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[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this 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 Craig Lampo, Amphenol's CFO, and I'm here together with Adam Norwitt, Our CEO.\nI will provide some financial commentary and then Adam will give an overview of the business as well as current trends.\nThen we will take questions.\nThe Company closed the fourth quarter with record sales of $2.426 billion, and record GAAP and adjusted diluted earnings per share of $1.15 and $1.13, respectively.\nSales were up 13% in U.S. dollars and up 11% in local currencies and organically compared to the fourth quarter of 2019.\nSequentially, sales were up 4% in U.S. dollars and 3% in local currencies and organically.\nBreaking down sales into our two segments.\nThe interconnect business, which comprised 96% of our sales, was up 14% in U.S. dollars and 11% in local currencies compared to the fourth quarter of last year.\nOur cable business, which comprised 4% of our sales, was down 4% in U.S. dollars and 2% in local currencies compared to the fourth quarter of last year.\nFor the full year 2020, sales were $8.599 billion, which was up 5% in U.S. dollars, 4% in local currencies and 2% organically compared to 2019.\nAdam will comment further on trends by market in a few minutes.\nFrom a segment standpoint, in the interconnect segment, margins were 22.5% in the fourth quarter of 2020, which increased from 22% in the fourth quarter of 2019 and 22.4% in the third quarter of 2020.\nIn the cable segment, margins were 10.3%, which increased from 10% in the fourth quarter of 2019 and decreased from 10.7% in the third quarter of 2020.\nFor the full year 2020, adjusted operating income was $1.650 billion, which was slightly up from 2019 and resulted in a full year 2020 adjusted operating margin of 19.2% compared to 20% in 2019.\nThis 80 basis point decline reflects the challenges and results -- resulting impacts related to the COVID-19 pandemic, primarily in the first half of the year.\nGiven the unprecedented challenges we saw this year, we are extremely proud of the Company's performance.\nOur team's ability to effectively manage through this crisis is a direct result of the strength and commitment of the Company's entrepreneurial management team, which continues to foster a high-performance, action-oriented culture, which has enabled us to capitalize on opportunities and maximize profitability in an uncertain market environment.\nThe Company's GAAP effective tax rate for the fourth quarter was 21.7%, which compared to 20.3% in the fourth quarter of 2019.\nOn an adjusted basis, the effective tax rate was 24.5% for both the fourth quarter of 2020 and 2019.\nFor the full year, the Company's GAAP effective tax rate for 2020 and 2019 was 20.5% and 20.2%, respectively.\nOn an adjusted basis, the effective tax rate for both the full year 2020 and 2019 was 20.5% -- 24.5%.\nOn a GAAP basis, diluted earnings per share increased by 12% to $1.15 in the fourth quarter compared to $1.03 in the prior year period.\nAdjusted diluted earnings per share increased by 15% to $1.13 in the fourth quarter of 2020 from $0.98 in the fourth quarter of 2019.\nFor the full year, GAAP diluted earnings per share was $3.91, a 4% increase from 2019 GAAP diluted earnings per share of $2.75.\nAdjusted diluted earnings per share was $3.74 for 2020, which was unchanged compared to 2019.\nThis was a strong performance considering the significant challenges and related incremental costs related -- resulting from the pandemic.\nOrders for the quarter were $2.512 billion, which was up 14% compared to the fourth quarter of 2019 and up 10% sequentially, resulting in a book-to-bill ratio of 1.04 to 1.\nThe Company continues to be an excellent generator of cash.\nWe are proud that operating and free cash flow for both the fourth quarter and full year 2020 were all records for the Company.\nCash flow from operations was a strong $441 million in the fourth quarter, or 124% of net income.\nNet of capital spending, our free cash flow was $371 million, or 104% of net income.\nCash flow from operations for the full year was $1.592 billion, or approximately 132% of net income.\nAnd net of capital spending, our free cash flow for 2020 was $1.328 billion, or 110% of net income.\nFrom a working capital standpoint, inventory days, days sales outstanding and payable days, were 79, 72 and 61 days, respectively, all within a normal range.\nDuring the quarter, the Company repurchased 1.5 million shares of common stock for approximately $182 million under the $2 billion open market stock repurchase plan, bringing total repurchases for the year to 6 million shares or $641 million.\nTotal debt at December 31 was $3.9 billion and net debt at the end of the year was $2.1 billion.\nTotal liquidity at the end of the quarter was $4.2 billion, which included total cash and short-term investments on hand of $1.7 billion plus the availability under our credit facilities.\nFourth quarter and full year 2020 EBITDA was approximately $600 million and $2 billion, respectively.\nAnd at December 31, 2020, our net leverage ratio was 1.1 times.\nLastly, the Company announced a 2-for-1 stock split, which will be effective as of March 4, 2021.\nFirst, I just want to express my hope that all of you on the call here today that you, your family, your friends and colleagues are all staying safe and healthy throughout the pandemic.\nI'm going to highlight our achievements in the fourth quarter and the full year.\nAs Craig mentioned, I'll discuss our trends and progress across our served markets.\nNow, with respect to the fourth quarter and amid what has, no doubt, been an unprecedented and volatile year, I'm truly proud that we finished 2020 with record sales and adjusted earnings per share in the fourth quarter, both of which were significantly above our guidance.\nSales grew 13% in U.S. dollars and 11% organically, reaching a new record $2.426 billion.\nThis organic growth, which was very strong, was driven by growth in mobile devices, industrial and automotive end markets in particular.\nThe Company booked a record of $2.512 billion in orders in the fourth quarter and that's a strong book-to-bill of 1.04 to 1.\nDespite continuing to face some operational challenges related to the ongoing pandemic, adjusted operating margins were strong in the quarter, reaching 20.6%, a 10 basis point increase from third quarter levels and 60 basis points from prior year.\nCraig already highlighted the operating and free cash flow of the Company, very strong at $441 million and $371 million, respectively, in the fourth quarter.\nBoth just excellent reflections of the quality of the Company's earnings.\nI just want to say, with this fourth quarter how proud I am of our team around the world.\nAnd our results this quarter once again reflect the discipline and agility of our entrepreneurial organization, as we continue to perform well amid the environment that still has continued challenges.\nOur small acquisition team was also very busy in the fourth quarter and here in the last few weeks of January.\nAs we announced on December 9, we're very pleased to have signed an agreement to acquire MTS Systems, a leading supplier of advanced test systems, motion simulators and precision sensors, for $58.50 a share.\nThe MTS acquisition continues to be subject to MTS shareholder approval, certain regulatory approvals, as well as customary closing conditions.\nIn addition, last week we announced that we had entered into an agreement with Illinois Tool Works, under which ITW will acquire MTS' Test & Simulation segment following the closing of our acquisition of MTS.\nThe sale is also subject to certain regulatory approvals and other customary closing conditions.\nWe continue to expect that both the acquisition of MTS, as well as the follow-on sale of the Test & Simulation business to ITW, will both occur approximately in the middle of 2021.\nI can just say that we've long been attracted by the outstanding technology and deep entrepreneurial culture of MTS Sensors and look forward to welcoming this wonderful team of people into the Amphenol family.\nThis acquisition, which is highly complementary to our current sensor offering, represents a further broadening of our high technology sensor offering to customers across the automotive, industrial, military and commercial air industries.\nWe expect the addition of MTS Sensors to add approximately $350 million in revenues and to generate approximately $0.10 per share of earnings accretion in the first year post closing.\nNow here in the last few weeks of January, we're also pleased to have closed two additional acquisitions of outstanding entrepreneurial companies, which we purchased for a combined price of $160 million.\nFirst, Positronic is a provider of high reliability harsh environment connectors for customers primarily in the military aerospace, IT datacom and industrial markets.\nBased in Springfield, Missouri and with also operations in France, India and Singapore, and with annual sales of approximately $80 million, Positronic represents a great addition to our harsh environment product offering.\nNext El-Cab, which is based in Poland, is a manufacturer of cable assemblies and related interconnect products, primarily serving the industrial market and with annual sales of approximately $55 million.\nWhat I'm very pleased by is that both Positronic and El-Cab are private, family owned companies with rich histories, leading technologies and excellent positions with customers in their target markets.\nOur ability to identify and execute upon acquisitions and successfully bring these new companies into Amphenol remains a core competitive advantage for the Company.\nNow, if we just look back on 2020 and some of the highlights from the year, despite the many challenges we all faced in 2020, from both a personal and a professional standpoint, Amphenol's dedicated entrepreneurial team performed just incredibly well.\nAnd I just could not be more proud of our performance this year.\nSales reached a record $8.6 billion, growing 5% in U.S. dollars and 2% organically, and actually surpassed our pre-pandemic outlook that we had given back a year ago.\nOur full year adjusted operating margins of 19.2%, did decline 80 basis points from prior year, but this decline was due to the significant cost challenges we experienced in the first half of 2020, after which our team was able to return to more typical profit levels in the second half.\nAnd that enabled us to achieve adjusted diluted earnings per share of $3.74, which was the same level as we achieved in 2019.\nNo question, an impressive result given the circumstances.\nWe generated record operating and free cash flow of $1.592 billion and $1.328 billion, respectively.\nExcellent confirmations of the Company's superior execution and disciplined working capital management, even in these most unprecedented of times.\nOur acquisition program remains strong, despite the challenges related to the pandemic, with two new companies added to the Amphenol family in 2020, EXA Thermometrics and Onanon, as well as Positronic and El-Cab here in January and the signing of MTS that we already discussed.\nThese acquisitions expand our position across a broad array of technologies and markets, while bringing outstanding and talented individuals into the Amphenol organization.\nWe're particularly excited that these acquisitions represent expanded platforms for the Company's future performance.\nIn addition, in 2020, we bought back over 6 million shares under our buyback program and increased our quarterly dividend to 16%.\nAnd as Craig mentioned, we're announcing today, a 2-for-1 stock split of the Company's shares.\nSo, while the overall market environment in 2020 was highly uncertain, our agile entrepreneurial management team is confident that we have built further strength from which we can now drive superior long-term performance.\nNow turning to our -- the trends and our progress across our served markets, I would just comment that we remain very pleased that the Company's balanced and broad end-market diversification continues to create value for the Company, with no single end-market representing more than 22% of our sales in the year 2020.\nWe believe that this diversification mitigates the impact of the volatility of individual end markets.\nThat was particularly important here in 2020, but while also exposing us to leading technologies wherever they may arise across the electronics industry.\nThe military market represented a 11% of our sales in the fourth quarter and 12% of our sales for the full year.\nSales in the quarter grew modestly from prior year, increasing by approximately 1% in the fourth quarter, with growth in naval, space and avionics applications offset in part by moderations in ground vehicles, rotorcraft and airframe.\nSequentially, our sales increased as we had expected coming into the quarter by 3%.\nFor the full year 2020, our sales grew by 3% in U.S. dollars and 2% organically, reflecting our leading market position and strong execution across virtually all segments of the military market, offset in part by the impact of the pandemic-related production disruptions that we experienced in the first half of 2020.\nLooking ahead, we expect sales in the first quarter to decrease modestly from these fourth quarter levels.\nI just want to say that our organization working in the military market has worked long and hard for many years to strengthen our broad technology position, while increasing our capacity to serve customers across all segments of this important market.\nOur performance in 2020, especially given the many disruptions related to the pandemic, is a great reflection of the results of those efforts.\nGiven the ongoing and favorable military spending environment, our team continues to solidify our leadership position by ensuring that we execute on the demands of our customers by supporting the many next generation technologies that are required for modern military hardware.\nThe commercial air market represented 2% of our sales in the fourth quarter and 3% of our sales for the full year.\nNot surprisingly, fourth quarter sales were down significantly, reducing by approximately 50%, as the commercial air market continued to experience unprecedented declines in demand for new aircraft, due to the pandemic-related disruptions to the global travel industry.\nSequentially, our sales were a little bit better than expected, declining 10% from the third quarter and for the full year 2020, sales declined by 34%, reflecting that significant impact of the pandemic on travel and aircraft production.\nLooking into the first quarter of 2021, we expect a sequential moderation in sales from these levels.\nLook, there is no doubt that these are difficult times for the entire travel industry, which is seriously impacting the market for commercial airplanes.\nNevertheless, our team, who has just been so resilient over the course of this year, remains committed to leveraging the Company's strong technology position across a wide array of aircraft platforms, as well as next-generation systems that are integrated into those airplanes and we remain well positioned when this market ultimately returns to growth.\nThe industrial market represented 22% of our sales in the quarter and in the full year of 2020.\nOur sales in this market significantly exceeded expectations that we had coming into the quarter, increased by a very strong 29% in U.S. dollars and 24% organically from prior year.\nThis robust growth was driven, especially by the battery and electric vehicle, instrumentation, heavy equipment, factory automation and medical segments of the industrial market.\nOn a sequential basis, sales increased by 4% from the third quarter.\nWe're really pleased with our results in industrial for the full year, with sales growing 15% in U.S. dollars and 11% organically, as we saw strong demand in really those same markets, battery and EV, instrumentation, heavy equipment, also alternative energy and of course, medical, which was a very strong segment in the year.\nLooking into the first quarter, we expect a slight moderation from the strong fourth quarter sales levels.\nI'm truly proud of our team working in the industrial market, whether enabling the growth in volumes of a wide array of medical equipment or managing through significant increases in demand for semiconductor capital goods and next-generation batteries, our global organization has reacted quickly to ensure that our customers are fully supported regardless of the many operational challenges that have arisen during the pandemic.\nThe automotive market represented 20% of our sales in the fourth quarter and 17% of our sales for the full year 2020.\nSales in this market were also much stronger than we had expected coming into the quarter, with revenue growing by 24% in U.S. dollars and 19% organically in the fourth quarter, and that was really driven by broad-based growth across all geographies in the automotive market.