% on a two-year basis.\nOverall, we saw an inflection in the growth trajectory of the Pizza Hut brand this year, a testament to the hard work of our team members and franchise operators and a reflection of the overall health of the system.\nPizza Hut International Q4 same-store sales grew 4% while same-store sales declined 3% on a two-year basis.\nKey markets that contributed strong performance in the quarter included Africa, Canada, India and the U.K. The brand remains focused on emphasizing easy through embracing continued growth in off-premise channels through utilization of both first- and third-party delivery networks.\nPizza Hut U.S. Q4 same-store sales grew 1% or 10% on a two-year basis.\nThe team continues to bring iconic pizza that customers love to market in relevant and distinctive ways.\nIn the fourth quarter, Pizza Hut received strong recognition for an influencer-based marketing campaign that resulted in Pizza Hut being named a 2021 culture driver by TikTok.\nAdditionally, we brought back a fan favorite, the Triple Treat Box, offering customers a convenient and value-oriented family meal option which drove sales in the quarter.\nLastly, the Habit Burger Grill achieved full year 2021 system sales growth of 24%, driven by a 16% same-store sales growth and 11% unit growth.\nQ4 system sales increased 20% with 11% same-store sales growth or 5% on a two-year basis.\nTo showcase their chef-inspired innovations, The Habit Burger Grill reintroduced the Chicken Caprese Sandwich on garlic ciabatta bread with garlic aioli during the quarter.\nNow I'll discuss our Unrivaled Culture and Talent growth driver.\nThe hallmark of Yum!\nis our people-first culture which drives retention and recruitment of amazing talent.\nWe remain committed to growing our talent from within and recruiting top external talent, as you've seen from some of our recent internal promotions and leadership transitions.\nThe past two years have allowed us to build a strong foundation centered on our culture, talent and unwavering relationships with our franchisees.\nThe collaboration with our franchisees has never been more powerful as we're aligned more than ever on the future growth trajectory of the business.\nFinally, I want to give an update on our Recipe for Good and the work we're doing around our three priority pillars: planet, food and people.\nWhen it comes to our planet pillar, 2021 was a milestone year.\nWe announced science-based targets to reduce greenhouse gas emissions nearly 50% by 2030 and pledged to achieve net zero emissions by 2050.\nWe are expanding our foundational requirements for green building standards for new unit builds and advancing our corporate office and company-owned restaurant footprint to renewable energy.\nIn terms of our food, we remain focused on food safety and listening and responding to customers' evolving preferences and improving the nutritional value of our menu items.\nto Pizza Hut offering Beyond Italian Sausage Crumbles in Canada.\nFinally, on the people front, we're committed to investing in Yum!\n's social purpose focused on unlocking opportunities for our people and communities while championing equity, inclusion and belonging across all aspects of our business.\nJust last week, we announced the Yum!\nFranchise Accelerator, a groundbreaking partnership with the University of Louisville and Howard University to train and advance underrepresented minorities and women interested in building a career in the restaurant industry.\nNot only is this a priority for Yum!\nbut unlocking opportunity remains a focus for our brands as well with the recent launch of the Taco Bell Business School.\nAs a result of our elevated commitments and transparent disclosures, we've received notable recognition this quarter, including being named to the Dow Jones Sustainability Index North America for the fifth consecutive year and being named on Newsweek's ranking of America's Most Responsible Companies.\nI'm incredibly proud of our Recipe for Good and know that this work is more important than ever when it comes to building resilient and relevant brands for the future.\nAs I take a moment to reflect on the past two years, I'm extremely proud and grateful for the significant accomplishments and collaboration across our teams to both serve our customers and community while fueling growth for our franchisees and shareholders.\nWe're entering 2022, which marks Yum!\n's 25th anniversary, with confidence in our Recipe for Growth and Good strategies, and I'm energized for what lies ahead.\nI'm certain we'll continue to build the world's most loved, trusted and fastest growing restaurant brands while delivering lasting value for our stakeholders.\nWith that, Chris, over to you.\nToday, I'll discuss our fourth quarter financial results, Bold Restaurant Development and Unmatched Operating Capability, as well as our strong balance sheet position and capital allocation strategy.\nI'll begin by discussing our financial results.\nWe finished the year strong, opening a record-breaking 4,180 gross units or 3,057 net new units, resulting in 6% unit growth for full year 2021.\nA robust 10% same-store sales growth helped us achieve 13% system sales growth, driving full year core operating profit growth of 18%.\nThat is a tremendous outcome given the inflation, labor, supply chain and consumer mobility challenges our brands faced in the back half of the year particularly in Q4.\nQ4 results also reflect impressive performance.\nSystem sales grew 9%, led by same-store sales growth of 5% or 4% on a two-year basis, accelerating from Q3.\nStrong underlying profit growth was masked by elevated G&A levels owing to higher incentive compensation as a result of our strong full year results and the normalization of Taco Bell company-owned restaurant margins in the quarter as previously signaled.\nWe anticipate quarterly variability in our company-owned restaurant margins as we remain focused on balancing relative value for our customers while protecting margins in the long run.\nTo that end, full year 2021 Taco Bell company-owned restaurant margins were in line with our historical range of 23% to 24%, virtually unchanged relative to 2019 levels.\nThis demonstrates our ability to drive strong top line results while managing profitability in an inflationary environment.\nOur Q4 ex special earnings per share was impacted by two items.\nFirst, we recorded a $35 million pre-tax gain on our investment in Devyani International Limited.\nSecond, we had a higher-than-normal tax rate for the quarter due to a tax reserve related to a prior year filing position that was challenged.\nAnd so our Q4 results were in line with our internal expectations and culminated in full year results that exceeded all elements of our long-term growth algorithm.\nMoving on to our Bold Restaurant Development growth driver.\nWe opened 1,678 gross units in the quarter or 1,259 on a net new unit basis, resulting in nearly 4,200 gross units opened for the full year, which is a record for Yum!\nand the restaurant industry.\nThat equates to over 100,000 jobs created worldwide last year alone.\nChina continues to be the biggest developer.\nHowever, we continue to see broad-based strength across our portfolio, evidenced by over 2,500 restaurants opened outside of China this year.\nIn fact, we saw new restaurants built in over 110 countries this year, a step-up from prior years, signaling our development engine is diversified and stronger than ever.\nAt KFC, the brand delivered a record development year, led by significant contributions from China, India and Russia.\nOverall, KFC International opened over 2,400 gross units and nearly 2,000 net new units during 2021.\nAt KFC U.S., after several years of same-store sales growth and strengthening unit economics, we have a much stronger foundation now on which to grow in the future as evidenced by the inflection point in developments with the system moving to positive unit growth in 2021.\nTaco Bell reported a strong development year in both the U.S. and international.\nIn the U.S., Taco Bell reached an impressive milestone, ending the year with over 7,000 restaurants and ample white space for future developments.\nDuring the fourth quarter, Taco Bell celebrated más international expansion as Spain was the first market to surpass 100 units.\nWe believe this development threshold unlocks accelerated growth, fueled by the benefits of scale, including supply chain advantages, as well as marketing and brand awareness.\nWe're confident in what the future holds for Taco Bell International, particularly as scale ties directly to profitability.\nPizza Hut International delivered a record year in development with all international business units reporting net positive growth, led by China and India.\nContinued improvement in unit economics and a more HMR-focused footprint are drivers of the broad-based unit growth.\nFinally, The Habit Burger Grill restarted their development engine this year with 23 net new units.\nOur brands are entering 2022 from a position of strength with plans to continue exceptional growth, owing to our world-class operators and franchise partners.\nWe're confident in our future growth engine given our broad-based strength, improved unit economics and the visibility we have into our development pipeline.\nNext, I'll talk about our Unmatched Operating Capability growth driver.\nWe remain focused on leveraging our digital and technology strategy to elevate both customer and team member experiences by leaning in on three key elements: easy experiences, easy operations and easy insights.\nStarting with easy experiences.\nWe expanded our digital ordering channels, including chat ordering via Tictuk, to nearly 2,000 stores at year-end, an increase of roughly 60% since our acquisition in the first quarter.