\nSequentially, our automotive sales increased by a very strong 22% as we continue to benefit from the broad recovery in the global automotive market.\nFor the full year 2020, our sales declined by 6% in U.S. dollars and 8% organically.\nAnd that really reflected the significant challenges in factory shutdowns experienced by the auto industry in the first half of the year related to the pandemic, but was partially offset by our strong recovery that we drove in the second half.\nLooking into 2021, we do expect a sequential moderation from these high sales levels in the first quarter.\nLook, no doubt about it, the automotive industry faced one of the most difficult periods in recent memory, during the first half of 2020, in particular in the second quarter, and that was followed by an unexpectedly robust recovery here in the second half.\nI'm just so proud of our team working in this important market, who has clearly demonstrated their agility and resiliency through these most turbulent times and thereby, secured the Company's position with our customers across the automotive market.\nRegardless of this most dynamic of years, we have continued to expand our range of interconnect, sensor and antenna products, both organically and through acquisitions, to enable a wide array of onboard electronics across a diversified range of traditional fuel and electric-powered vehicles made by auto manufacturers around the world.\nThis consistent strategy will continue to benefit us long into the future.\nThe mobile devices market represented 18% of our sales in the fourth quarter and 15% of our sales for the full year.\nOur sales in the quarter to mobile device customers increased by a much stronger-than-expected 32% from prior year, with strength in all product types, but particularly in wearables and laptops.\nSequentially, our sales increased by 15% and that was driven by higher sales to smartphones and wearable devices.\nFor the full year 2020, sales in the mobile devices market increased by a very strong 16%, as we continued to benefit from our agility in reacting to changes in demand in this dynamic market.\nFor the full year, we saw particularly strong sales growth in products incorporated into laptops, tablets, wearables and other accessories as well as production-related products, and that was offset in part by a slight moderation of sales of products incorporated into smartphones.\nLooking into the first quarter, we anticipate a typically significant seasonal sequential decline of approximately 40%.\nWhile mobile devices will always remain one of our most volatile of markets, our outstanding and agile team is poised as always, to capture any opportunities for incremental sales that may arise in 2021 and beyond.\nOur leading array of antennas, interconnect products and mechanisms continues to enable a broad range of next-generation mobile devices, all positioning us well for the long term.\nThe mobile networks market represented 5% of our sales in the quarter and 6% of our sales for the full year of 2020.\nSales in the quarter decreased from prior year by 8% in U.S. dollars and 9% organically, with declines in sales to both equipment manufacturers as well as operators.\nSequentially, our sales did increase by a bit less than we had expected, 12%.\nFor the full year 2020, sales declined by 16% from prior year, which reflected the impact of the U.S. government restrictions on certain Chinese customers that had been imposed in 2019, as well as other impacts related to the COVID-19 pandemic.\nLooking ahead, we expect sales in the first quarter to increase from this quarter's levels, as operators expand their investments in next-generation mobile networks.\nRegardless of the challenging demand environment in the mobile networks market in 2020, we're confident in the Company's long-term position in this important and exciting industry.\nOur team continues to work aggressively to expand our opportunity with next-generation equipment and networks.\nAnd as customers ramp up investment of these advanced systems, we look forward to benefiting from the increased potential that comes from our unique position with both equipment manufacturers and mobile service providers around the world.\nThe information technology and data communications market represented 18% of our sales in the quarter and 21% of our sales for the full year of 2020.\nSales in the quarter was stronger than expected, rising by 3% in U.S. dollars and 2% organically from prior year, as stronger sales of networking equipment and server-related products were offset by lower sales of storage-related products.\nSequentially, our sales declined by 8% from our very robust third quarter.\nWe're very pleased with our performance for the full year for IT datacom, with our sales growing a very strong 15% in U.S. dollars and 11% organically, as we capitalized on increased demand from our OEM and service provider customers, as they work to accelerate bandwidth capacity expansions, in particular to support home-based work, school and entertainment.\nOur team working in support of these customers has clearly distinguished themselves this year, reacting quickly to capitalize on unprecedented demand for our industry-leading high-speed and power products.\nAt the same time, we've not slowed down our efforts to further develop that broad range of leading interconnect products in support of data communications networks around the world.\nLooking into the first quarter of 2021, we expect a typical seasonal moderation of sales here in the quarter.\nBut nevertheless, we remain very encouraged by the Company's strong technology position in the global IT datacom market.\nOur customers around the world continue to drive their equipment to ever higher levels of performance, in order to manage the dramatic increases in bandwidth and processor power.\nIn turn, our team remains singularly focused on enabling this continuing revolution in IT datacom.\nThe broadband communications market represented 4% of our sales in the quarter and 4% for the full year.\nSales increased by 3% in the fourth quarter from prior year, driven by stronger demand for home installation related equipment from our broadband operators.\nOn a sequential basis, sales decreased as expected by 9% from the third quarter.\nFor the full year of 2020, sales were flat and that's despite the significant disruptions to production and demand that we experienced in the first quarter, offset by the accelerated investments in support of bandwidth later in the year.\nLooking into the first quarter, we expect sales to moderate from these levels and we remain encouraged by the Company's position in the broadband market.\nWith our expanded range of products, together with strong relationships with customers around the world, we look forward to benefiting as operators increase their network investments in the future.\nNow just to summarize, there is no question that 2020 was one of the most challenging years we've all experienced.\nBut in the face of these challenges, I'm just so proud of the entire team of Amphenolians around the world, who have managed extraordinarily well throughout the pandemic and the related disruptions to the economy.\nThrough our dual-pronged approach of growing both organically and through our acquisition program, the Company continues to expand our market position, while strengthening our financial performance.\nAmphenol's superior performance is a direct reflection of our distinct competitive advantages, our leading technology, our increasing position with customers across our diverse end markets, worldwide presence, a lean and flexible cost structure, a highly effective acquisition program and I can say, most importantly in this pandemic-impacted 2020, an agile and entrepreneurial management team.\nNow turning to our outlook and regardless of our strong performance in the fourth quarter, there still remains significant economic uncertainties related to the COVID-19 pandemic.\nAccordingly, we will not be providing full year guidance at this time.\nAssuming no new material disruptions from the pandemic, as well as constant exchange rates, for the first quarter, we now expect sales in the range of $2.120 billion to $2.180 billion and adjusted diluted earnings per share in the range of $0.90 to $0.94.\nI would just note that on a post-split basis, this adjusted diluted earnings per share guidance would be $0.45 to $0.47.\nThis guidance represents sales growth in the first quarter of 14% to 17% year-over-year and adjusted diluted earnings per share growth of 27% to 32%, again compared to the first quarter of 2020.\nI remain confident in the ability of our outstanding management team to adapt to the continued challenges in the marketplace and to capitalize on the many future opportunities to grow our position and expand our profitability.\nOur entire organization remains committed to delivering strong financial results, all while prioritizing the continued safety and health of each of our employees around the world.\nAnd with that, operator, we'd be very happy to take any questions that there may be.\n", "role": "user" }, { "content": "compname reports record fourth quarter 2020 results and announces 2-for-1 stock split.\nq4 adjusted earnings per share $1.13.\nq4 gaap earnings per share $1.15.\nq4 sales $2.426 billion versus refinitiv ibes estimate of $2.22 billion.\nfor q1 2021, amphenol expects sales to be in range of $2.120 billion to $2.180 billion.\nnot providing full-year 2021 sales and earnings per share guidance at this time.\nboard approved 2-for-1 stock split to be paid in form of dividend to shareholders of record as of february 16.\nexpects pre stock-split q1 2021 adjusted diluted earnings per share in range of $0.90 to $0.94.\nexpects post-stock-split q1 2021 adjusted diluted earnings per share in range of $0.45 to $0.47.\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: With me here today are Jenna Foger, Peter Moglia, Steve Richardson, and Dean Shigenaga.\nAs Michael Jordan once said, some people want it to happen, some people wish it to happen, others make it happen.\nAlexandria makes it happen.\nFor a moment, keys to the second quarter, historic high demand for Alexandria's lab space and our critical lab operations, which go along with that.\nAlexandria is at the vanguard of meeting the historic and high unprecedented demand from many of our more than 750 tenants for growth needs now and a critical path for future growth very importantly.\nFundamental drivers of demand are the strongest we've ever seen.\nRental rate growth continues unabated and no excess supply on the horizon at this time.\nWe're very proud that we've got almost 7% quarter-to-quarter per share FFO growth, more than 40% rental rate growth, almost 18% NOI growth, almost 8% same-store NOI growth and a $1.3-plus billion annual NOI run rate, not to mention about $545 million in incremental revenue in our development and redevelopment pipeline.\nAlexandria truly has a demonstrable pricing power advantage in each of our cluster markets.\nAnd when life science tenants choose, they almost always prefer Alexandria's lab space and our operational excellence based on our critical lab operations.\nNature Biotechnology, a magazine back in April wrote the following: 2020 was a year that smashed many records.\nBiotech saved your role and the pandemic attracted a stampede of private and public investors alike.\nThe pandemic apparently reinforced the requirement for long-term value-based investors of any kind to have exposure to life sciences.\nAnd life science demand has in fact hit an all-time high as the world has recognized the importance of next-generation therapies to solve current and future really difficult healthcare challenges.\nAnd Jenna will talk a bit more about it.\nI'm going to highlight just a couple of things for the moment.\nThe pandemic has underscored the support for the National Institutes of Health and investment in basic science, which are keys to ensuring that the U.S. maintain its leadership position in life science and maximizing national preparedness to address current and future healthcare challenges.\nThere is a proposal right now to increase the fiscal year '22 NIH budget up to $51 billion, nearly a 20% boost over fiscal year '21.\nThe FDA Center for Drug Evaluation and Research, better known as CDERS approved 23 new molecular entities in the first half of 2021, putting it on the pace to exceed 2020's near-record approval high of 53.\nFollowing a historic year of 2020, venture capital in Life Science continues at a very strong pace of almost $36 billion already raised in the first half of 2021, on pace to eclipse 2020's all-time high of $46 billion.\nThis unprecedented level is likely to continue throughout the year due to substantial dry powder available to life science funds and increased investment from institutional, generalists and traditional life science investors.\nFollowing a record 2020 for IPOs and follow-on offerings, the first half of this year have continued to reach new highs, with over $8 billion raised in 52 IPOs and over $17 billion raised in many follow-ons, positioning 2021 for an all-time record year of public market investment in life science.\nR&D continues with amazing productivity and resilience through COVID, enabling the industry to expediently deliver novel vaccines and therapies to combat the global pandemic.\nNew biology, drug discovery platforms and increasing focus on complex medicines as the future therapeutic innovation have all demonstrated the life science industry's ability to effectively drive solutions to current and future healthcare challenges and yield strong returns to investors.\nAnd maybe a final comment would be as Project Warp Speed did in bringing a historic public private partnership together of the government on the one hand and the private industry, biotech and pharma companies on the other hand, at a warp speed rate to bring research and development and commercialization of the COVID vaccines in record time as well as ensure a timely manufacturing supply.\nWe really do need a 21st infrastructure package, not a 20th century package like the one Congress is now debating.\nWe need to make the U.S. self-sufficient in semiconductors.\nWe only produce now about 11% to 13% and self-sufficient in next-gen manufacturing of complex medicines.\nAs Joel highlighted last quarter and continues to be reaffirmed by the fundamental he just shared is the tremendous paradox of this pandemic moment for the life science industry.\nDespite the challenges of these past many months, COVID has illuminated the power of science and the industry's ability to transform the future of human health.\nNot only are so many of our tenants in the industry, as Joel mentioned, risen to the challenge of combating global pandemics, but R&D and bioinnovation broadly have persisted with amazing productivity, resilience and experiences throughout this time.\nAnd we cannot stress not how critical it is for us a halt to preserve and prioritize and continue to catalyze this groundbreaking innovation that has and will continue to save so many lives.\nSo turning to COVID-specific update for a few moments.\nA total of 3.7 billion vaccine doses have been administered worldwide with nearly 10% of these doses in the U.S. alone.\nRoughly 57.5% of the vaccine-eligible population in our country, that's 12 and over have been fully vaccinated by either tenant Pfizer or Moderna's 2-shot mRNA-based vaccine or tenant Johnson & Johnson's single shot.\nThis is just over 49% of the total U.S. population, and we hope this number of fully vaccinated individuals will continue to steadily rise.\nThese numbers are astounding.\nAnd before we get into the where are we now, I want to emphasize that despite the COVID fatigue, we all continue to fuel even despite some relief from the easing of restrictions over the past few months, albeit with the likely return of some new ones, none of where we are in the recovery process can be taken for granted.\nThe fact that the biopharma industry spearheaded by many of our tenants was equipped with the know-how, resources and technology to create safe and effective vaccines to combat a novel viral pathogen would have been unimaginable just a few decades ago.\nThe fact that our tenants Pfizer, Moderna and Johnson & Johnson were able to develop, run robust clinical trials, manufacture and distribute billions of vaccines at scale in less than 12 months is absolutely unprecedented.\nThese vaccines achieved such astounding safety and efficacy in the 90-plus percent range when the FDA has set the original bar at 50%, with an amazingly low incidence of side effects reported from the millions of people who have now received that is truly astounding.\nThe fact that the biopharma industry, government and many other public and private agencies came together to ensure all of the above transpired at a pace and level sufficient to provide adequate vaccine supply to inoculate the entire U.S. population as we now have, unlike most nations around the world, is not to be undervalued.