\nWe also saw digital sales at KFC U.S. grow approximately 70% year over year, fueled by our delivery service channel and e-commerce platform that launched nationwide in early 2021.\nWe continue to invest in technology platforms focused on delivering a frictionless experience for our guests, including the launch of Quick Pick-Up at KFC U.S. in the fourth quarter that allows guests to bypass the drive-thru and grab their digital orders from cubbies inside the restaurant.\nThe outstanding sales growth across our digital channels is evidence that our customers continue to expect and opt for easy access to our brands.\nNow moving on to easy operations, which are focused on making it easier for our team members to run the business and ensure a superior customer experience.\nI want to highlight the exceptional operating performance of our brands, starting with Taco Bell, whose team members were unwavering in their commitment to deliver a superior customer experience.\nIn 2021, Taco Bell's drive-thru times were two seconds faster year over year, and the fourth quarter marked the eighth consecutive quarter of an average drive-thru time under four minutes.\nThis truly is an impressive performance considering labor availability challenges.\nAdditionally, the Dragontail order and delivery platform is now live in 2,800 stores in 21 markets across KFC and Pizza Hut, up from 13 markets last quarter and nine markets from the end of 2020.\nDragontail allows us to tap into the power of artificial intelligence to streamline the end-to-end food preparation process and optimize delivery routes for drivers.\nAt Pizza Hut International, we continued deploying HutBot, our intelligent coaching app designed to enhance both the team member and customer experience by digitizing routines and insights into operational efficiencies.\nWhen HutBot is deployed and used effectively, it's proven to increase customer satisfaction scores.\nWe ended the year with HutBot live in over 6,000 Pizza Hut locations in 70 markets.\nTo round out our technology strategy, our easy insights platform provides us with invaluable knowledge about our consumers, enabling us to enhance the customer relationship.\nWhen we acquired Kvantum, a leading AI-based consumer insights and marketing performance analytics business, in the first quarter, it was operating in 13 markets.\nWe have since tripled Kvantum's footprint to over 45 markets.\nWe will continue to prioritize initiatives that lead to incremental sales growth and improved unit economics for our franchisees.\nThe impressive adoption rates of these technology platforms are evidence of our franchisees' confidence in the investments we made to advance our digital and technology ecosystem this year.\nWe're confident these investments have created a meaningful competitive advantage and will be a point of differentiation for Yum!\nas we serve the elevated expectations of customers.\nNow for an update on our strong balance sheet position and our capital allocation strategy.\nWe ended the year with cash and cash equivalents of $486 million excluding restricted cash.\nWe closed the year temporarily below our net leverage target of five times as a result of our strong earnings growth.\nCapital expenditures, net of refranchising proceeds, were $55 million during the quarter and $145 million for the full year.\nThe full year consisted of $230 million in gross capex and $85 million in refranchising proceeds.\nWe paid a healthy quarterly dividend of $0.50 per share or approximately $600 million for the full year.\nWith respect to our share buyback program, during the quarter, we repurchased 5.6 million shares at an average share price of $128, totaling $720 million.\nFor the full year, we have repurchased 13 million shares at an average price of $122, totaling $1.6 billion.\nAs we look to 2022, our capital priorities remain unchanged: invest in the business, maintain a healthy balance sheet, pay a competitive dividend and return excess cash to shareholders via share repurchases.\nWe remain committed to maintaining our asset-light business model of at least a 98% franchise mix.\nGoing forward, we expect strong returns from our equity store investments to continue and like our franchisees, see attractive opportunities to invest in unit development.\nCapitalizing on these opportunities, we expect net capital expenditures for full year 2022 to be approximately $250 million, reflecting up to $350 million of gross capex and $100 million of refranchising proceeds.\nIn the long run, we expect our refranchising proceeds to offset our new store investments as they have in the past.\nBut in the near term, new store investments may exceed refranchising by $50 million to $100 million annually, primarily driven by our strategy to accelerate growth of The Habit equity estate.\nWe were pleased to announce earlier this week an increase in our quarterly cash dividend of 14% to $0.57 per share in 2022.\nThe recovery of our business in 2021 and proven resilience of our free cash flow supported this increase, reflecting a two-year double-digit CAGR, in line with our historical earnings growth and dividend increases.\nI'd like to wrap up by providing color on the shape of 2022.\nI'm pleased to share that we expect to deliver full year growth in line with our long-term growth algorithm, which includes 2% to 3% same-store sales growth and 4% to 5% unit growth, culminating in mid- to high single-digit system sales growth leading to high single-digit core operating profit growth which excludes FX.\nReflecting on 2021 results, we had several quarterly drivers that created lumpiness in the shape of the year, creating noise in our year-over-year lapse in 2022.\nWe expect our full year G&A to be approximately $1.1 billion but our G&A spend will return to a more balanced quarterly cadence relative to 2021.\nGiven the shape of our anticipated G&A spend throughout 2022 in comparison to 2021, we expect G&A to be a headwind to operating profit growth in the first half and a tailwind to growth in the second half of 2022.\nDue primarily to these timing factors related to G&A, we are expecting roughly flat core operating profit growth in the first half and high teens core operating growth in the second half, culminating in full year high single-digit core operating profit growth, in line with our long-term growth algorithm.\nFinally, on our 2022 effective tax rate.\nAlthough it's difficult to forecast with precision at this time, we continue to believe 21% to 23% is the appropriate range, but there are factors that could move us toward the high end of the range.\nWe'll continue to provide updates as appropriate.\nOverall, I couldn't be prouder of the results for the year.\nLooking forward to 2022, I'm confident we're poised to take share and deliver on our long-term growth algorithm, driven by our expanding competitive advantages tied to our unmatched global scale, investments in our digital ecosystem and world-class franchise partners.\nI'm looking forward to the year ahead and the continued success of our iconic global brands while delivering consistent earnings growth for shareholders.\nWith that, operator, we're ready to take any questions.\n", "role": "user" }, { "content": "compname reports fourth-quarter results; industry record full-year 3,057 net-new units.\nfourth-quarter system sales growth of 9% with over $6 billion in digital sales.\nfull-year system sales growth of 13% and record digital sales of $22 billion.\nqtrly worldwide system sales grew 9% excluding foreign currency translation, with kfc at 10%, taco bell at 11%, and pizza hut at 4%.\nqtrly worldwide same-store sales grew 5%.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I hope you are all well and safe.\nLet me just start with the things that I'm happy about when it comes to Q3.\nFirst of all, I'm happy on our progress with our new product introductions that they're going quite well.\nOur execution on recent M&A is going as planned, if not better.\nOur commercial focus and our discipline is as good as I've seen it.\nAnd I'm very happy with our growth versus our key competitors in both large joints and set, particularly when it comes to the U.S. For the team, in my view, continues to drive results in the areas under our control.\nAnd as a result, I continue to be proud of them for doing so.\nAlternatively, Q3 was also a quarter with unexpected negative environmental impacts that are, for the most part, out of our control.\nQ3 brought greater COVID pressure than I think anybody expected.\nMore customer staffing shortages certainly than we expected and an earlier China VBP impact than we anticipated.\nAnd this resulted in Q3 revenues that were lower than we had projected.\nAnd unfortunately, we expect these pressure points to continue into Q4.\nAnd as a result, we need to update our 2021 financial guidance and really the view we have of the fourth quarter.\nAs we look forward, until we see a fundamental shift in these trends, we're just going to assume that these pressure points aren't going away, but will be with us into Q4 and possibly into early 2022.\nLet's just start by taking a look at COVID and staffing concerns kind of together because I believe they're somewhat related.\nAs I think most of us know by now that there was a significant delta variance surge in Q3 that drove more COVID pressure than, again, I think anybody expected.\nWe previously thought COVID pressure would lessen through the back half of the year, but instead, while procedures did seasonally step up in September, it wasn't by as much as we expected, again, due to the enhanced COVID and staffing pressures.\nAnd as a result, September was our least attractive month relative to growth.\nAnd until we see a real shift in COVID and staffing-related recovery, we're projecting that the pressure we saw in September will continue through the end of the year, that's in the view of COVID.\nIf we think about the China VBP, the process in China is moving forward.\nAnd although it's still fluid, we are getting more clarity on what it will mean this year and in 2022.\nAnd our assumption going into the process was that VBP would pose no more than a 1% risk in terms of impact to ZB's overall revenue.\nAnd although for a number of reasons, the overall impact will likely be greater than what we originally anticipated.\nWe do believe that sizing this at around 1% of revenue impact is still accurate, that is the right way to size it.\nWith that said, the timing of the revenue impact as definitely shifted forward, and we now expect that much of this impact will be felt in 2021.\nAnd there are a few factors that are driving this shift into 2021.\nFirst one is around current year inventory reductions by distributors.\nThe second is around just ongoing negotiations we have with our distributor partners that are beginning to include price concessions on existing inventory.\nAnd then unfortunately, we're now seeing patients defer their surgeries until after the lower VBP pricing is in effect.\nApparently, even though China achieves near universal public medical coverage, there are out-of-pocket expenses that increase or decrease based on implant pricing, and this is substantial enough for patients to defer their procedures.\nSo clearly, in summary, although we feel very good about our execution in the areas we can control, these macro environmental issues continue to mute our overall performance, and these are fluid.\nThese issues for sure, they're fluid, but we've done our best to incorporate our current view of their impact in our revised guidance.\nI'm going to briefly discuss our Q3 results and updates that we made to our full year 2021 financial guidance.\nWe've also provided comparisons to the third quarter of 2019 as we feel that performance to pre-pandemic results is an important comparator.\nNet sales in the third quarter were $1.924 billion, a reported decrease of 0.3% and a decrease of 0.8% on a constant currency basis.\nWhen compared to 2019, net sales increased 0.4%.\nOn a consolidated basis, as Bryan mentioned, we were growing through August, but then declined in September as we saw delta variant cases and staffing shortage increases.\nIn short, there was a seasonal step-up in procedure volumes for the quarter, but the recovery has not taken hold as fast as we thought it would, especially in our hip and knee businesses.\nThe Americas declined 3.2% or flat versus 2019.\nThe U.S. declined 4.4% or up 0.1% versus 2019.\nLower U.S. performance in September was the key driver to lower consolidated results.\nEMEA grew 5.9% or up 0.3% versus 2019.\nThis is the first time the region posted positive growth since the start of the pandemic.\nIn the quarter, we saw an improving trend across a number of markets.\nHowever, the U.K., France, Spain and most emerging markets continue to be challenged despite higher vaccination rates.\nLastly, Asia Pacific grew 0.5% or up 1.5% versus 2019.\nWhile we did see growth versus 2019, it decelerated versus what we observed in the first half of the year.\nThis was driven in part by pricing adjustments on channel inventory as we continue to negotiate with our distributor partners ahead of VBP implementation.\nIn tandem with continuing COVID pressure throughout the region, especially in Japan and Australia and New Zealand.\nTurning to business performance in the third quarter.\nThe global knee business declined 0.7% or down 1% versus 2019.\nIn the U.S., knee is declined 5.3% or down 0.7% versus '19.\nOur global hip business declined 6.6% or down 2.4% versus 2019.\nIn the U.S., hips declined 11.3% or down 2.4% versus '19.\nThe sports extremity and trauma category increased 4.2% or 7.7% versus '19, driven by continuing commercial specialization, new product introductions and the contribution from strategic acquisitions we added to this portfolio in 2020.\nOur dental and spine category declined 6.1% or down 2% versus 2019.\nThe dental business posted good growth in the quarter and continued to benefit from strong execution and market recovery, while the spine business declined when compared to 2020 and 2019 due to increasing COVID pressure throughout the quarter.\nFinally, our other category grew 15.4% or down 1.1% versus 2019.\nInside this category, we saw ongoing demand for ROSA Knee as well as increased revenues from the launch of our ROSA partial knee and hip applications.\nMoving to the P&L.\nFor the quarter, we reported GAAP diluted earnings per share of $0.69, lower than our GAAP diluted earnings per share of $1.16 in the third quarter of 2020.\nThis decrease was driven primarily by cost of goods and higher spending related to litigation, our spin-off and R&D.\nIn addition, our share count was up versus the prior year.\nOn an adjusted basis, diluted earnings per share of $1.81 was flat compared to the prior year, even though sales were down.\nWe implemented targeted reductions in SG&A, which in tandem with a slightly lower tax rate helped offset higher investments in R&D and a higher share count.\nAdjusted gross margin of 70.3% was just below the prior year, and the results were slightly below our expectations due to lower volumes in tandem with less favorable product and geographic mix.\nOur adjusted operating expenses of $852 million were in line with the prior year and stepped down sequentially versus the second quarter.\nInside of that, we continue to ramp up investment in R&D and commercial infrastructure across priority growth areas like S.E.T., robotics and data and informatics.\nAnd we are offsetting those increases with improvements in efficiency across other areas of SG&A.\nOur adjusted operating margin for the quarter was 26.1%, largely in line with the prior year and prior quarter.\nThe adjusted tax rate of 15.8% in the quarter was in line with our expectations.\nTurning to cash and liquidity.\nWe had operating cash flows of $433 million and free cash flow totaled $307 million with an ending cash and cash equivalents balance of just over $900 million.\nWe continue to make good progress on deleveraging the balance sheet and pay down another $300 million of debt totaling $500 million of debt paydown for 2021 to date.\nMoving to our financial guidance.\nWe've updated our full year 2021 outlook based on two factors: first, COVID and customer staffing pressures continuing at levels higher than previously expected.\nAnd while we expect procedure volumes to seasonally improve in the fourth quarter, we are taking a cautious approach and currently assuming that the more acute pressure we saw in September will continue through the fourth quarter.\nAnd second, as Bryan mentioned, we now know more about the dynamics leading up to the implementation of the China VBP and project that it will have a bigger impact in the fourth quarter than originally assumed.\nThe impact across inventory reductions, price write-downs on existing inventory and a new factor, which is patients deferring their procedures have increased the impact of VBP and the timing of that impact.\nAs a result, our current projection for Q4 VBP impact is about 300 basis points of headwind to our consolidated results, but the situation remains fluid, and we will continue to update you as the implementation of VBP unfolds.\nFor the full year, we now expect reported revenue growth to be 11.3% to 12.5% versus 2020 with an FX impact of about 140 basis points of tailwind for the year.\nWhile we are taking steps to further reduce spending in the fourth quarter as a response to our lower revenue outlook, we are reducing our adjusted operating margin projections to be 26% to 26.5% for the full year.\nOur updated full year adjusted diluted earnings per share guidance is now in the range of $7.32 to $7.47.\nOur adjusted tax rate projection is unchanged at 16% to 16.5%.\nAnd finally, our free cash flow estimates remain in the range of $900 million to $1.1 billion.\nThis updated full year 2021 guidance range implies that Q4 constant currency revenue growth will be between negative 2.3% and positive 1.8% versus Q4 2020.\nAnd we project Q4 adjusted earnings per share to be between $1.90 to $2.05.\nWe kept a wider range of potential Q4 outcomes in our guidance to account for the uncertainty around COVID surges, customer staffing pressure and VBP implementation.\nAs a note, we do believe that COVID pressure, including the related staffing shortages will continue to mute pandemic recovery as we move into 2022.\nAdditionally, as we mentioned earlier, VBP is expected to reduce 2022 consolidated revenues by about 100 basis points.\nThat impact will be felt in our large joint segment and will negatively impact gross margins as we move forward.\nTo respond to this, we are accelerating transformation and efficiency efforts to help offset these headwinds.\nIn summary, the macro environment presents challenges, but our underlying business fundamentals remain strong as we continue to execute successfully against what we can control.\nAnd that's why I have such confidence in our long-term growth projections.\nThe ZB team remains intensely focused on creating value and most importantly, delivering on our mission.\nOur underlying business is strong.\nAnd overall, we're pleased with our performance in large joints and set versus market.\nThis is a significant shift for ZB versus where we were just a few years ago and an important driver of our ongoing growth.\nOur innovation is in full stride, and that's a big part of this.\nWe're going to enter 2022 with a new product pipeline of more than 20 anticipated product launches across the next two years.