\nAnd the fact that we have a regulatory agency in the FDA that has worked around the clock to review thousands of COVID-19-related applications to maximize the availability of high-quality testing and safe and effective vaccines and therapies against COVID-19 cannot go unrecognized.\nSo where are we now?\nIt's been just over 18 months since the first U.S. COVID case was reported on January 21, 2020.\nYet despite all of the progress with vaccines, etc.\n, countries around the world are still very much combating new COVID-19 surges, driven most recently in part to the increasing prevalence of the so-called Delta variant.\nIn the U.S., this highly continuous Delta variant, approximately 50% more transmissible with 1,000 times higher viral load account for at least 83% of COVID cases.\nAverage daily confirmed COVID case count now exceed 50,000, which is guide x that of the mid-June lows with hospitalization and deaths rising as well.\nHowever, as worrying is this trend may seem breakthrough infections, those are infections that occur in vaccinated people are still relatively uncommon.\nAnd the vast majority of these breakthrough cases have not caused serious illness, hospitalization or death.\nMore than 95% of people hospitalized for COVID-19 are unvaccinated, and the vaccine still remain effective even against the Delta variant.\nSo while they may not entirely prevent transmission, they do seem almost entirely able to prevent severe disease and death.\nWith regards to vaccine safety.\nThere have been very few adverse events, less than seven per million reported overall with nearly all cases resolving and without long-term side effects reported.\nAs such, the strong safety and efficacy profile will likely garner full FDA approval for mRNA-based vaccines for Pfizer and Moderna this fall.\nWith regards to pregnancy and women of childbearing age, though data is more limited, based on the safety data generated to date and how we know vaccines work in the body, the CDC does encourage pregnant women to get vaccinated, especially given that pregnant and recently pregnant women are at increased risk for severe illness from COVID-19.\nWith regards to children, Pfizer has an emergency use authorization for children over 12, and the FDA is urging Pfizer and Moderna to expand their studies in children aged five to 11.\nSo what's next and where are we headed?\nThe evolving data and the duration of immunity and COVID-19 variants of concern suggests that COVID-19 and the need for vaccines and boosters will likely persist long term.\nHowever, the faster we can vaccinate the population in this country and increase access to vaccines in the rest of the world, the more effectively we can slow the emergence of new variants and the sooner we can turn this virus into a less deadly pathogen even if still contagious.\nAnd given that COVID will likely remain on the planet for the foreseeable future, therapies are going to continue to be important in mitigating the severity of COVID-19, such as recently authorized to our tenant Bayer and GSK for their new antibody.\nEqually as important, is continued COVID testing, of course, for active virus in symptomatic individuals as well as surveillance testing across the population to detect new outbreaks, sequence emerging variants and track overall transmission.\nThe last point I want to make is regarding the FDA, which has received somewhat unyielding flack over the past several months despite the herculean COVID efforts while maintaining a near all-time record high pace of new drug approvals, as Joel highlighted.\nThis criticism has been mounting on account of several factors, including the lack of a fully appointed FDA commissioner, the growing backlog of review requirements for new investigational drug applications given the strong pace of innovation of our industry, the lack of fully approved vaccines despite their being authorized under the emergency use authorization pathway and most recently, the historic and highly controversial approval of Biogen's Aduhelm to treat Alzheimer's disease.\nThis was the first approval in nearly two decades for this chronic neurodegenetive disease affecting over six million people in the U.S. alone.\nI will save commentary on all of this for another time, but it needs to be said that without the FDA's steadfast and tireless work throughout COVID to maximize the review of the immense COVID-relating testing, therapeutic and vaccine applications will try to keep up pace with the record numbers of submissions from the industry, we as a nation would fall way behind.\nIt is nothing short of astounding and worthy of the utmost recognition.\nThe FDA is critical for ensuring the safety of all drug products that are available in the U.S. while balancing efficacy and expediency.\nThe future productivity and leadership of the agency, which will be announced by November of this year is of the utmost importance to all of us.\nAs the FDA is instrumental in ensuring the continued pace and vitality of biomedical innovation in our country.\nBiopharma is emerging from COVID as a dawn of historic new era for biotech and scientific innovation.\nThe world recognizes the value of this industry and the potential for next-generation medicines as evidenced by Moderna and Pfizer's next-generation vaccines to address current and future healthcare challenges.\nAnd clearly, the paradox of this pandemic moment has only reaffirmed why Alexandria has dedicated our business, our passion and our purpose to help drive this mission-critical industry forward.\nI'd like to take a step back at the start of my comments and provide some historical context for the accelerating demand which really translates into leasing at warp speed for Alexandria's mega campuses.\nAt Alexandria's Annual Investor Day during December 2017, we presented a bold framework to nearly double the company's annual rental revenues from a little more than $800 million to $1.5 billion by the end of 2022.\nWe are pleased to share those annualized revenues for Q2 2021 are, in fact, in excess of $1.5 billion.\nAnd so the Alexandria team has accomplished this lofty goal in an accelerated time frame more than one year sooner than anticipated.\nThe company has also grown from a mission-critical operating asset base and development pipeline of 29 million square feet at the end of 2017, to a total of 62 million square feet at the end of Q2 2021.\nTruly exceptional growth, more than doubling the footprint of the company, and importantly, concentrated in our core clusters with disciplined execution, enabling the continuation of high-quality cash flows.\nAnd as we fielded questions during the 2020 as to whether the healthy leasing activity for Alexandria's mega campus platform was perhaps a short-term blip driven by COVID-19, the second quarter of this year's leasing volume of more than 1.9 million square feet, the highest quarterly leasing volume in the history of the company is again evidence of the company's unique position as a trusted partner to the growing life science industry, providing a durable and sustainable competitive advantage in the market.\nI'll go ahead and review a few of the exceptional highlights, including the following: leasing outperformance.\nAs we just stated, the 1.9 million square feet lease represents the highest quarterly leasing activity during the 27-year history of the company.\nTruly leasing at warp speed.\nI'll direct you to page two of the supplemental, where it indicates the 3.4 million square feet under construction is 80% leased and the additional 3.6 million square feet anticipated to commence construction during 2021, 2022 is 89% leased and negotiating.\nSo robust leasing and our growth pipeline provides exceptional clarity, and these projects in total will drive incremental revenues in excess of $545 million.\nWe also have exceptional core results.\nCash increases this quarter of 25.4% and GAAP increases of 42.4%.\nOccupancy remained very solid at 94.3% and the operating portfolio, which would have been 98.1% if were not for the 1.4 million square feet of vacancy in recently acquired properties, which provide for near-term incremental annual rental revenues in excess of $55 million.\nIn market health, demand, as we've outlined, continues to accelerate, and Alexandria's branded and highly desirable mega campuses and supply does continue to be restrained during 2021 across all of our markets, and we do not see any disruptive large-scale projects delivering 2022, '23.\nWe're closely evaluating Greater Boston's ground-up pipeline, which is 56% leased.\nAnd in the San Francisco area, we are monitoring leasing activity at two or three ground-up lab projects.\nAnd as we've stated before, there have been no significant lab sublease spaces put in the market for several quarters now.\nSo in conclusion, the first half of 2021 continues the very strong outperformance by Alexandria and our intent focus on operational excellence has positioned the company very well to enhance its industry-leading brand.\nWith that, I'll hand it off to Peter.\nI'm going to update you all on our development pipeline and construction cost trends, comment on our recent asset sales and report on a couple of comps that reflect that the private market appetite for life science assets is still very healthy.\nAs Steve and Joel both noted, we're experiencing historic demand and have responded by executing our differentiated life science strategy at an accelerated pace through expanding our collaborative campuses and asset base in each of our cluster markets.\nA significant sign of the health of the underlying life science industry is that we're expanding significantly in almost all of our markets.\nIn many of our submarkets, the supply and demand imbalance has been exacerbated by a lack of near-term opportunities to expand, leading Alexandria to push the boundaries of those markets.\nExamples of this are successful forays into Watertown and Seaport in Greater Boston, new mega campuses in Sorrento Mesa, and expansion of San Diego Science sector to the north and east, and a highly successful mega campus underway in San Carlos.\nThis high demand paired with our highly experienced development teams resulted in another very productive quarter for Alexandria.\nIn the second quarter, we delivered 755,565 square feet, spread over five assets located in South San Francisco, San Carlos, Long Island City, San Diego and the Research Triangle.\nThis is double what we delivered in the first quarter, and these deliveries will provide more than $31 million in annual rental revenue over the next year.\nIn addition, this historic demand has led to improved quarter-over-quarter leasing and leases under negotiation numbers despite adding two new assets that have had little marketing time.\nAssets contributing notably to this outcome include 840 Winter Street and Waltham Mass, which is a testament to our ability to capture demand from companies needing facilities for next-gen manufacturing.\n3160 Porter Drive in Palo Alto, a joint effort with Stanford to commercialize the University's most innovative science.\nAnd 5505 Morehouse in Sorrento Mesa, which is benefiting from Alexandria's place-making expertise and strong demand drivers in San Diego.\nIn addition, we expect to have another 3.6 million square feet in 19 properties commenced construction this year, and next that are already 89% leased or under negotiation.\nAs Steve also mentioned, these properties will cumulatively add approximately $545 million of annual rental revenue once fully delivered.\nI felt it necessary to remind everybody of that.\nConstruction costs remain elevated from trade -- from some trades and commodities holding study and others continuing to be unexplainable and unprecedented levels.\nLumber is a positive story and could be a microcosm for what will happen with other commodities.\nA year ago, lumber was $500 per thousand board feet, which was about $100 above its historical norm.\nIt climbed to $1,700 per thousand board feet in early May, but has since dropped back down to $600 per thousand board feet, and is still dropping.\nThe reason for the drop was a large number of residential projects were put on hold due to the price of lumber.\nWith this pullback in demand, the mills have been able to catch up, leading to stabilization in pricing.\nA correction due to a decrease in demand is essentially what's going to eventually normalize all construction commodities.\nCopper has shown signs of dropping, but it's still two times above historical norms.\nAlternatives such as aluminum are being considered to alleviate the pricing pressures.\nAnd if there's enough adoption, it could lead to a stabilization in pricing.\nDespite the promising news with lumber and copper, rolled steel remains very volatile and is not showing any signs of stabilizing.\nRolled steel is used for things such as metal decks, metal studs and ductwork.\nSo it's very impactful on multilevel buildings with large HVAC needs such as lab buildings.\nSo we have to keep our cost escalation assumptions on the high end despite the noted drop in some commodities.\nThe reason being reported is both a commodity and labor issue at the shops that create the products from raw materials.\nCOVID caused many to shut down.\nAnd then when demand exploded, the shops had a hard time getting the labor to come back.\nThe shops try to solve this by scheduling longer shifts, but the amount of rolled steel showing up was not enough to support those shops.\nThus, prices remained very high with metal studs up 75% since January.\nWe want to assure you that we're keeping a very close eye on commodities and have been developing strategies to counter these increases.\nAnd together with our prudent underwriting, we will continue to deliver our projects on time and on budget as we always have.\nI'll conclude by commenting on our recent sales and provide a couple of comps that were announced recently.\nI discussed our record 4% cap rate at 213 East last quarter, but I want to add that in addition to achieving that cap rate, we also achieved an unlevered IRR of 9.6%.\nAnd a value creation margin, which is calculated by dividing our gain by gross book value of 56%.\nWe achieved a 12% unlevered IRR on this sale and a value creation margin of 61%, a truly remarkable outcome, and it's very reflective of the high-quality assets we've developed and continue to develop in the Seattle region and elsewhere.\nOutside of those Alexandria transactions, there are a couple of transactions of note in our submarkets that reflect the high value that private investors are putting on life science assets today.\nIn Sorrento Mesa, an asset known as The Canyons, which contains a little over 1/3 of lab and manufacturing space with the balance being office, sold at a 4.48% cap rate and a value of $575 per square foot.\nThe cash flow is from a credit tenant and there is no near-term upside, so the cap rate really reflects the yield a private investor was willing to pay in a submarket that a couple of years ago would have commanded a cap rate with a six handle.\nIn a similar vein, the other comp we're reporting comes from Rockville, Maryland, which was received to be a seven cap rate submarket by some analysts not too long ago.\n9615 Medical Center Drive, located in the Shady Grove submarket and adjacent to a number of Alexandria properties was sold to a U.S. insurance company for a 5.18% cap rate and a valuation of $610 per square foot.\nThe asset is a leasehold interest subject to a long-term ground lease that happens to be owned by Alexandria.\nAnd with that, I'll pass it over to Dean.\nWe reported exceptional operating and financial results for the first half of '21 and provided a very strong outlook for the remainder of the year.\nRevenue and net operating income for the second quarter was up 16.6% and 16.8% over the second quarter of 2020, respectively.\nAnd NOI for the second quarter was up 6.9% over the first quarter of '21.\nNow venture investment gains included in FFO per share were $25.5 million for the second quarter and was consistent with the first quarter of '21.\nNow looking back over the last two quarters, we raised our outlook for FFO per share, $0.03 when we reported first quarter results.\nAnd during the second quarter, we raised our outlook for FFO per share again by another $0.02.\nNow this $0.02 increase was announced in connection with our Form 8-K filing date at June 14, when we were substantially through the second quarter and had solid visibility into the strength of core results for the quarter.\nSame-property NOI growth for the first half of '21 continue to benefit from our high-quality tenant roster, with 53% of our annual rental revenue from investment-grade rated or large-cap publicly traded companies.\nSame-property NOI growth for the first half of '21 was very strong at 4.4% and 7.4% on a cash basis.\nHigh rental rate growth on lease renewals and releasing the space was the key driver for the improvement in our outlook for 2021 same-property net operating growth to 2% to 4% and 4.7% to 6.7%, an increase of 30 basis points and 40 basis points, respectively.