\nAnd of course, this is incremental to a number of new products we recently launched, including, but certainly not limited to, ROSA partial knee, ROSA Hip and Persona IQ, which is the first smart knee implant in the world.\nWe're very excited about this launch.\nAnd we continue to see strong ROSA placements, increased robotic penetration into our accounts.\nI think most importantly, just more robotic procedures as a percentage of our overall procedure base.\nAnd ROSA is even more attractive because it's a key component of our ZBEdge suite of truly integrated solutions.\nAnd that really does help to tie pre-intra and post-op data together with the goal of changing patient care.\nAnd finally, we are accelerating our corporate transformation.\nWe're making great progress on the planned spin-off of our spine and dental business.\nWe just recently appointed a new CFO and other key leadership team members for Zimby.\nWe continue to be strategic and selective in our active portfolio management process and have added key assets over the past year that have helped us to better compete and more importantly to win across robotics and data, dental, set, CMFT and the broader ASC market.\nWe're reinvesting in our business for sure, but we're also advancing efficiency programs designed to streamline and improve how we operate and very importantly drive savings.\nAll of this forward momentum plus ZB's differentiated portfolio, the expected value creation of our planned spin transaction and our ability to execute really does give us continued confidence in our path to grow revenue in the mid-single digits and to deliver a 30% operating margin by the end of 2023.\nAnd I can tell you that this is clearly a time of significant challenge in market pressures, particularly given the fact that we have such a dependence on elective procedures.\nSo there's no doubt about that.\nBut this is also a time of significant opportunity for Zimmer Biomet.\nWe look forward to delivering for our team members, delivering for our shareholders and most importantly, the customers and patients that we serve.\n[Operator Instructions] With that, operator, may we have the first question, please?\n", "role": "user" }, { "content": "q3 adjusted earnings per share $1.81.\nq3 earnings per share $0.69.\nq3 sales fell 0.3 percent to $1.924 billion.\nsees fy 2021 adjusted earnings per share $7.32 - $7.47.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Joining me on the call today are Ian Siegel, co-founder and CEO; and David Travers, CFO.\nIn addition, during today's call, we will discuss non-GAAP financial measures.\nThese non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from GAAP results.\nReconciliations of the non-GAAP metrics to the nearest GAAP metrics are included in ZipRecruiter's public S-1 filing and in our Form 10-Q.\nWe hope you're all staying safe and healthy.\nThe second quarter of 2021 was an exceptional one for the U.S. economy.\nGDP growth exceeded 6%.\nThe COVID-19 vaccine rolled out en masse, and U.S. employers rushed to staff up.\nAccording to July's jobs report released on August 6, 2021, we've now recovered almost 75% of the jobs lost during the pandemic.\nAmerican businesses are ready to hire again.\nWe responded to the increased demand from employers by scaling up our sales and marketing efforts, resulting in nearly 170,000 quarterly paid employers participating in our marketplace, an all-time high.\nRevenue of $183 million this quarter was also the highest in ZipRecruiter's history.\nI'm proud of the execution by all of our teams and their commitment to our mission of actively connecting people to their next great opportunity.\nWhile employers are eager to hire, job-seeking activity still remains lower than in pre-pandemic periods.\nThat said, over the past quarter, we've seen job seeker volume increasing.\nWe're excited to help these job seekers find work, aided by their own personal recruiter, Phil, our popular AI-powered box.\nIn the second quarter of 2021, we will fill throughout the product, providing job seekers an even more personalized and consistent experience.\nPhil directs the job seekers' attention to jobs that are a great fit and provides helpful tips to take the guesswork and mystery out of the job search experience.\nWe also introduced many improvements to our job matching algorithms, which have driven up the number of applications submitted by job seekers.\nAmidst a competitive labor market, we were thrilled to have spent the quarter adding many amazing new members to our own team.\nSpecifically, we grew headcount in the second quarter by 140, which is a record high for our company.\nWe now have over 1,000 ZipRecruiter employees.\nOur secret in a challenging environment is not so secret.\nWe use ZipRecruiter to find great hires.\nThese hires include key additions from across all of our teams, including technology, product management and sales.\nAs strong as the second-quarter results were, I truly believe we are just getting started.\nAs Ian mentioned, our second-quarter revenue of $183 million represented a record quarter, exceeding the midpoint of our guidance range by $23 million.\nThis represents a 109% growth year over year and 46% growth over the first quarter of 2021.\nThe growth in the second quarter was driven by stronger-than-expected demand from employers and our execution across sales and marketing activities.\nThe main driver of our revenue growth was the substantial increase in quarterly paid employers.\nAt almost 170,000, this represented an improvement of 120% year over year, an another all-time high for ZipRecruiter.\nGAAP net loss was $53 million in the second quarter of 2021 compared to net income of $21 million in the prior year.\nAdjusted EBITDA loss was $2 million with a negative 1% margin compared to $26 million in adjusted EBITDA or a 29% margin in the prior year.\nLast year, in the second quarter of 2020, in response to the pandemic, we substantially reduced our operating expenses.\nSince then, we have grown expenses as we scaled sales and marketing.\nWe were encouraged by the efficiency of our increased sales and marketing spend in Q2 of 2021 and have confidence in our ability to attract employers and job seekers to our marketplace.\nIn the second quarter of 2021, we incurred $64 million in stock-based compensation expense, $42 million of which related to the modification and expense of employee RSUs to allow for vesting in the direct listing, which impacted net loss.\nSimilarly, in the second quarter of 2021, we incurred $32 million in general and administrative expenses related to the direct listing completed during the quarter, which impacted both net loss and adjusted EBITDA loss.\nEven with the investments discussed earlier and onetime expenses for our direct listing, we ended the quarter with over $153 million in cash, an increase of $18 million from the first quarter of 2021.\nAdditionally, we secured a $250 million line of credit, none of which was drawn as of the quarter end.\nAfter closing out an extraordinary quarter, we're pleased to increase our guidance for the third quarter and the full year of 2021.\nFollowing the largest increase in quarterly revenue in ZipRecruiter's history, we expect $185 million of revenue in Q3 of 2021 at the midpoint, which translates to 80% year-over-year growth.\nWe're pleased to increase our midpoint guidance for the full year to $658 million, up from the $590 million shared last quarter.\nThis increased 2021 revenue guidance equates to 57% growth over 2020 at the midpoint.\nWe believe the second quarter of 2021 was a truly unique time for our country and our company.\nOur third quarter guidance and full year expectations reflect our belief in a gradual return to a more traditional macroeconomic pattern by the end of the year as well as a seasonal softening of job activity in the fourth quarter.\nWhile we did not see this trend last year due to the nation's economic recovery through the second half of the year, this is a seasonal trend we have consistently seen prior to the pandemic.\nOur full-year midpoint guidance for adjusted EBITDA of $34 million equates to an adjusted EBITDA margin of 5%.\nThis increased guidance reflects stronger revenue outlook, offset by increased investment in sales and marketing activity in response to the stronger labor market environment we're currently seeing.\nThis is above our pre-COVID adjusted EBITDA margin of 2% back in 2019 despite our investments to achieve substantially higher growth rate this year.\nThe second quarter of 2021 was exceptional by many measures.\nWe began our life as a public company, delivered record revenue and served an all-time high number of employers.\nAs encouraging as these results are, we remain focused on what is yet to come.\nWe look forward to partnering with shareholders who share our enthusiasm to actively connect people to their next great opportunity.\n", "role": "user" }, { "content": "compname reports q2 revenue of $183 mln.\nq2 revenue $183 million versus refinitiv ibes estimate of $160.4 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I am joined today by Kristin Peck, our Chief Executive Officer; and Glenn David, our Chief Financial Officer.\nOur remarks today will also include references to certain financial measures, which were not prepared in accordance with generally accepted accounting principles or U.S. GAAP.\nWe also cite operational results, which exclude the impact of foreign exchange.\nI hope you and your loved ones are all staying healthy and able to get vaccinated for COVID-19, if not already, then soon.\nWe've been very fortunate in the U.S. as vaccination rates are up and infection rates are trending down overall.\nBut that is not the situation everywhere.\nIn many countries, improving access to vaccines and controlling infection rates are critical hurdles for a more comprehensive global recovery.