\nNow while the primary focus of our acquisitions for 2021 has been driven by strong demand from our tenant relationships for both current and future development and redevelopment projects, certain acquisitions have also included operating properties with opportunities to drive growth and cash flows through lease-up of vacancy.\nNow these operating properties have contributed to NOI growth in the first half of '21.\nIt's important to highlight that the lease-up of 1.4 million rental square feet of vacancy at these properties will provide further growth in annual rental revenue in excess of $55 million.\nNow occupancy that we reported for June 30 was 94.3% and 98.1% on a pro forma basis, excluding vacancy from recently acquired properties.\nAnd it's also important to highlight that if we set aside recently acquired properties, our occupancy is on track to improve by 100 basis points in 2021.\nNow we believe it's important to highlight the strategic benefits of having the team with tremendous experience and expertise with designing, building and operating sophisticated laboratory office buildings and the team with decades of trusted partnerships with our highly innovative tenants.\nAs mentioned earlier, we have one of the highest credit tenant rosters in the REIT industry.\nWe have one of the highest adjusted EBITDA margins in the REIT industry at 69%.\nWe reported our lowest AR balance since 2012 at $6.7 million, truly amazing when you consider that our total market capitalization was over $26 billion as of June 30.\nAnd we continue to consistently report high collections at 99.4% for July.\nWe reported record leasing velocity at over 3.6 million rentable square feet executed in the first half of this year.\nAnd this run rate is significantly exceeding the strong leasing volume for 2020 and on track for exceptional rental rate growth in the range of 31% to 34% and 18% to 21% on lease renewals and releasing the space the last figures on a cash basis, by the way.\nNow as a trusted partner with access to over 750 tenants in our portfolio, we are well positioned to capture the tremendous demand from our tenant roster and life science industry relationships.\nWe have a super exciting pipeline of projects under construction, aggregating 3.4 million rentable square feet, 80% lease negotiating.\nNear-term projects starts 89% leased were under negotiations, aggregating 3.7 million square feet.\nNow this aggregates about 6.9 million square feet, 90% of which is related to space requirements from our existing relationships.\nThese projects will generate an amazing amount of incremental annual rental revenue exceeding $545 million or a 34% increase above the second quarter rental revenues annualized of $1.6 billion.\nNow importantly, we also expect to start additional projects between now and December of 2022.\nOur venture investments portfolio continue to highlight the exceptional talent of our science and technology team for underwriting high-quality innovative entities.\nAs of June 30, unrealized gains were $962 million on an adjusted cost basis of $990 million.\nRealized gains on our venture investments for the second quarter were $60.2 million, including $34.8 million of realized gains excluded from FFO per share.\nNow for the first half of '21, we realized gains aggregating about $57.7 million that related to significant gains in three investments that were excluded from FFO per share as adjusted.\nNow we're pleased that the venture investment program is generating capital exceeding our initial forecast for 2021, and we hope this will be in the range of about $100-plus million for the entire year.\nNow continuing on to our very strong and flexible balance sheet to support our strategic growth initiatives.\nWe continue to be very pleased to have one of the best balance sheets in the REIT industry, providing us access to attractive long-term cost of capital.\nWe remain on track for net debt to adjusted EBITDA of 5.2 times by year-end.\nOur fixed charge coverage ratio for the fourth quarter has increased to greater than five times.\nWe continue to maintain significant liquidity of $4.5 billion as of June 30.\nWe're in a solid position with debt maturities with our next maturity representing only $184 million comes due in 2024.\nAnd while it's challenging to predict when owners of real estate will decide to sell, two to three transactions drove most of the amount of acquisitions and accounted for about half of our target for 2021.\nFor the remainder of the year, our goal is to remain very selective with acquisitions.\nOur team is advancing a number of important dispositions primarily focused on partial interest sales in high-value, low cap rate properties for reinvestment into our strategic value creation development and redevelopment projects.\nNow to date, in 2021, we have completed $580 million at cap rates in the 4% to 4.2% range.\nAnd we have about $1.4 billion in process at various stages and expect to move along other dispositions that will push us well above the top end of our range for dispositions, which are currently at $2.2 billion.\nNow we are targeting about $1 billion in dispositions to close in the third quarter and the remainder in the fourth quarter.\nImportantly, each of these key pending transactions will continue to highlight the tremendous value we have and continue to create for our stakeholders.\nThis guidance is an update to our guidance for the year that was disclosed on our Form 8-K dated June 14.\nWe narrowed the range of guidance from $0.10 to $0.08 for both earnings per share and FFO per share.\nEPS was updated to a range from $3.46 to $3.54 and FFO per share as adjusted was updated to a range from $7.71 to $7.79 with no change in the midpoint of FFO per share diluted as adjusted of $7.75.\nNow as a reminder, since our initial FFO per share guidance for 2021, we have increased the midpoint of our guidance by $0.05 for growth in 2021, representing an increase of 6.1% over 2020.\nI also wanted to express our team's appreciation for continued recognition by an independent panel of judges for a six NAREIT Gold Award for Communication and Reporting Excellence to the investment community.\nOperator, we can go to questions, please.\n", "role": "user" }, { "content": "sees 2021 funds from operations per share, as adjusted $7.71 to $7.79.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We hope that everyone listening continues to be safe and healthy as we work through the challenges related to the pandemic.\nIt is impossible to review ARI's 2020 performance or discuss current market conditions and the implications for ARI's future strategic priorities without acknowledging the initial and ongoing impact of the pandemic.\nUltimately, the real estate market resides at the intersection of the economy and the capital markets.\nTo frame my comments in the appropriate context, it is important to note that despite initial concerns expressed by those who viewed the pandemic through the lens of the Global Financial Crisis, over the past 11 months the capital markets have remained functioning and experienced an historically rapid recovery.\nHowever, overall economic performance is recovering slowly, and the ultimate trajectory of the economy will depend on the pace at which fiscal and regulatory policies and capital investment are able to minimize the impact of the pandemic and the ongoing vaccination efforts enable the reopening of as much of the pre-pandemic economy as possible.\nUnlike every other year-end earnings call in ARI's history when we would typically highlight origination volume, growth in the capital base and portfolio as well as capital efficiency, we believe ARI's performance in 2020 is best measured by the company's balance sheet durability and effective proactive asset management.\nDuring the year, the in-place strength of the balance sheet was enhanced through effective liquidity management predicated on strong relationships with each of our lenders as well as opportunistic and well-priced asset sales.\nARI's asset management efforts benefited from our ongoing investment in both talent and systems and our historic practice of keeping originators involved with their transactions, which facilitates dialogue with and information flow from our borrowers.\nThe tremendous skill set of Apollo's commercial real estate debt team and the resources, thought leadership and relationships that come from being part of the broader Apollo organization were instrumental to ARI's achievements in 2020 and continue to differentiate ARI in the marketplace.\nImportantly, the net result of our 2020 efforts was ARI's continued ability to pay a well-covered dividend to our shareholders.\nThe onset of the pandemic immediately led to concerns over liquidity throughout the real estate sector and heightened security of balance sheet strength and bank lending relationships across mortgage REITs.\nIn managing ARI's balance sheet, we have always focused on implementing a leverage strategy consistent with our asset mix, balancing the use of leverage with return targets, not relying on max leverage on any one asset to generate a target return and maintaining an unencumbered pool of loans.\nWe have consistently maintained strong relationships with our lenders, always seeking to keep an open and candid dialogue and ensuring that ARI fully benefits from the One Apollo approach to managing relationships with key financial partners.\nThis approach was validated during 2020, as we materially increased ARI's short-term liquidity without the need for any form of rescue capital or having to access the capital markets from a position of weakness during the peak of capital markets volatility.\nBeyond ARI's basic financial strategy, we also chose to opportunistically sell loans at attractive pricing, generating excess liquidity and eliminating some of our construction and future funding commitments.\nDuring 2020, ARI sold approximately $634 million of loans at a weighted-average price of 98.1% of par, generating net proceeds of $208 million.\nGiven the significant amount of capital searching for yield, the market for loan sales remains active, and when and if appropriate we may consider additional sales on behalf of ARI.\nAnother highlight of 2020 was ARI's considered use of its share repurchase plan.\nIn growing ARI, we have maintained our commitment to only issue common stock above book value.\nIn 2020, we remained thoughtful with respect to how our capital allocation could positively impact book value given the pandemic-driven downward pressure on our common stock price.\nAs such, we determined repurchasing ARI's common stock would achieve the best risk-adjusted return on equity for our excess capital.\nAs a result, we repurchased over $128 million of common stock at an average price of $8.61, resulting in approximately $0.61 per share of book value accretion.\nI also want to highlight that yesterday we announced our board of directors authorized a $150 million increase to ARI's share repurchase plan, providing us with total capacity of $172 million.\nPivoting to the portfolio, ARI's focus for 2020 was proactive asset management.\nOur efforts were greatly enhanced through the access to the resources of the Apollo platform, providing our team with extensive real-time data and information.\nIn prior quarters, we have spoken extensively about the challenges within various property types or specific assets in our portfolio.\nGiven the underlying LTV of our loans, the ongoing dialogue with our borrowers and the measured recovery in the economy, I am pleased to report that there are no material changes to the credit quality of the portfolio or to our credit outlook since the last call.\nAnecdotally, with respect to our loans underlying the hospitality assets, we continue to see steady improvement within the roughly 65% of our portfolio which are resort or destination locations, while business-oriented hotels continue to face challenges.\nWith respect to the Anaheim hotel that was foreclosed upon and is being carried as REO, the hotel is under contract to be sold, and a hard deposit has been posted.\nLastly, with respect to two of our largest focused loans, we have had positive momentum at both the Miami Design District loan and the Fulton Street loan.\nWith respect to Miami Design, since the last earnings call we entered into a partnership with an extremely well regarded local developer who is converting the space into an open-air marketplace and working on leasing the existing space, while retaining the option to redevelop the property at a later date.\nOn Fulton Street, we partnered with a best-in-class New York developer to redevelop the site into a multifamily property.\nThe one additional loan I want to discuss is our first mortgage secured by an urban retail property in London.\nThe property is located in one of the most trafficked locations on Oxford Circus in London, and it houses Topchop's and Nike's flagship stores.\nLast quarter, Topshop's parent company, Arcadia, filed for bankruptcy.\nThis was an outcome we considered when we underwrote the loan, as we were extremely familiar with the credit.\nThe property is currently being marketed for sale, and the initial feedback from the process indicates the proceeds will be well in excess of our loan.\nThe loan is currently accruing interest, including default interest, and we believe we are well covered.\nAs we look ahead, we believe ARI is well positioned to capitalize on the significant increase in real estate transaction activity which began in the latter part of 2020 and has continued in 2021.\nThe commercial real estate market is benefiting from the low interest rate environment and record amounts of dry powder in real estate funds, which is leading to increased deal activity.\nARI entered 2021 with excess capital on its balance sheet and is positioned to deploy that capital into attractive risk-adjusted return opportunities.\nAlso, given the current strength of the capital markets, we believe ARI will be repaid on some of its existing loans, thereby providing additional capital to be invested.\nApollo's real estate credit platform remained active throughout 2020 and continues to see a tremendous amount of transaction flow, which has enabled ARI to thoughtfully build a pipeline of potential new deals.\nImportantly, ARI's lenders have indicated their willingness to provide ARI with financing for new transactions, and we are confident that levered returns achievable today are consistent with the returns on the capital we are expecting back this year.\nAs always, our focus on capital allocation will remain on generating the most attractive risk-adjusted ROE.\nWe will remain steadfast to our credit-first methodology, and we will be prudent in our capital management in funding new business.\nWe recently committed to our first transaction in 2021, a large first mortgage loan in Europe, and the pipeline continues to build.\nThis was achievable even with excess liquidity on our balance sheet through most of 2020.\nOur common stock offers investors in excess of an 11-plus percent dividend yield, which we believe is extremely attractive in this current low yield environment.\nBefore we review earnings, I wanted to discuss our secured financing arrangements.\nFrom March 15 of last year, total deleveraging on our $3.5 billion financing arrangements were $190 million, which is less than 6% of our outstanding balance.\nOur strong relationships with key counterparties were beneficial as we navigated volatility in the capital markets throughout the past 11 months.\nWe also proactively worked with our financing partners and availed ourselves of the benefits of the broader Apollo platform to ensure adequate liquidity and term-out financing.\nI want to highlight that beginning of this quarter we will use the words \"distributable earnings\" instead of \"operating earnings,\" with no change to the definition.\nFor the fourth quarter of 2020, our distributable earnings prior to realized loss on investments were $51 million, or $0.36 per share of common stock.\nDistributable earnings were $21 million, or $0.15 per share, and the realized loss on investments was comprised of $25 million in previously recorded specific CECL reserves and $5 million on loan sales and restructurings.\nGAAP net income available to common stockholders was $33 million, or $0.23 per share, and the common stock dividend for the quarter was $0.35 per share.\nAs of December 31, our General CECL Reserve remained relatively unchanged, declining by three basis points to 68 basis points, and our total CECL reserve now stands at 3.24% of our portfolio.\nMoving to book value.\nGAAP book value per share prior to the General CECL Reserve was $15.38, as compared to $15.30 at the end of the third quarter.\nThe increase was primarily due to the accretive share repurchases Stuart mentioned earlier.\nSince the end of the first quarter of last year, our book value prior to General CECL Reserve increased by $0.44 per share.\nAt quarter-end, our $6.5 billion loan portfolio had a weighted-average unlevered yield of 6.3% and a remaining fully extended term of just under three years.