\nYet with the extraordinary measures being taken by so many, I remain optimistic about the steady progress we're making to beat this pandemic.\nI'm also very proud of what we've been able to do at Zoetis in our own small way to support the global effort.\nWe've been able to keep our colleagues safe, encourage and assist them with vaccinations where possible, and continue serving our customers in the care of their animals.\nAnd we're off to a very strong start in 2021, executing on strategies for building on our innovative pet care portfolio, expanding in key markets outside the U.S. and accelerating our growth in diagnostics.\nIn the first quarter, we grew our top line revenue at 21% operationally, our best quarter ever, with 25% operational growth internationally and 19% growth in the U.S. China and Brazil led our international performance with 75% and 48% operational growth respectively, exhibiting their strength in both companion animal and livestock product sales.\nIn total, our containment animal portfolio grew 34% operationally based on the strength of our parasiticides and dermatology products, while our livestock portfolio grew 8% operationally with solid growth in cattle, swine and fish products.\nDigging deeper on pet care, it has been one year since the launch of our triple combination parasiticide, Simparica Trio.\nIt is exceeding expectations and has been well received by customers, with a 90% plus penetration rate in our largest U.S. corporate accounts.\nSimparica Trio is the latest growth catalyst for a portfolio of small animal parasiticides.\nAfter several successful innovations in the last few years, these products made up 16% of our total sales in the first quarter and includes such brands as Simparica, Simparica Trio, Revolution, Stronghold and ProHeart.\nWe believe the ongoing market shift to e-commerce is another boost for this category, helping to increase compliance and months on therapy.\nAnd our direct-to-consumer campaigns for Simparica and Simparica Trio continued showing a solid return on investment in markets around the world.\nMeanwhile, our key dermatology portfolio led by Apoquel and Cytopoint, demonstrated continued double-digit growth.\nWe are seeing excellent traction and significant growth across the range of international market.\nOur dermatology portfolio has further growth potential as we continue expanding our international customer base and seek to become a more common first-line treatment for pruritus in dogs.\nVeterinarians and pet owners alike appreciate the exceptional standard of care that our products can provide.\nIn the containment animal space, we've also continued to be pleased with our diagnostics portfolio, which grew 47% operationally in the first quarter.\nWe have grown our point-of-care diagnostic sales, made excellent progress on improving our connectivity solutions in veterinary practices, and have seen our cloud-based VetScan images platform receiving very positive customer feedback, with placements exceeding expectations in the early launch.\nWe're also making progress on our Reference Labs integrations and look forward to future expansion in this space, both in the U.S. and internationally.\nOur growth in livestock was driven by the performance of cattle, swine and fish in the first quarter.\nCattle product sales in the U.S. were strong as the food service sector has started to recover and generic competition projection was later than expected.\nMeanwhile, swine benefited from the continued recovery from African swine fever in China.\nLooking ahead, we are raising guidance for operational growth and full year revenue to the range of 10.5% to 12%.\nAnd while we had an unusually strong first quarter, we expect more normalized revenue growth in the second half of the year due to tougher comparative quarters and increasing generic competition for DRAXXIN.\nGlenn will provide more details on other guidance updates in his remarks.\nSince the beginning of the year, Zoetis has continued to advance our key priorities, including key milestones for new products and life cycle innovations and geographic expansions for major brands.\nSince our last earnings announcement, we received approval in the European Union for Solensia the first injectable monoclonal antibody for the alleviation of pain associated with osteoarthritis in cats and will be launching this year.\nOsteoarthritis is vastly underdiagnosed and undertreated today due to limited options for therapy and difficulty recognizing pain in cats.\nMeanwhile, Librela, our monoclonal antibody for the alleviation of OA pain in dogs, has launched in the EU.\nAnd we're seeing a great customer response from vets and dog owners who referenced increased activity, social ability and quality of life for their pets.\nIn the U.S., we continued discussions with the FDA regarding our regulatory submissions and manufacturing inspection for Librela and Solensia, and we now anticipate approvals for both products in 2022, with Librela likely later in the year.\nWe will provide updates on U.S. revenue expectations for these products in 2022 as we get further clarity on approval timing and rollout plans.\nIt is also worth noting that in China, which is our second largest market in terms of revenue, Zoetis recently received approvals for several leading products, Fostera PCV MH a one-shot vaccine for pigs, Excenel RTU EZ, a key anti-infective for cattle and swine, and Revolution Plus, our latest parasiticide for cats.\nWe continue to strengthen our portfolio in China, one of our key catalysts for growth.\nWe're also maximizing our key brands with more geographic expansion.\nIn poultry, we expanded our line of recombinant vector vaccines with approval of Poulvac Procerta HVT-ND in Canada, Brazil and several other smaller markets.\nAnd in parasiticides, we received additional approvals for Simparica Trio in Japan, Mexico and several other smaller markets.\nIn terms of sustainability, we published our long-term goals in March with specific commitments to communities, animals and the planet.\nWe've built a comprehensive and rigorous approach through our Driven to Care program, and our goals include support for 10 of the 17 United Nations Sustainable Development Goals.\nWe'll be releasing more detail on these goals and our initial progress in our sustainability report this June.\nIn closing, the fundamental growth drivers for our industry continue to show strong and sustainable momentum.\nPet adoption trends and higher spending per visit in the U.S. along with increased medicalization rates in markets outside the U.S. all continue to bode well for significant growth in our companion animal and diagnostic portfolios globally.\nWe feel very confident about where our companion animal business has come over the last few years, launching innovative new products, defining new standards of treatment and expanding our global reach.\nIn 2014, our companion animal business was 34% of our total revenue.\nLast year, it had grown to 55% based on the strength of our innovation and investment in growth, and we see that continuing to expand.\nIn livestock, the industry is in a more limited innovation cycle, and we expect modest growth for the year.\nLivestock growth is tied closely to the pandemic and how quickly the foodservice industry recovers.\nFor Zoetis, we also anticipate increasing headwinds of generic competition to DRAXXIN, but we expect our life cycle innovations and competitive strategies to help us mitigate the impact.\nWhile U.S. livestock may present challenges for us in the near term, I feel very positive about our catalysts for growth in pet care, diagnostics, and international markets like China and Brazil.\nWe continue to be led by our companion animal parasiticide and dermatology portfolio with more growth to come, and we see a bright future ahead for our monoclonal antibodies for pain.\nDiagnostics is accelerating its growth as we increase our global footprint, expand our reference labs and demonstrates the potential for VetScan images to veterinary clinics.\nAnd internationally, China continues to be a market with significant growth potential, not only in swine products, but with a sizable opportunity for increased medicalization of pets.\nAnd we expect major growth to continue in Brazil across the companion animal and livestock portfolios.\nAs always, we remain confident that Zoetis' diverse portfolio across species and geographies, our continued pipeline of innovative new products and life cycle innovations, and the agility and commitment of our colleagues will continue driving our success in 2021 and beyond.\nNow let me hand off to Glenn, who will speak more about our first quarter results and updated guidance for the full year 2021.\nAs Kristin mentioned, we had a very strong start to the year, delivering substantial growth on a global basis and across species and therapeutic areas.\nToday, I'll focus my comments on our first quarter financial results, the key drivers contributing to our performance, and an update on our improved full year 2021 guidance.\nIn the first quarter, we generated revenue of $1.9 billion, growing 22% on a reported basis and 21% operationally.\nAdjusted net income of $603 million with an increase of 33% on a reported basis and 34% operationally.\nOperational revenue grew 21%, resulting entirely from volume increases with price flat for the quarter.\nVolume growth of 21% includes 13% from other in line products, 5% from new products, and 3% from key dermatology products.\nCompanion animal products led the way in terms of species growth, growing 34% operationally, with livestock growing 8% operationally in the quarter.\nPerformance in companion animal was driven by our parasiticide portfolio, which includes sales of Simparica Trio in the U.S., certain European markets, Canada, Australia and Mexico.