\nApproximately 90% of our floating-rate U.S. loans have LIBOR floors that are in the money today, with a weighted-average floor of 1.46%.\nWe completed $109 million of add-on fundings during the quarter for previously closed loans, bringing our total add-on fundings to $413 million for 2020.\nAnd lastly, with respect to our borrowings we are in compliance with all covenants and continue to maintain strong liquidity.\nAs of today, we have $250 million of cash on hand, $30 million of approved undrawn credit capacity and $1.1 billion in unencumbered loan assets.\n", "role": "user" }, { "content": "compname reports q4 earnings per share $0.23.\nq4 earnings per share $0.23.\napollo commercial real estate finance - company's board of directors authorized increase of $150 million to existing share repurchase plan.\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 us on the call today are Mike Long, Chairman, President and Chief Executive Officer; Chris Stansbury, Senior Vice President and Chief Financial Officer; Andy King, President, Global Components; and Sean Kerins, President, Global Enterprise Computing Solutions.\nI will now hand the call to our Chairman, President and CEO, Mike Long.\nThe critical engineering, design and supply chain services they provide to our customers, our suppliers and partners create technology that protects and improves our way of life.\nThe health of our people always comes first.\nOver the course of a few months, we've learned a lot about the practices necessary to keep the business going while protecting our people.\nWe're increasingly optimistic that we have found a sustainable way to do business and actually thrive in the coming quarters.\nOn April 30, we provided an outlook for the second quarter.\nWe recognized then and now that to guide innovation forward, we must maintain our reputation for transparency.\nIn addition, we have a long-held belief in the power of data from the billions of transactions we do with thousands of customers across dozens of industries.\nAs a result, I'm pleased to report that we exceeded our quarterly earnings guidance for the quarter.\nIn fact, we've met or exceeded our guidance 46 times in the last 50 quarters.\nAs we reflect on what we can do to achieve long-term success, it's important to recognize both the items that are in our control and those that are not.\nWe can't control the demand for cars, data center equipment or electronic devices.\nHowever, we can continue to position our business for rapid sales acceleration and mix shift to higher-margin engineered components and solutions.\nOne way we're doing that is by adding to our engineering and our sales teams today.\nWe've seen great opportunity to drive leverage from design, engineering and marketing that will benefit our customers and suppliers.\nAnother way for Arrow to position for the eventual improvement in demand is to execute on the business model and to strengthen the balance sheet.\nOur results this quarter showed just that.\nCash flow from our operations totaled $418 million, $1.7 billion over the last 12 months, and we have also reduced debt by $1.1 billion over the last year.\nWe remain confident in our long-term strategy and execution.\nTherefore, we increased our commitment to returning excess cash to our shareholders with an additional $600 million of share repurchases.\nArrow remains focused on maximizing our near-term opportunities, while positioning our business for the long term.\nDesign activity reached an all-time record for any quarter in our history, and our design activity has actually increased year-over-year for the third quarter in a row.\nTypically, this is a good leading indicator of an improving market, and this is why we keep investing in our engineering capabilities.\nOther indicators are consistent with short run stability.\nSecond quarter backlog increased from the first quarter, the third quarter in a row of sequential improvement.\nLead times were consistent with the first quarter and with last year.\nGlobal components book-to-bill was 1.07 exiting the second quarter.\nBook-to-bill was highest in the Asia region where the pandemic recovery is happening sooner.\nOur Americas customer sentiment survey showed some improvement.\nThe percentage of customers saying they had too little inventory increased compared to last year, and the percentage of customers saying they had too much inventory decreased compared to last year but also remained higher than normal.\nTo date, we've not faced significant challenges securing the parts our customers need.\nTurning to enterprise computing.\nIn the second quarter, sales were slightly above our midpoint expectation.\nLike last quarter, we experienced strong demand for the solutions that enable the work from home and the business continuity.\nSecurity software sales were strong, and storage sales increased compared to last year.\nWe remain confident in the consistent growth from data from connected devices and objects, and we believe that, that will be a long-term tailwind for our business.\nTaking a step back, I want to emphasize that as a company, we have a long history on capitalizing on downturns and disruptions.\nAnd despite the current environment, we continue to improve our team's leading design and demand creation for global components.\nHybrid cloud for enterprise computing solutions, and we can fund these investments with efficiencies that we gained from our superior operational platform, and we expect these investments to drive exceptional profit leverage in the long term.\nIn closing, we're continuing to support our stakeholders and communities.\nWe're committing to providing our customers with the products and solutions they need when they need them.\nWe remain disciplined and focused as we operate our facilities and businesses through these uncertain times.\nOver the last several months, we worked diligently to avoid disruptions and are confident we'll continue to do so as we operate as a critical provider to the global technology and industrial ecosystem.\nWe will not stop looking for opportunities to expand our business, drive innovation and improve the performance of our end customers everywhere.\nI'll now hand the call over to Chris to provide more details on the second quarter results and our expectations for the third quarter.\nSecond quarter sales were $6.61 billion.\nSales increased 4% quarter-over-quarter and decreased 8% year-over-year as adjusted.\nThe average euro-dollar exchange rate for the quarter was exactly in line with our expectation.\nGlobal components sales were $4.72 billion.\nThis was above the high end of our prior guidance and represents an 8% year-over-year decrease as adjusted.\nI mentioned last quarter that industry destocking has been going on for more than one year.\nThis quarter, global component sales increased sequentially for the first time since the second quarter of 2019.\nDemand in Asia has been resilient.\nAnd as we expected, the Americas and Europe were hard hit by the aerospace and transportation industries.\nGlobal components operating margin was 3.8%, down 10 basis points year-over-year.\nThis was mainly due to regional mix with Asia contributing 45% of global component sales, up from 37% in the first quarter and 38% last year.\nEnterprise computing solutions sales of $1.89 billion decreased 8% year-over-year as adjusted and were above the midpoint of our prior expected range.\nAs we've said in the past, uncertainty is bad for IT spending, and enterprise computing solutions is likely a later cycle business than global components.\nThat said, we believe some of the delayed investments in mission-critical technologies cannot be pushed out indefinitely.\nBillings were approximately flat year-over-year, adjusting for changes in foreign currencies.\nWe experienced strong demand for security and storage solutions, while demand for servers and networking declined meaningfully year-over-year.\nGlobal enterprise computing solutions operating income margin decreased by approximately 60 basis points year-over-year to 4.3%.\nAnd similar to what we saw in the global components business last year, demand from smaller customers who rely on more of our capabilities has been weaker in this downturn.\nDemand from larger, better capitalized customers has been more resilient.\nReturning to consolidated results for the quarter.\nInterest and other expense of $32 million was below our prior expectation due to lower borrowings and lower interest rates.\nThe effective tax rate of 24.1% was in line with our expectations.\nEarnings per share were $1.59 on a diluted basis, exceeding the high end of our prior expectation.\nTurning to the balance sheet and cash flow.\nWe reported strong operating cash flow of $418 million.\nDuring the second quarter, we reduced borrowings by approximately $257 million, principally through the maturity of a $209 million 6% note retirement.\nOur balance sheet is in great shape, and our liquidity position remains strong.\nCurrent committed and undrawn liquidity stands at over $3.2 billion, excluding the $206 million cash balance that we have on hand.\nWe're closely monitoring credit and receivables.\nCollections remained healthy and DSO increased, but in line with DPO.\nThis was due to the further expansion of customer engagements during the quarter that are neutral to working capital.\nAs we've said in the past, it's fair to measure our performance by the cash conversion cycle, not by any one metric in isolation.\nThe second quarter cash conversion cycle was four days shorter than last year.\nWe returned approximately $75 million to shareholders during the quarter through our share repurchase plan.\nThe remaining authorization under our existing plan is approximately $113 million.\nThe new $600 million authorization increases the total to $713 million.\nNow turning to guidance.\nAgain, this quarter, we're providing wider-than-normal ranges to account for increased volatility, given the current environment.\nWith that said, we're forecasting consolidated sales to be approximately flat compared to the second quarter with higher global component sales and lower enterprise computing solution sales which is typical for the third quarter.\nWe expect a slight increase in earnings per share compared to the second quarter.\nHowever, the percentage decline in earnings per share looks unfavorable on a year-on-year basis.\nCompared to the third quarter of 2019, current demand conditions in the Americas and in Europe remain significantly depressed for both businesses.\n", "role": "user" }, { "content": "q2 adjusted earnings per share $1.59 excluding items.\nq2 sales $6.61 billion versus refinitiv ibes estimate of $6.37 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: With us on the call today are Mike Long, Chairman, President and Chief Executive Officer; Sean Kerins, Chief Operating Officer; and Chris Stansbury, Senior Vice President and Chief Financial Officer.\nOur actual results could differ materially due to a number of risks and uncertainties, including the risks factors in our most recent 10-K and 10-Q filings with the SEC.\nThese non-GAAP measures are not intended to be a substitute for our GAAP results.\nI'll now hand the call to our Chairman, President and CEO, Mike Long.\nOver the last few quarterly reports, I've shared with you the growing momentum behind our business.\nEven as we navigated the pandemic, we maintain staffing.\nWe continue to identify efficiencies to fund greater investments in design, engineering and supply chain services.\nI'm pleased to report that this momentum is yielding results.\nWe achieved all-time record sales, gross profit and earnings per share, not just for the second quarter, but for any quarter in Arrow's history.\nIn our industry, maintaining a leadership position requires constant evolution.\nAt Arrow, we strive to be our customers' trusted source for solutions to their manufacturing and information technology challenges.\nWe always seek new ways to help their businesses be more successful.\nTo do so, we must consistently expand and enhance our service offerings in the areas of engineering, design for manufacturing, supply chain management and secure workload management.\nAnd we've made great progress on these fronts.\nArrow is now operating from a position of strength.\nThe opportunity for our business has never been greater.\nIn the current environment, it's rare to find a company or industry that's not facing challenges from a supply chain perspective.\nWe're ideally positioned to help customers address those challenges by leveraging our unmatched databases of design, electronic components information from our media properties.\nBeyond information, we see the companies around the globe are rethinking their approaches to component procurement.\nJust-in-time deliveries have become a high-risk, low-return strategy.\nCustomers are seeking reliability, and we can work with them to create a more stable and a more secure stream of parts that benefits our suppliers as well.\nAs a result, we've expanded our customer base, and are engaging with new companies who are in the past had not considered Arrow services.\nWe're providing solutions tailored to their specific challenges to achieve success.\nThe trajectory of our global components business was very positive during the second quarter.\nOur global components business capitalized and continued strong demand in all regions, with sales up 40% year-over-year.\nSales were above the high end of our expectations for the fifth quarter in a row.\nThe upside largely attributable to our ability to secure additional inventories to meet the strong demand.\nWe saw robust demand from key industries such as transportation, industrial, communications, consumer electronics and data networking.\nWe also saw growth in the aerospace and defense sector on a year-over-year basis as the commercial aviation industry continues to recover.\nAs a result, global component sales reached $6.6 billion, which is an all-time record in the company's history.\nAgain, this quarter, we achieved significant growth along with exceptional profit leverage on sales.\nOperating income from global components increased more than two times the rate of sales growth.\nWe continue to provide customers with valuable supply chain services that utilize our global ERP capabilities and distinguishes our level of inventory insight from many of our competitors in this area.\nOur digital platform is also helping customers manage component supply and safeguard their manufacturing.\nThe sales contribution from design and engineering activity which were remarkably resilient through the pandemic is keeping pace with the market growth.\nStepping back to a multiyear view of our industry.\nWe see several key indicators of a smooth transition to normalized demand.\nFirst, based on our current orders and backlog, even with a heavy level of caution and skepticism, we see the urgent need for electronic components for production extending well into 2022.\nSecond, we believe customers want to keep their places in line with lead times extending.\nLastly, and this has been changing the increasing electronic content in and everything around us is a tailwind for the business.\nTurning to enterprise computing solutions.\nSales were in line with our expectations and billings increased at a solid rate year-over-year.\nWe experienced growth in storage and networking, which was helped by businesses and their workers returning to their offices.\nWhile the corner turned out largely as we expected, in the short run, lower spending on work and learn from home is an offset to growth.\nWe saw supply chain issues limit our ability to capitalize on stronger demand.\nWhile we're pleased with our enterprise computing solutions performance, we see strong potential for even better results.\nIT spending priorities are shifting toward more complex transformational projects that tend to be better aligned with our value-added focus.\nThe growing threat of landscape and the return to on-site business have greatly increased activities for our business.\nIncreases in cyber threats such as ransomware attacks continue to shine a light on the importance of being proactive toward security protocols.\nArrow has proven itself to be an expert in this area, and continues to be the trusted partner for VARs, MSPs and their end customers.\nFinally, I'm happy to report that we increased our share repurchase authorization by an additional $600 million.\nThis comes approximately one year after our last $600 million authorization and shows our continued commitment to returning cash to the shareholders at unmatched levels in our industry.\nAs our metrics show, we have never, in our history, been better positioned to balance working capital demand with robust growth.\nThis makes increasing cash returns and easier decision.\nWith that, I'll now hand the call over to Chris to provide more details on our second quarter results and expectations for the third quarter.\nSecond quarter sales increased 25% year-over-year on a non-GAAP basis.\nThe average euro-dollar exchange rate for the quarter was $1.21 to EUR one compared to the rate of $1.18 we had used for forecasting.