\nWe also saw growth in our key dermatology products, Apoquel and Cytopoint, as well as in small animal vaccines and diagnostics.\nFollowing blockbuster sales in year one, Simparica Trio began 2021 with strong first quarter performance, posting revenue of $90 million, growing sequentially each quarter since launch.\nThe underlying dynamics that drove first quarter sales are very favorable for significant future growth, such as increasing clinic penetration and robust reordering rates within penetrated clinics.\nI'd again like to mention how pleased we are with the performance of our broader parasiticide portfolio, which, in addition to the Simparica franchise, had significant growth in the Revolution, Stronghold and ProHeart franchises as well.\nU.S. market share within the flea, tick and heartworm segment is now at an all-time high of 31%, representing an increase of more than 9% for the first quarter versus the same period in the prior year.\nGlobal sales of our key dermatology portfolio were $245 million in the quarter, growing 24% operationally.\nWe remain confident that key dermatology sales will exceed $1 billion this year.\nOur diagnostics portfolio grew 47% in Q1, led by increases in consumable and instrument revenue.\n2020 presented challenging conditions for our diagnostics business, as social distancing restrictions limited our ability to enter vet clinics and increase our market share.\nHowever, our vast product portfolio, commitment to innovation, and ability to leverage the breadth of our medicines and vaccines portfolio has us well positioned to grow faster than the overall diagnostics market.\nLivestock growth in the quarter was primarily driven by our cattle and swine businesses.\nImproving market conditions from the COVID-19 recovery as well as successful promotional activities led to increased sales across the cattle portfolio.\nIn addition, later-than-expected timing of generic entrants led to strong first quarter sales for DRAXXIN.\nOur swine portfolio grew 19% operationally as large producers continued rebuilding herds as they recover from African swine fever and created significant demand for our products.\nPoultry sales declined in the first quarter as producers expanded their use of lower-cost alternatives to our premium products.\nThe decline in poultry partially tempered the growth in cattle, swine and fish.\nNow let's discuss the revenue growth by segment for the quarter.\nU.S. revenue grew 19%, with companion animal products growing 32% and livestock sales declining by 4%.\nFor companion animal, pet ownership and pet spending trends remain promising.\nWhile severe weather caused a slight decline in vet clinic traffic for the quarter, revenue per visit was up more than 10%.\nIn addition, pet ownership has increased and is trending toward a younger demographic, and younger pet owners typically spend more on pet care.\nThis is a key driver for increased revenue per visit and creates robust demand for our diverse portfolio.\nOur small animal parasiticide portfolio was the largest contributor to companion animal growth, growing 74% in the quarter.\nDiagnostics, key dermatology products and small animal vaccines also contributed to growth.\nSimparica Trio continues to perform well in the U.S. with sales of $83 million.\nThe Simparica franchise generated sales of $112 million in the quarter and is now the number 2 brand in the U.S. flea, tick and heartworm segment.\nCompanion animal diagnostic sales increased 62% in the quarter as the continued recovery at the vet clinic and a favorable prior year comparative period led to significant growth in point-of-care consumable revenue.\nKey dermatology sales were $157 million for the quarter, growing 16% with significant growth for Apoquel and Cytopoint.\nU.S. livestock declined 4% in the quarter, driven primarily by poultry as producers switching to lower-cost alternatives unfavorably impacted our business.\nSwine also declined in the quarter, which is attributed almost entirely to a favorable nonrecurring government purchase, which occurred in Q1 2020.\nCattle grew 6% in the quarter as promotional programs and the timing of generic entrants drove growth across the product portfolio.\nGrowth in cattle partially offset the declines in poultry and swine.\nTo summarize, U.S. performance was once again strong in what remains a very favorable companion animal market environment, in which we offer the broadest and most innovative product portfolio.\nAlthough livestock declined in the quarter with expectations of further declines for the year, we are encouraged by a series of foodservice trends such as increased dining out and school and business reopenings.\nRevenue in our international segment grew 25% operationally in the quarter, with companion animal revenue growing 37% operationally and livestock revenue growing 17% operationally.\nThe strength in companion animal was fueled by the continuing trends of pet adoptions, increasing standard of care by pet owners, and our investments in advertising, all of which drove growth across our parasiticide and dermatology portfolios.\nCompanion animal diagnostics grew 18% in the quarter, led by a 24% increase in point-of-care consumable revenue and a second consecutive quarter of double-digit increase in instrument placement revenue.\nWe began early experience programs for Librela, a monoclonal antibody for alleviation of OA pain in dogs.\nThe feedback from the programs has been extremely positive, and further solidifies our view of the long-term potential of the product with an EU launch currently under way.\nOur feline monoclonal antibody, Solensia, will begin early experience programs in Q2 with an EU launch to follow in the third quarter.\nSolensia will provide cat owners an innovative therapy to address one of the largest unmet needs in animal health.\nOur international livestock business saw double-digit growth across all species with the exception of poultry, which grew low single digits in the quarter.\nSwine revenue grew 29% operationally led by growth in China of 128%, marking the third consecutive quarter with swine growth in excess of 100%.\nWhile additional outbreaks and strains of African swine fever have occurred, we believe it is contained to a specific region and a limited number of customers.\nCattle grew 11% operationally in the quarter as a result of marketing campaigns, key account penetration, and favorable export market conditions in Brazil and several other emerging markets.\nOur fish portfolio delivered another strong quarter, growing 39% operationally driven by strong performance in Chile, the timing of seasonal vaccination protocols, and the 2020 acquisition of Fish Vet Group.\nAll major markets grew in the first quarter, many in double digits.\nChina total sales grew 75% operationally, which in addition to the significant growth in swine, delivered 59% operational growth in companion animal.\nBrazil grew 48% operationally in the quarter as sales of Simparica, the leading oral parasiticide in the Brazilian market, drove a 73% operational increase in companion animal.\nOverall, our international segment delivered strong results, again, demonstrating the value of substantial geographic and species diversification.\nOur companion animal business benefited from favorable trends such as rising medicalization rates outside the U.S. And while swine was the largest growth driver for our international livestock business, the contributions were broad-based with growth across all species.\nNow moving on to the rest of the P&L.\nAdjusted gross margin of 71% increased 70 basis points on a reported basis compared to the prior year as a result of favorable product mix, partially offset by foreign exchange and other costs, including freight.\nAdjusted operating expenses increased 8% operationally, resulting from increased compensation-related costs and advertising and promotion expense for Simparica Trio.\nThis was partially offset by reductions to T&E costs as a result of COVID-19.\nThe adjusted effective tax rate for the quarter was 19%, an increase of 230 basis points driven by a reduction in favorable discrete items compared to the prior year's comparable quarter, partially offset by the favorable impact of the jurisdictional mix of earnings.\nAdjusted net income and adjusted diluted earnings per share grew 34% operationally for the quarter, primarily driven by revenue growth.\nWe resumed our share repurchase program in the first quarter, repurchasing approximately $180 million worth of shares.\nAlong with our dividend, share repurchase is a critical component of our shareholder distribution strategy.\nWe remain in a strong liquidity position and are highly cash generative.\nAnd as a result, we expect to be able to execute on all investment priorities including direct-to-consumer advertising, internal R&D and external business development, while still returning excess cash to shareholders.\nNow moving on to our updated guidance for 2021, which we are raising as a result of our first quarter performance.\nPlease note that our guidance reflects foreign exchange rates as of late April.\nFor revenue, we are raising and narrowing our guidance range, with projected revenue now between $7.5 billion and $7.625 billion and operational revenue growth between 10.5% and 12% for the full year versus the 9% to 11% in our February guidance.\nAdjusted net income is now expected to be in the range of $2.12 billion to $2.16 billion, representing operational growth of 12% to 14% compared to our prior guidance of 9% to 12%.\nAdjusted diluted earnings per share is now expected to be in the range of $4.42 to $4.51, and reported diluted earnings per share to be in the range of $4.08 to $4.19.