\nThe slightly stronger euro benefited sales growth by approximately $69 million more than we anticipated.\nInterest expense was slightly lower than we expected, but a slightly higher-than-expected effective tax rate offset any impacts to the bottom line.\nFor the full year 2021, we continue to expect our effective tax rate to be near the low end of our long-term range of 23% to 25%.\nTurning to the balance sheet and cash flow.\nSecond quarter operating cash flow was $281 million despite substantial inventory demand to fund growth.\nOver the last five-, 10- and 15-year period, cash flow from operations has consistently averaged 90% of non-GAAP net income.\nBut on a year-to-year basis, cash flow has an inverse relationship to sales growth.\nOur cash cycle of approximately 50 days improved by six days compared to last year.\nThis improvement significantly aided cash flow performance in the face of working capital demands.\nOur liquidity position is the best in the history of our company and continues to improve.\nLeverage, as measured by debt-to-EBITDA is the lowest level in nearly 10 years.\nWe returned approximately $250 million to shareholders during the second quarter through our share repurchase plan and this was the largest single quarter of share repurchases in our history and was enabled by our strong profits and proactive working capital management.\nWe remain committed to returning cash to shareholders and recently expanded the operation by $600 million.\nThe total authorization under our plan is approximately $663 million and we're confident that we're purchasing shares below their intrinsic value based on the increasing return on invested capital and return on working capital that we're showing in the business.\nNow turning to guidance.\nMidpoint sales and earnings per share guidance would be an all-time third quarter, our forecast implies that third quarter profits would be slightly above the second quarter despite slightly lower sales.\nBoth businesses continue to face supply constraints that are limiting our ability to make the most of strong customer demand.\nOur guidance reflects continued strong profit leverage for global components on a year-over-year basis and for global enterprise computing solutions profitability to remain consistent with last quarter and last year.\nFinally, as we discussed last quarter, please note the CFO commentary includes information on our fiscal calendar closing dates for 2021.\nIn 2021, the fourth quarter starts on October 3, unlike in 2020, when it started on September 27.\nThis makes the fourth quarter shorter than prior year fourth quarters, but year-over-year comparisons for the second and third quarters are not affected and our fiscal year-end on December 31, as always.\n", "role": "user" }, { "content": "compname announces additional $600 million share repurchase authorization.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: With us on the call today are Mike Long, Chairman, President and Chief Executive Officer; Sean Kerins, Chief Operating Officer; and Chris Stansbury, Senior Vice President and Chief Financial Officer.\nOur actual results could differ materially due to a number of risks and uncertainties, including the Risk Factors in our most recent 10-K and 10-Q filings with the SEC.\nThese non-GAAP measures are not intended to be a substitute for our GAAP results.\nI will now hand the call to our Chairman, President and CEO, Mike Long.\nWhen I spoke to you in late April of 2020, right after our first quarter, there was much we didn't know about how the coming months would unfold, which is why it's incredible to be here today talking about record quarterly sales and earnings in the fourth quarter of the year.\nNot to mention, in 2020, we generated record operating cash flow, reduced debt by a record amount, and returned a record cash to the shareholders for the year, it's a true testament of our strength.\nBut not only did we do that, but in a very short period of time, we had almost 15,000 people that had to go from office work to work from home, and this is a true testament of the hard work and the dedication of our team.\nEvery day our customers have a choice, we're proud they continue to choose Arrow.\nCustomers place their trust in Arrow's engineering, design and supply chain services.\nThey rely on us to ensure their products are designed to be efficiently manufactured and well-received in the marketplace.\nOur suppliers are critical to our success.\nThey continue to choose Arrow to sell, market and design their components into some of the most innovative and important products coming to market.\nWhile our reputation speaks for itself, our consistency comes from putting our people first.\nWhile some of these -- While some of the same obstacles we've had in the past, we've seen major devices upgrades and major upgrade cycles, followed by strong sales.\nThe foundation of our business has never been stronger, while business conditions in our industry are dynamic, we're cautiously optimistic that the demand environment for Americas and Europe can return to growth.\nCustomers are ramping up prior production levels across many industries, and the inventory correction that occurred prior to the pandemic means that some components are in short supply.\nOrders and backlog are up in all regions.\nIn line with this, our Americas customer sentiment survey showed an increase in the percentage of customers that have an inventory shortage and a decrease in customers with an excess of inventory.\nTurning to our enterprise computing solutions business, we are pleased to deliver operating income growth on a year-over-year basis.\nOperating income growth continues to be the truest measurement of performance for this business, and in addition, operating margin reached its highest level since the fourth quarter of 2017.\nWhile we were pleased with our enterprise computing solutions results, we see strong potential for further improvements in 2021.\nFirst, the markets we serve remain challenged by lockdowns and continued restrictions to related on-site work.\nIn the meantime, widespread work from home policies continue to drive security and cloud solutions.\nIn the past, we've seen major upgrades, followed by strong infrastructure spending to support them.\nWe see further benefits to enterprise computing from a recovery by special VARs and MSP customers, who serve some of the industries that have both -- mostly been impacted by the pandemic.\nOur customers see service, the hospitality, retail, restaurant and even the medical industries have been hampered by an inability to work on-site at their end customers.\nWe derive value from complexity, so helping these customers design and self-secure multi-site hybrid cloud data solutions should benefit our volumes and profits compared to our business in 2021 [Phonetic].\nBefore closing, I thought I'd share a few words of our Company's long-standing commitment to developing business leaders and proactive succession planning.\nWe recently announced the appointment of Sean Kerins as Arrow's new Chief Operating Officer.\nSean has been a valued member of our team since 2007.\nHis leadership and proven track record at Arrow make him the ideal executive to now lead both businesses in advance, innovation across our global sales, marketing and operations.\nWe're confident in his ability to help Arrow capture value and growth from the increasing convergence of semiconductor, electronic component industries with the information and operational technology industries.\nWith that, I'll now hand the call over to Chris to provide more details on our fourth quarter results and our expectations for the first quarter.\nFourth quarter sales were $8.45 billion.\nSales increased 13% year-over-year on a non-GAAP basis.\nThe average euro-dollar exchange rate for the quarter was $1.19 to EUR1 compared to the rate of a $1.16 we've used for forecasting.\nStrengthening of the euro relative to the dollar boosted sales by approximately $50 million compared to what we had anticipated in our prior guidance.\nGlobal component sales were $5.92 billion.\nSales were above the high-end of our prior guidance and we saw improving demand across regions in most industries.\nGlobal component's non-GAAP operating margin was 4%, up 40 basis points year-over-year.\nThis improvement was mainly due to greater operating expense efficiency in all regions as we leveraged higher sales volumes.\nWe continue to see substantial opportunity for further operating income leverage as all regions can capture an improving mix of higher value component sales, and as the Americas and Europe regions continue to recover.\nEnterprise computing solutions sales of $2.53 billion were above the midpoint of our prior expected range.\nFourth quarter billings increased year-over-year adjusted for changes in foreign currencies and we experienced growth in infrastructure software across the portfolio, security, storage and industry standard servers.\nGlobal enterprise computing solutions non-GAAP operating income margin increased by 30 basis points year-over-year to 6.3%, the highest level since 2017.\nReturning to consolidated results for the quarter, the effective tax rate was below our expectations due to timing of certain discrete items.\nFor the full-year 2020, our effective tax rate was near the low-end of our long-term range of 23% to 25%.\nWe continue to see 23% to 25% as our appropriate target range going forward.\nNon-GAAP diluted earnings per share were $3.17, it's $0.44 [Phonetic] above the high-end of our prior expectation, approximately $0.04 of the upside to prior guidance was attributable to more favorable exchange rates.\nTurning to the balance sheet and cash flow, operating cash flow was $200 million, despite substantially stronger demand than we anticipated.\nOur cash cycle improved by two days compared to the third quarter and 11 days compared to last year.\nThis improvement significantly aided cash flow generation in the face of working capital demand.\nInventory days were the lowest level since the fourth quarter of 2015.\nEnding 2020, debt decreased by $715 million compared to 2019.\nLeverage, as measured by debt-to-EBITDA, was at the lowest level in over five years.\nWe returned approximately $100 million to shareholders during the fourth quarter through our share repurchase plan.\nThe remaining authorization under our existing plan is approximately $463 million.\nNow, turning to guidance.\nMidpoint sales and earnings per share guidance would be all-time first quarter records.\nThe diversity of the products we sell and the customers and industries we serve helped provide stability for our business as a whole.\nOur guidance reflects continued improvement in both global components and global enterprise computing solutions operating margins on a year-over-year basis.\nFinally, as we discussed last quarter, please note that CFO commentary includes information on our fiscal calendar closing dates for 2021.\nIn 2021, the first, second and third quarters close on April 3, July 3 and October 2, respectively.\nUnlike in 2020, where they closed on March 28, June 27 and September 26.\nThese closing dates have a much greater impact on enterprise computing solutions and on global components and full-year comparisons are not affected as fiscal 2021 ends on December 31, as always.\n", "role": "user" }, { "content": "q4 non-gaap earnings per share $3.17.\nq4 sales $8.45 billion versus refinitiv ibes estimate of $7.8 billion.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Today's discussion is being broadcast on our website at atimetals.com.\nParticipating in today's call are Bob Wetherbee, President and Chief Executive Officer; and Don Newman, Senior Vice President and Chief Financial Officer.\nBob and Don will focus on our first quarter highlights and key messages.\nSlides are available on our website, atimetals.com, and provide additional color and details on our results and outlook.\nNavigating through the pandemic has sharpened our focus and provided absolute clarity on how we need to operate.\nWe've consistently followed our guiding principles, keep our people safe, reduce costs quickly, strengthen and protect our balance sheet and remain recovery ready for our customers.\nFocusing on these principles have been critical to mitigating the impact of the pandemic and the resulting global economic decline on ATI's financial results.\nAs our key end markets began to show signs of coming recovery, ATI is positioned for significantly improved margins.\nThese are amplified by our recent share gains and new business awards, especially in our High Performance Materials & Components segment.\nThat said, we still reported a loss for the quarter of $0.06 per share.\nOur objective, as with all public companies, is to generate a level of profitability greater than our cost of capital.\nAnd we have the clear strategy, defined actions and passionate team to do that.\nThe results achieved so far are a result of the relentless efforts of our entire global team.\nWe value each of our employees for their commitment and hard work.\nBefore Don reviews our first quarter financial performance and outlook in detail, I want to address four important topics.\nFirst, my view of the current business environment and what it means for ATI.\nSecond, update progress on and commitment to strategic transformation and share some good news on a few recent business awards.\nThird, address the ongoing strike by our USW-represented employees at several facilities in the Specialty Rolled Products business unit; and finally, share my views on our performance and outlook by end market.\nLet's begin with the context of what we're seeing in the current business environment and what it means for ATI.\n2021 began much like 2020 ended with optimism for a speedy vaccine rollout across the U.S. and Europe and slow but steady progress moving to the next normal.\nThe vaccination statistics are encouraging predictors of what may be possible in the not-too-distant future.\nWe're seeing increased optimism in the jet engine supply chain as improved domestic leisure travel demand accelerates.\nMore airplanes in the sky is a great thing.\nBeyond the U.S., demand for products produced in China continues to be strong, while India grapples with the effects of a major COVID infection surge.\nAnd in Europe, we're seeing mixed signals as vaccination rates vary across the region.\nSince 2020, we've been laser-focused on streamlining our cost structures to improve our competitiveness and maintaining healthy cash balances to weather a storm of unpredictable duration.\nLooking forward, our cash balances will fund working capital to support long lead time customer orders as the economic recovery takes hold.\nSelf-improvement actions continue and they'll make us a stronger company.\nOn an earnings per share basis, as I mentioned earlier, we lost $0.06 per share versus our guidance range of a loss between $0.23 and $0.30.\nOur dedication to more closely aligning capacity with near-term demand was a key contributor to achieving first quarter results that exceeded expectations.\nThere were two additional drivers of our financial outperformance, both related to the growing expectation for a global economic recovery.\nFirst and foremost, raw material prices rose significantly leading up to and within the quarter.\nNickel, ferrochrome and cobalt increases led to higher surcharge pricing and favorable timing between higher selling prices and lower inventory values, largely in our Specialty Rolled Products business.\nThese year-over-year tailwinds are outside of our control and are neither predictable nor sustainable.\nThis quarter, favorable metal prices provided a benefit of over $20 million or about $0.19 per share in total and $0.08 more than the metal price assumptions used for our Q1 guidance.\nEarly in Q2, metal prices retreated but have recently stabilized.\nAs a result, we anticipate a modest headwind from raw materials in the second quarter.\nSecond, our Precision Rolled Specialty Strip business in China, known as STAL, exceeded expectations with the strongest quarterly earnings in its history.\nOur local team following the Chinese government's recommendation to avoid travel over the Lunar New Year holiday, instead worked diligently to fulfill our significant customer order backlog.\nI'm pleased to report that our third major increment of capacity, which came online in 2019, is performing well, serving continued strong customer demand in the region.\nAs I mentioned earlier, we're seeing continued modest demand recovery for our jet engine forgings and the first signs of recovery for our other jet engine materials.\nThose positive signs were largely accounted for in our original guidance range.\nWhile an extended recovery in our markets will continue to dampen our results, our focus on what's within our control is making a difference.\nDon will provide additional details on our financial performance in a few minutes.\nNow let's shift to what's going on within ATI.\nAs we often discussed in 2020, our decremental margins benefited from our decisive and structural cost reduction actions.\nFirst quarter 2021, year-over-year decremental margins were 16% for ATI overall, marking a significant improvement from prior quarters.\nIt's worth noting that we've maintained this key metric below 30% in each pandemic-impacted quarter to date.\nThe actions required to make this trend possible were comprehensive and significant, and the results are visible and impactful.\nMost importantly, they're sustainable for the long term.\nPrior to the pandemic, we began a significant growth capital project within our HPMC segment.\nThis project expands our isothermal forging capacity and related heat treating, machining and testing capabilities.\nIt's required to support future jet engine demand, including our recent narrowbody-related share gain.\nThe new machining and testing capabilities are operational.\nDon and I visited this new facility in Appleton, Wisconsin a few weeks ago, and were impressed by its advanced machining capabilities and technologies.\nOver the next two quarters, additional portions of this multiyear investment will be completed.\nAt the same time, we're seeing a solid uptick in demand for components made possible by these new investments well ahead of industry production growth rate.\nThese new assets are on track to provide growth for HPMC's top line and improve its bottom line for years to come.\nMoving to the AA&S segment.\nIn December, we announced plans to transform our Specialty Rolled Products business, exiting low-margin standard stainless sheet products and eliminating associated costs and investments.\nWe remain on track to complete this footprint rationalization in the second half of the year.\nThe current strike by the United Steelworkers does not change our plans or our time line.\nEach of our business units must earn more than its cost of capital on a stand-alone basis.\nThis means having cost structures and capital investment aligned to its profit-making capability.\nWe dispassionately apply this standard across our business portfolio over a complete industry cycle.\nThe Specialty Rolled Products business has struggled to consistently meet this profitability threshold for some time.\nWithout transformation, it will not meet this objective in the foreseeable future.\nSo we're decisively taking the actions necessary to fix it.\nThis is critical not just to survive, but to thrive against global competitors.\nOtherwise, the business will continue to wither and die.\nThe performance over the last quarter confirms that our strategic transformation is the right course of action.\nWhen we successfully transformed, we'll have a streamlined, more profitable and thriving Specialty Rolled Products business, focused on delivering high value in our key end markets.\nOur AA&S transformation strategy also includes growth in high-value materials and increased utilization rates at our HRPF.\nI'm pleased to report progress on both objectives in 2021.\nAs a result of our commercial and operational team's hard work, we earned two significant customer wins that will benefit ATI and the AA&S segment going forward.\nWe were awarded a contract for roughly $40 million of specialty nickel alloy sheet materials for use in a pipeline off the coast of South America.\nWe're in the process of finalizing product testing with the customer and expect to deliver the full value of the contract in the second half of 2021.\nBidding activity in this market space remains active, and we expect continued success over the next several quarters.\nSecond, we signed a multiyear extension to our existing long-term agreement with Boeing to supply titanium mill products for both of our operating segments.\nThis share-based agreement provides the opportunity to gain share over the contract term through emergent demand.\nOur long-term titanium raw material agreement, providing the inputs to our mill product supply chain, remains in place throughout this extension.\nThis removes the variability associated with raw material prices over the term of the Boeing agreement.\nWhile important for our long-term market position, we expect subdued financial benefits from the airframe submarket until widebody aircraft production improves.\nNow I'll address the ongoing strike by our USW-represented employees at several facilities within our Specialty Rolled Products business unit.\nWe're incredibly disappointed that the union leadership chose this course of action.\nNo one wins in a strike, not customers, not communities, not employees or their families.\nAt a time when we're losing money, we have a generous four-year contract proposal on the table.\nWe want our USW-represented employees to come back to work.\nWe're offering annual raises as well as a premium free healthcare plan for the first three contract years.\nBeginning in year four, we're asking them to contribute modestly to their healthcare cost.\nWe know it's possible.\nOur other USW-represented and nonrepresented employees already do, so do their USW-represented counterparts at our close competitor.\nWe must find an equitable mechanism to mitigate the impact of healthcare cost inflation.\nWe can't continue to shoulder this burden alone.\nWe're committed to reaching an agreement that both rewards our hard-working employees and contributes to the long-term viability of our Specialty Rolled Products business.\nWe'll persevere to create an appropriate and predictable cost structure for this business.\nIn the meantime, we're successfully deploying our business continuity plan to operate the affected facilities.\nWhile this plan will take time to fully implement, the operations are gaining momentum, and we expect to reach our run rate goals in June.\nWe're absolutely delivering on orders at the required quality levels.\nWe're quoting and winning new business.\nWe've partnered with our customers to understand their needs against our projected capacity, prioritizing our production for what's most critical to them.\nThis includes the high-value nickel alloys for the pipeline project I mentioned earlier.\nThey're protecting our business, investing their time and energy in ATI's future.\nTheir dedication provides the opportunity for the USW-represented employees, who have chosen to strike to their jobs, to return to.\nOur competitors are hoping we fail.\nI'm confident we won't.\nLet me emphasize one more point.\nWould we rather be operating with our longtime USW-represented employees in place?\nThat's why we've improved our offer repeatedly throughout negotiations and worked hard to address the issues between us.\nAnd with that, let me conclude my opening comments with a perspective on our performance and outlook by end market.\nLet's start with our most significant market, commercial aerospace, specifically for our jet engine forgings and materials.\nThe fourth quarter 2020's modest improvement trend continued with sales of our advanced isothermal and hot-die forgings improving faster than our specialty material.\nAlthough jet engine sales declined significantly versus a robust prior year quarter, they grew nearly 30% sequentially.\nAs a reminder, our forgings are more finished components with shorter lead times compared to our other engine materials.\nForgings demand growth is directly linked to higher jet engine builds and additionally, in our case, to share gains.\nAll of this is driven by increasing narrowbody production rates.\nOur specialty materials tend to have longer lead times and are delivered to intermediate forgers, both internally and externally.\nInventory levels differ between materials and customers, which leads to today's multispeed demand recovery.\nWith increasing OEM production rates, we expect jet engine customer destocking to be largely complete in the second half of the year.\nAt that point, we anticipate our forgings and materials growth rates will more closely align with our customers' requirements.\nWe expect our jet engine product sales and related earnings to continue improving across 2021, again, driven mainly by narrowbody production increases, share gains and our previously implemented margin improvement actions.\nWe saw continued lower year-over-year sales, as expected, due to lackluster international travel demand, impacting widebody production rates.\nThese planes consume a large percentage of our total airframe titanium sales.\nWe expect our primary OEM customer to continue to destock across 2021, with new business from another large global OEM, partially offsetting the decline in the second half of the year.\nWe agree with industry analysts' projections that widebody production will remain at low levels for an extended time.\nWe've adjusted our cost structure accordingly.\nWe continue to see sales growth adding to our double-digit year-over-year gains in 2020.\nFirst quarter sales growth was very robust for military aerospace products, including jet engines, airframes and rotorcraft.\nAs expected, this was partially offset by a steep decline in ground vehicle armor plate as our primary customer completed the initial phase of a large product program.\nLooking ahead, we expect continued military aerospace growth and ongoing solid demand levels for naval nuclear products.\nWe'll see lower armor sales in the second quarter in advance of a new customer program kicking off later in 2021.\nIn total, we anticipate overall defense market growth in 2021 and beyond as we expand in new applications, materials and customers.\nShifting to our broader energy markets.\nSales declined year-over-year but at a slower pace than in previous quarters.\nSales to our specialty energy markets expanded including robust double-digit growth for nuclear energy and pollution and control material.\nSales to our traditional oil and gas markets declined versus prior year, but at a slower rate than in the most recent quarters.\nImproving demand for fuel needed to support travel and commerce is driving an increase in upstream production activity.\nAdditionally, the market for clad pipe applications continues to gain momentum.\nAs I noted earlier, we recently won a contract worth roughly $40 million for nickel alloy clad pipe materials to be produced and shipped in the second half of 2021.\nLooking ahead, we expect oil and gas market conditions to continue to improve with the coming economic recovery.\nWe anticipate ongoing growth in specialty energy markets, likely at a slower pace as compared to the first quarter.\nIn our smaller electronics and medical markets, Q1 produced mixed results.\nOn the positive side, we saw ongoing strong electronics customer demand for both Precision Rolled Specialty Strip in Asia and for our growing specialty alloy powders globally.\nThe latter materials are used in a wide variety of next-generation consumer products, including 5G networks, autonomous vehicles and advanced computing.\nWe expect continued year-over-year electronics market growth in 2021, but at a slower pace than the first quarter.\nIn our medical markets, in the first quarter, both MRI and implant material sales continued to be negatively impacted by COVID challenges that included restricted access to hospitals and lower elective surgery volume.\nAs we enter Q2, we're seeing increased forward order commitments.\nWe expect our sales in the medical market to improve in the second half of this year.\nFinally, another potentially significant development is a likely national infrastructure improvement plan currently unfolding in the U.S. ATI would indirectly benefit in two ways: first, this program will create jobs, leading to increased discretionary spending for travel and consumer goods.\nThe delivery of people, products and materials require airplanes, trucks and cars that consume fuel.\nThis will benefit ATI's two largest markets, aerospace and energy.\nSecond, and opportunistically, ATI will indirectly benefit from increased building material consumption.\nWhile ATI does not produce these basic materials, we're a key link in a cost-effective supply chain for those who do.\nOur HRPF is uniquely positioned to generate increased cash flow from rolling carbon steel slabs for domestic producers.\nDuring the next few minutes, I'll provide my thoughts in several key areas.\nFirst, our Q1 financial performance; second, an update on our liquidity levels; and third, an updated view on our 2021 outlook.\nAs a whole, ATI lost $0.06 per share in Q1, well ahead of our expected loss range heading into the quarter.\nIn many ways, our financial performance reflected benefits from our 2020 cost actions.\nThe cost reductions have positioned us to take advantage of the coming global economic recovery, particularly within commercial aerospace, our largest end market.\nAs Bob noted, increased domestic travel rates are giving Boeing and Airbus the confidence to increase narrowbody production rates.\nIn turn, we are seeing early demand signals for our specialty forgings and materials produced by the HPMC segment.\nLet me add some color to the Q1 results.\nHPMC sales decreased year-over-year compared to a robust prior year pre-pandemic quarter.\nBut as an encouraging sign that we have seen the bottom, HPMC sales increased nearly 10% sequentially.\nThis growth was led by nearly 30% gain in commercial jet engine sales and a 17% pickup in defense sales.\nWithin jet engines, we saw a significant sequential uptick in engine forgings demand.\nTo that end, we are pleased to note that we have moved from a minority to a majority share on several LEAP engine isothermal forge components.\nWe're encouraged by these trends and expect them to continue expanding across 2021, and as domestic travel rates increase.\nIn the defense market, our growth was largely attributable to forgings and materials for military jet engines.\nAs expected, airframe sales continued to lag due to ongoing customer destocking.\nSequentially, HPMC earnings margins improved significantly due to revenue growth and favorable product mix.\nWithin our jet engine sales, highly profitable next-generations forgings and materials comprised over 40% of the Q1 total, up from 35% and 19% in the prior two quarters, respectively.\nIn addition to product mix, margin enhancements included in our renewed LTAs provided a tailwind as did transitory benefit from rapidly rising cobalt prices during Q1.\nOverall, we're encouraged by the improving aerospace trends in both HPMC business units and expect to continue to gain momentum as Airbus and Boeing increase narrowbody production volumes.\nTurning to AA&S, segment revenues decreased 16% year-over-year largely due to a 25% decrease in Specialty Rolled Products, or SRP, business unit sales.\nThe decline in SRP sales was across all major markets, except automotive.\nSales at our STAL JV increased by over 50% year-over-year, fueled by demand for consumer electronics and elevated automotive production in China.\nLooking at the sequential revenue change, AA&S sales improved 4%, largely due to SRP's 15% increase in standard value stainless products, which generate minimal profit.\nAA&S segment EBITDA improved year-over-year and sequentially, led by record STAL earnings.\nOur Specialty Alloys & Components, or SA&C, business unit, along with STAL continued to generate double-digit percentage margins.\nThose business units are also well positioned to take advantage of coming demand in their respective markets.\nSRP posted a positive EBITDA this quarter.\nIt's important to note that nearly 75% of the SRP Q1 EBITDA was due to rising nickel and, to a lesser degree, ferrochrome prices in the quarter.\nIf this unpredictable benefit is removed, SRP earned an EBITDA margin of about 2% and generated a loss after appropriately considering depreciation and interest charges.\nThe SRP business has the potential to be a solid and consistent contributor to ATI's profitable growth story.\nSRP's first quarter results are a reminder of why a transformation is needed within this business.\nThe cost structure does not allow for acceptable returns, and we make far too many products that generate little or no margin.\nThe good news is that we know exactly what needs to be done to transform SRP into an outstanding business; exit Standard Stainless Sheet Products, consolidate the footprint to streamline product flow, and maximize production capabilities.\nThe cost structures in the SRP unit need to be fixed and the product mix improved.\nWe are on it.\nWe are hitting the milestones laid out in our transformational plan.\nSRP's performance will look dramatically different in 2022, no longer dependent on good luck from metal prices to generate meaningful profits.\nWe're optimistic about these changes, and we will keep you in the loop as the transformation unfolds.\nBefore jumping to the balance sheet, I want to highlight that we've limited year-over-year decremental margins to 16% this quarter.\nSoon, the conversation should shift from decremental margins to outsized incremental margins, driven by increasing aerospace volumes and ongoing cost structure reductions.\nLooking beyond the income statement, 2020's groundwork to strengthen our balance sheet and generate and preserve cash continues to benefit us.