\nOur key assumptions for 2021 have not changed materially since the guidance we provided on our Q4 2020 call.\nHowever, our current view is that we will not face competition in the U.S. for Simparica Trio or our key dermatology products until the second half of 2022.\nOn our fourth quarter call, I mentioned that we anticipated growth to be heavily weighted toward the first half of the year, and I'd like to take this time to expand upon that further.\nWe are expecting first half 2021 growth to materially outpace growth in the second half of the year, primarily resulting from Simparica Trio sales and the favorable Q2 2020 comparative period related to COVID-19.\nSubsequently, we expect growth to moderate in the second half of the year as a result of increased generic competition for DRAXXIN as well as challenging comparative periods when pent-up demand in the first half of 2020 worked its way through the system in the second half.\nNow to summarize before we move to Q&A, we've delivered strong operational top and bottom line growth in the first quarter with significant gains in both companion animal and livestock and across nearly every therapeutic area and geography.\nIn addition, we raised and narrowed our full year 2021 guidance.\nAnd while growth will moderate in the back half of the year for the reasons I outlined, we again expect to grow faster than the market and feel very positive about our position for sustained growth beyond this year.\n", "role": "user" }, { "content": "sees fy earnings per share $4.08 to $4.19.\nsees fy revenue $7.5 billion to $7.625 billion.\nq1 revenue rose 22 percent to $1.9 billion.\nsees fy adjusted earnings per share $4.42 to $4.51.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I am joined today by Kristin Peck, our Chief Executive Officer; and Glenn David, our Chief Financial Officer.\nOur remarks today will also include references to certain financial measures, which were not prepared in accordance with generally accepted accounting principles or U.S. GAAP.\nWe also cite operational results, which exclude the impact of foreign exchange.\nOnce again, I hope you and your loved ones are safe and healthy as this pandemic continues to be pervasive and unpredictable with COVID cases spiking again in several regions of the U.S. and around the world.\nWe are all facing the uncertainty and fatigue that has come with this pandemic, but I'm also grateful and see today to share results that reflect the resilience of the animal health industry, the outstanding performance of our colleagues at Zoetis and the essential value we are providing our customers.\nAt Zoetis, we've stayed very responsive to the needs of our colleagues and customers throughout the year.\nWe've prioritized their health and safety while also ensuring that a consistent and reliable supply of products is getting to the clinics, farms and pet owners who need them.\nOur global supply chain and manufacturing operations are running well with safety and quality as our top priority, and we've maintained operations at normal capacity and with no loss output.\nAs we look ahead, we're fortifying our network of suppliers and building inventory levels while also planning further contingencies for supply and distribution in the months ahead.\nOur R&D programs also remained on track despite the pandemic challenges, and our field force has been very adaptive to the changing protocols, lockdowns and customer needs in various markets.\nOur diverse and innovative portfolio has been driving growth this quarter with companion animal products up 20% operationally and livestock product sales up 9% operationally.\nOur newest parasiticides, including Simparica Trio, REVOLUTION PLUS and ProHeart 12 led the way again along with vaccines, key dermatology products and our diagnostics portfolio, including reference labs.\nThe third quarter also benefited from sales growth in the U.S. cattle market and China swine market.\nAs a result of the sales growth and target investments, we delivered adjusted net income growth of 20% operationally for the third quarter.\nReflecting at our nine month performance and despite expectations for a more modest fourth quarter, we are increasing our revenue and adjusted net income guidance for the full year.\nGlenn will provide more details around guidance updates in his remarks.\nThis year has shown once again that animal health is a steady and reliable sector even in times of economic hardship.\nThe world's fundamental need for nutrition, comfort and companionship provided by animals has proven durable and enduring over time.\nIn the U.S., veterinary clinic revenues for pets are increasing at double-digit rates.\nPet owners are focusing again on wellness and chronic illness, not just emergency visits and acute care.\nWhile spending more time with their pets, pet owners are much more attuned to their dogs' and cats' health, observing conditions like itchiness, dermatitis and pain.\nWhile clinic visits are relatively flat in the U.S., we are actually seeing an increase in average spend per visit.\nWe expect to continue to see our strength coming from companion animal products, especially our parasiticides and key dermatology portfolios across global markets.\nSimparica to Trio's launch and penetration into new clinics in the U.S. and elsewhere is going well despite the headwinds of COVID-19.\nAnd we're seeing a good return to our direct-to-consumer advertising and digital campaigns for Simparica and APOQUEL.\nMeanwhile, in the livestock sector, producers are adapting to the changes in their end markets for protein.\nAnd our third quarter growth was driven by increased sales in cattle, swine and fish.\nThe spike in COVID cases, limitations on dining out and shifts in production capacities will continue to make livestock a longer-term recovery story that may vary by region and species, another reason our diverse portfolio and global footprint is such an advantage.\nLooking ahead, we have stayed focused on advancing our five key priorities: drive innovative growth, enhance customer experience, lead in digital and data analytics, cultivate a high-performing organization and champion a healthier and more sustainable future.\nThroughout the year, we have stayed on track with our execution and investments in these areas, supported by a strong cash position and clear strategy.\nIn the third quarter, we achieved an important milestone for our pipeline for pain management in pets.\nAs you know, there's been limited innovation in this area over the last 20 years and we're excited by the potential of monoclonal antibodies or mAbs to be the next breakthrough in long-term pain management.\nWe've been building on our research and leadership in monoclonal antibodies for several years and gave valuable experience in the development and launch of our dermatology product, CYTOPOINT in 2016.\nIn September, Zoetis received a positive opinion on our latest mAb, Librela, from the committee for veterinary medicinal products in Europe.\nUpon full approval by the European Commission, the Librela will be the first injectable monoclonal antibody licensed for alleviation of pain associated with osteoarthritis in dogs.\nThe European Commission approval is anticipated later this year with a potential launch in the first half of 2021.\nWe have additional regulatory submissions for Librela under review by health authorities in the United States, Latin America and Asia Pacific.\nAnd we are progressing with similar regulatory reviews for monoclonal antibody therapy that can help manage osteoarthritis pain in cats, a condition that is vastly under-diagnosed or treated in cats today.\nWe also continue to bring our leading product into new markets.\nOn the companion animal side, Simparica was recently approved in China and CYTOPOINT and REVOLUTION PLUS gained approvals in additional markets in Asia and Latin America, respectively.\nAnd in livestock, received approval in Japan for two of our leading swine vaccines, Fostera Gold PCV MH and Fostera Gold PCV, all great examples of how we build and expand our innovation-based franchises.\nLast quarter, I previewed our latest diagnostics innovation, VetScan Imagyst, which features a cloud-based artificial intelligence platform.\nSince then, we have launched it in Australia, Ireland, New Zealand, the U.K. and the U.S. and customers have been enthusiastic about its potential to simplify point-of-care workloads and improve the consistency of results.\nAnd finally, we remain committed to creating a healthier and more sustainable world through our work as a leader in animal health.\nWe've been formalizing our strategy this year and look forward to sharing baseline metrics that are aligned with leading ESG reporting standards before the end of this month.\nNow let me hand it off to Glenn, who will speak more about our third quarter results and updated guidance for the full year.\nWe delivered another solid quarter with significant growth in both our companion animal and livestock portfolios.\nAnd we continue to be encouraged by the strength and resiliency of our business despite the challenging environment due to the pandemic.\nToday, I will provide commentary on our Q3 results, update you on our improved full year 2020 guidance and discuss our expectations for Q4.\nIn the third quarter, we generated revenue of $1.8 billion, growing 13% on a reported basis and 15% operationally.\nAdjusted net income of $524 million was an increase of 15% on a reported basis and 20% operationally.\nForeign exchange negatively impacted revenue in the quarter by 2%, driven primarily by the strengthening of the U.S. dollar.\nOperational revenue growth was 15% with contributions of 2% from price and 13% from volume.\nVolume growth of 13% includes 5% from other in-line products, 4% from new products, 3% from key dermatology products and 1% from acquisitions.\nCompanion animal products led the way in terms of species growth, growing 20% operationally with livestock growing 9% operationally in the quarter.\nPerformance in companion animal was driven by our parasiticides portfolio, which includes sales of Simparica Trio in the U.S., certain European markets, Canada and Australia.\nWe also saw growth in our small animal vaccine portfolio and our key dermatology products, CYTOPOINT and APOQUEL.\nThe positive momentum for Simparica Trio continued in the third quarter, and we expect full year incremental revenue of between $125 million to $150 million.\nAs we've previously mentioned, the COVID-19 pandemic has limited our ability to visit and penetrate clinics at the rate we had originally expected.\nHowever, we are finding that once the clinic has converted to Simparica Trio, the adoption level within the clinic is resulting in meaningful incremental market share.\nWe're also extremely pleased with the performance of our broader parasiticide portfolio, which, in the U.S., gained an additional 6% market share in the fleet, tick and heartworm segment for the third quarter versus the same period in the prior year.\nGlobal sales of our key dermatology portfolio were $251 million in the quarter, growing 16% operationally and contributing 3% to overall revenue growth.\nOur diagnostics portfolio also contributed to growth due to the continued recovery of wellness visits following a slowdown from social distancing restrictions earlier in the year.\nLivestock growth in the quarter was primarily driven by our U.S. cattle business seeing a return to historical distributor buying patterns following the impact of COVID-19 in the second quarter.\nIn addition, the fall cattle run occurred earlier in the year, causing a portion of fourth quarter sales to be pulled forward into the third quarter.\nAnd as a result, we expect a significantly weaker fourth quarter in cattle than we typically deliver.\nFor the remaining livestock species, swine returned to growth in the quarter, resulting from expanding herd production in key accounts and increased biosecurity measures in the wake of African swine fever in China.\nWe also remain encouraged by the strength of our aquaculture business, which posted a fourth consecutive quarter of double-digit growth.\nPoultry declined modestly in the quarter, which partially offset the growth in cattle, swine and fish.\nNew products contributed 4% growth in the quarter, driven by companion animal parasiticides, Simparica Trio, REVOLUTION PLUS and ProHeart 12.\nRecent acquisitions contributed 1% of growth this quarter, including our expansion to reference labs and the Platinum Performance nutritionals business.\nNow let's discuss the revenue growth by segment for the quarter.\nU.S. revenue grew 18% with companion animal products growing 21% and livestock sales increasing by 13%.\nFor companion animal, we continued to be encouraged by vet clinic trends with revenue per clinic up 12% in the quarter and demand for our products remaining robust.\nCompanion animal growth in the quarter were driven by sales of our Simparica franchise as well as key dermatology products.\nWe continued to invest in direct-to-consumer advertising in both therapeutic areas, and we have seen a good return on that investment.\nSimparica Trio continued to perform well in the U.S. with sales of $44 million despite difficult market conditions for a new product launch.\nKey dermatology sales were $180 million for the quarter, growing 17%, with significant growth for CYTOPOINT and APOQUEL, resulting from additional patient share and an expanding addressable market.\nDiagnostic sales increased 28% in the quarter as a result of our reference lab acquisitions and increased point-of-care consumable usage.\nU.S. livestock grew 13% in the quarter, driven primarily by cattle.\nAs I mentioned, purchasing patterns returned to historical levels and we saw earlier movement from pasture to feedlot, both contributing to a significant volume increase for our products.\nTo summarize, U.S. performance was once again strong in what remains a difficult market environment.\nWe remain enthusiastic about the recovery and trends we're observing in companion animal products.\nWhile livestock delivered an exceptional third quarter, as we've indicated in the past, we do not expect a sustainable recovery until the middle of 2021.\nRevenue in our International segment grew 11% operationally in the quarter with growth across all species with the exception of poultry, which was flat in the quarter.\nCompanion animal revenue grew 20% operationally and livestock revenue grew 6% operationally.\nIncreased sales in companion animal products resulted from growth in our parasiticide portfolio, vaccines and our key dermatology products.\nParasiticide growth in the quarter was driven by the Simparica franchise, including the continued adoption of Simparica Trio, as well as increased promotional activity for REVOLUTION.\nIn the EU, limited access to veterinary clinics due to COVID-19 restrictions presented challenges for companion animal product sales in the second quarter, but in the third quarter we saw pent-up demand begin to work its way through the system, particularly for small animal vaccines.\nCompanion animal diagnostics grew 17% in the quarter led by an increase in point-of-care consumable usage.\nInternational livestock growth in the quarter were driven by swine, fish and cattle.\nSwine delivered another strong quarter with 16% operational revenue growth, primarily driven by China, which grew 159%.\nWhile a significant portion of China's growth reflects the impact of African swine fever in the prior year, we're continuing to see expansion in our key accounts as production shifts from smaller forms to large-scale operations.\nOur fish portfolio delivered another strong quarter, growing 10% operationally, driven by an increase in market share in vaccines and the acquisition of Fish Vet Group.\nOverall, our International segment delivered strong results and was a key contributor to revenue growth with significant growth in companion animal, swine and fish.\nWe are also encouraged to see cattle return to growth in what are still difficult market conditions as a result of the COVID-19 pandemic.\nNow moving on to the rest of the P&L.\nAdjusted gross margin of 69.6% fell 50 basis points on a reported basis compared to the prior year as a result of negative FX, the manufacturing costs and recent acquisitions.\nThis was partially offset by favorable product mix and price increases.\nAdjusted operating expenses increased 9% operationally, resulting from increased advertising and promotion expense for Simparica Trio and APOQUEL.\nWe have strategically reallocated savings, mainly from T&E costs into these high-return promotional programs, which have been successful in increasing sales.\nThe adjusted effective tax rate for the quarter was 20%, a decrease of 50 basis points, driven by the impact of net discrete tax benefits.\nAdjusted net income for the quarter grew 20% operationally primarily driven by revenue growth, and adjusted diluted earnings per share grew 21% operationally.\nThe strength of our balance sheet, along with the significant free cash flow we generate, has enabled us to execute on our investment priorities including direct-to-consumer advertising, internal R&D and external business development.\nWhile we suspended our share repurchase program for the last two quarters to preserve cash during the pandemic, we remain committed to our 2020 dividend.\nIn addition, share repurchases are a critical component of our shareholder distribution strategy and we'll continue to evaluate the appropriate time to resume the program.\nNow moving on to our updated guidance for 2020.\nWe are raising guidance for a second consecutive quarter as a result of our third quarter performance and the improving companion animal market environment.\nWhile the COVID-19 pandemic presents challenges and risks, we remain confident in the resiliency and durability of our diverse portfolio.\nPlease note that our guidance reflects foreign exchange rates as of late October.\nFor revenue, we are raising and narrowing our guidance range with projected revenue now between $6.55 billion and $6.625 billion and operational revenue growth of between 7% and 8% for the full year versus the 3% to 6% in our August guidance.\nAdjusted net income is now expected to be in the range of $1.79 billion to $1.825 billion representing operational growth of 6% to 8% compared to our prior guidance of 1% to 5%.\nAdjusted diluted earnings per share is now expected to be in the range of $3.76 to $3.81 and reported diluted earnings per share to be in the range of $3.38 to $3.45.\nWe are anticipating a deceleration of revenue growth in the fourth quarter resulting from weaker performance in our livestock business.\nThe impact will filter down to adjusted net income, which will also be affected by increased expense as we invest in future revenue growth.\nIn addition, adjusted net income has a difficult comparative period as a result of nonrecurring discrete tax benefits recorded in Q4 2019.\nIn closing, we delivered another strong quarter demonstrating the resiliency of our business even in these challenging market conditions.\nI'd like to once again express how extremely proud we are of our colleagues and the commitment they have demonstrated toward our customers and our company.\n", "role": "user" }, { "content": "q3 revenue $1.8 billion versus refinitiv ibes estimate of $1.63 billion.\nsees fy 2020 earnings per share $3.38 to $3.45.\nsees fy 2020 revenue $6.55 billion to $6.625 billion.\nsees fy 2020 adjusted earnings per share $3.76 to $3.81.\n", "role": "assistant" } ]