\nWe reshaped our debt maturity profile, shifting our next significant maturity to mid-2023, and we've lowered our annual interest costs.\nBeyond traditional base debt, we made progress on reducing the financial burden from our U.S. defined benefit pension plan in 2020.\nThe combination of strong pension asset returns and 2020 calendar year contributions overcame the decline in discount rates.\nThe result, an improved funding status and reduction in required 2021 pension contributions and expense.\nDuring the market chaos, we've maintained a strong total liquidity, ending the first quarter with roughly $540 million in cash and about $360 million of ABL availability.\nThis is below year-end 2020 levels due to our anticipated seasonal cash usage in Q1.\nWe will continue to actively manage our debt maturity profile in the coming quarters.\nWe will leverage available cash and liquidity to further improve our long-term leverage profile and our profitability.\nAs we've said several times today, the fundamentals underpinning our jet engine business are improving for both forgings and materials.\nWe anticipate HPMC's sequential revenue and earnings growth in Q2, driven by improving commercial aerospace, energy and defense demand.\nAs a result of the improved outlook, we've eliminated all planned Q2 facility outages and are preparing for an expected production ramp in the second half of 2021.\nThe ramp is needed to fulfill increased customer demand levels, including elevated isothermal forgings due to our share gains, exciting developments as we respond to the coming road.\nWithin AA&S, we have line of sight into STAL and SA&C for Q2.\nBut the ongoing USW strike clouds the visibility and degrades the near-term expectations for the SRP business.\nSticking with what we can accurately predict, we expect continued solid performance from STAL in Asia as customer demand remains strong.\nWe anticipate higher revenues and earnings from SA&C, driven mainly by defense end market sales.\nAnd lastly, in our SRP business, we see improvement in some end markets, but we'll be unable to capitalize on this strength if the USW strike continues.\nAs a result, SRP will produce and ship fewer materials in Q2 than we did in Q1.\nAdditionally, we expect a modest raw material headwind as the price of nickel has declined quarter to date.\nIn aggregate, we expect sequential Q2 financial improvements in our HPMC segment, along with continued solid results from our SA&C business and STAL JV.\nHowever, we are not able to provide Q2 earnings guidance due to the uncertainty caused by the USW strike.\nWe will return to providing quarterly earnings guidance in our normal cadence as soon as we can do so with confidence.\nDespite not being able to provide Q2 earnings guidance, we remain confident in our full year 2021 free cash flow guidance range of $20 million to $60 million, excluding pension contributions.\nA longer time horizon and actionable cash flow levers make achieving this metric more predictable.\nFrom a cadence perspective, we anticipate a working capital release in the second quarter that will likely be offset within the calendar year when inventories are rebuilt after a new labor agreement is reached.\nNow let's discuss the pension.\nLast quarter, we announced that we anticipated contributing $87 million to the pension plans in calendar 2021.\nDuring the first quarter, the federal government passed new pension plan legislation, effectively reducing our 2021 minimum contribution requirements.\nUnder new rules, we would not be required to make any further pension contributions in 2021.\nWhile we appreciate the flexibility that new rules provide, I want to be clear, we are committed to our pension glide path.\nWe intend to manage our net pension obligation to a fully funded status within a handful of years, given the anticipated recovery in our key end markets.\nWe will evaluate throughout the year what, if any, additional contributions will be made in 2021.\nWe will share those plans with you in future quarters.\nFor the time being, assume no further pension contributions this year as we ensure efficient capital allocation in the business.\nLet me wrap this up by saying that the team's aggressive 2020 cost reduction efforts, coupled with improving market conditions, have put ATI squarely on the path to recovery.\nFour out of our five business units are moving in the right direction and the need to transform our SRP business was confirmed by its Q1 financial results.\nOur North Star remains the same, and we are excited about the future.\nFor SRP specifically, the current production disruption is temporary.\nIt does not change our commitment or time line to reshape the SRP business into a more profitable, consistent and growing enterprise, one that out earns its cost of capital and competes for investment within our business portfolio.\nWe will be successful in this effort.\nI agree with you regarding our excitement for the future.\nA lot of great work being done by really some hard-working people across the globe for ATI.\nOur first quarter financial results showed solid sequential improvement and reinforced our belief that commercial aerospace recovery is on the horizon.\nDemand for new fuel-efficient planes is growing, and we can feel momentum building at ATI, particularly within our HPMC segment.\nImproving aerospace market conditions will create an outsized benefit for ATI as we've streamlined our cost structures and have higher shares of our critical customer programs.\nI'm confident that when these volumes return to pre-pandemic levels, we'll be an even stronger, more profitable company.\nTransformation is on track in our Specialty Rolled Products business.\nWithout significant and structural changes to rationalize our product portfolio, align our footprint and cost structure, the business will not survive against continuously intensifying global competition.\nWe're focused on building a leaner, more profitable SRP business that out earns its cost of capital, has substantial profitable growth opportunities and competes successfully for investment within the company.\nI'll close by saying that ATI is a growth-focused company, set to benefit from the coming commercial aerospace and broad economic recovery.\nWith a clear strategy and innovative team, we're taking action to accelerate our future.\nQuickly, there are a few parameters for today's Q&A session.\nFirst, please limit yourself to two questions to ensure time for all analysts questions.\nOperator, we're ready for the first question.\n", "role": "user" }, { "content": "q1 loss per share $0.06.\nlooking ahead to q2, expect continued modest demand recovery for our jet engine products.\nexpect to see continued margin improvement in our hpmc segment 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: Today's discussion is being broadcast on our website at atimetals.com.\nParticipating in the call today are Bob Wetherbee, President and Chief Executive Officer; and Donald Newman, Senior Vice President and Chief Financial Officer.\nFor today's call, we will not display or advance slides as Bob and Don speak.\nTheir comments will focus on highlights and key messages.\nThe slides provide additional color and details on our results and outlook.\nThey are available on our website at atimetals.com.\nIt's an understatement to say that 2020 has been a challenging year for all of us, especially those who serve the commercial aerospace market.\nDespite these headwinds, the relentless ATI team continues to rise to the challenge, guided by the leadership priorities we established at the outset of the pandemic.\nFirst, how we're taking control of what we can control, thus accelerating cost savings and strengthening our position.\nSecond, our strong balance sheet puts us in an excellent position to weather storms ahead as well as to fuel our growth.\nSo first, where we are today.\nOur customer connectivity continues to give us the insights to assess market dynamics in the moment.\nFrom this, we gain conviction to make critical decisions, aligning our cost structures and inventory levels with changing demand expectations.\nWe've acted thoughtfully and with urgency to reshape ATI for 2021 and beyond.\nAs a result of these proactive efforts, our third quarter financial results significantly exceeded our previous guidance.\nWe accelerated benefits from our cost savings initiatives through aggressive implementation.\nThis included capacity up, gold dark and quiet facility islands reduced our fixed costs, minimized variable costs with execution on our restructuring programs, eliminated costs to align with demand declines, reduced overhead.\nWe've intensely reviewed every administrative and nonproduction related expense continuing only what was critical.\nOverall, we've significantly variabilized our cost structure.\nCosts historically viewed as fixed are now turned on and off in sync with demand, which gives us tremendous control over our costs.\nThis will be a lasting impact of the actions we've taken during the crisis.\nThrough it off, our people have been extraordinary.\nFirst and foremost, they're keeping each other safe, while efficiently and consistently delivering critical materials and components to our customers.\nThe frequent production adjustments we made in response to demand shifts and end market forecasts have not been easy for them.\nGrowing levels and shift schedules have fluctuated as a result.\nI sincerely appreciate the entire team's effort and dedication and personal economic sacrifices.\nTheir continued actions demonstrate a shared commitment to ATI's future success.\nThe deliberate actions we've taken and will continue to take are crucial to our ability to emerge a stronger company as the economy recovers.\nLooking ahead, we're confident demand will eventually recover.\nWe expect these difficult times to continue for several quarters to come, but we do believe we're reaching the bottom with some signs of upcoming stability.\nSecondly, let's talk about our balance sheet and the solid position it puts us in.\nWe've worked diligently to ensure ample liquidity levels and a manageable debt maturity schedule.\nOur strong balance sheet gives us confidence to manage through the COVID crisis and fuel our future growth.\nWe're fueling growth in three ways: first, based on customer commitments, we're investing capital to enable strategic share gains and new business awards that we'll start to see in 2021.\nNext, organically expanding our presence in adjacent high-value markets, where our material science expertise is valued.\nAnd finally, when the time and economics are right, we'll pursue acquisitions to rapidly build out scale, expand capabilities and capture profitable core market opportunities.\nAs we accomplish our growth goals, we'll intensify our presence in aerospace and defense, materials and components.\nWe'll continue leveraging our material science capabilities and advanced process technologies to generate aerospace like margins in adjacent markets along the way.\nLooking forward, we're confident that the demand for commercial aerospace products will recover.\nWe see it as growth deferred, not lost.\nNo matter what form you believe the coming economic recovery will take, it could be a leak, could be a U, it could be L-shaped.\nWhen you're at the bottom, it's difficult to predict when you'll reach the other side.\nBut we know we'll get there.\nWe're positioning ATI to emerge stronger, leaner and more efficient, no matter how the recovery comes.\nThere are some examples of how I believe we're doing just that.\nWe're expanding our presence in growth markets like defense.\nWe have solid positions in adjacent markets that are likely to recover faster than commercial aerospace and can generate aerospace-like profitability.\nLastly, our efforts to lower costs and streamline our manufacturing footprint while deploying growth capital will pay dividends for the long term.\nBroadly speaking, and not surprisingly, our Q3 sales across most markets were negatively impacted by the ongoing pandemic and resulting economic downturn.\nDefense remains a notable positive exception.\nA little more color on our view of what we expect going forward.\nLet's start with commercial aerospace.\nBoth jet engine and airframe continued to decline significantly versus the prior year.\nAggregate year-over-year sales were down 60% in the third quarter, driven by factors we're all familiar with: quarantines, travel restrictions and low 737 MAX production.\nAggressive jet engine customer inventory destocking in the near term will better align future production levels with demand.\nFourth quarter jet engine product sales will remain relatively weak as quarantines began to slowly recover.\nSpecialty materials will likely lag for an additional couple of quarters.\nAPI sales into airframe applications will remain subdued for the balance of 2020 and likely throughout 2021 as the impact of announced future wide-body production rate reductions work their way through the supply chain.\nIn 2021, ATI will benefit from engine market share gains and new airframe business.\nThe positive impact from these wins will increase over time as aerospace industry volumes recover.\nOur second core market, defense, remains a source of strength.\nExcluding titanium armor, ATI's diversified defense sales were up more than 20% year-over-year, led by naval nuclear and military aerospace growth.\nTitanium armor plate sales were down significantly due to timing for both a domestic and an international program.\nWe're investing resources to accelerate growth in the defense market, leveraging our material science capabilities and advanced process technologies to develop and produce materials and components to both power and protect.\nNear term, we expect continued growth in the fourth quarter and into 2021.\nNext, let's talk about my thoughts on three important adjacent end markets.\nThird quarter sales were down significantly in the energy and medical markets and up in electronics.\nWhen it comes to energy's oil and gas submarket, we saw a lack of end-customer demand and a resulting inventory glut, reducing exploration and downstream processing activities worldwide.\nWe expect this market to remain weak in the fourth quarter.\nA bright spot within energy is the specialty energy submarket, including solution control, nuclear and renewables.\nThese sales grew year-over-year.\nAnd we expect the specialty energy market to continue to outperform the larger hydrocarbon-based markets in the fourth quarter, mainly driven by large international pollution control projects.\nOur medical market is principally comprised of biomedical implants and MRI materials.\nSales versus prior year were lower to customers in both categories, mainly due to the challenges presented by COVID.\nPatients postponed elective surgeries and hospitals limited facility access to equipment suppliers.\nLooking ahead, we believe medical sales will accelerate as patients regain confidence to reenter their medical facilities, either due to an effective COVID vaccine or disease treatment protocols.\nFinally, electronic sales moved higher year-over-year.\nThis is mainly due to ongoing consumer goods production in support of new product launches and year-end holiday sales.\nWe anticipate modest growth trends to continue in the fourth quarter.\nI'll spend the next few minutes sharing highlights in three key areas: one, our better-than-expected third quarter financial performance; two, our strong balance sheet and cash position; and three, a look at our Q4 and 2021 expectation.\nFrom a performance standpoint, the adjusted earnings per share loss of $0.38 per share in Q3 is significantly better than our previous guidance of a loss of between $0.62 and $0.72 per share.\nOur Q3 performance reflects accelerated cost reductions and an improved mix in portions of our business.\nFirst and foremost, we are managing decisively.\nWe are making the most of external demand despite market headwinds, and we're controlling what we can, our costs and capital deployment.\nConsider this, our third quarter revenue dropped by more than 40% versus prior year, including a 60% decline in our high-value commercial aerospace business.\nThe revenue drop was largely due to market factors that were not within our control.\nWhen market declines became clear earlier this year, we responded quickly, focusing on cost containment.\nBenefits of those efforts can be seen in our Q3 results.\nDespite the 40% drop in revenue, we posted a 25% year-over-year decremental margin in Q3.\nThat's a meaningful improvement from the 28% decremental margins captured in Q2, clear improvement resulting from quick action.\nOur cost actions are having meaningful impact and they're accelerating.\nAs Bob described it, we have significantly variabilized our cost structure.\nCosts once considered fixed are now variable.\nThis means we are better prepared to deal with future demand fluctuation.\nAlso keep in mind that structural cost savings will accelerate profitability in the recovery, expanding margins and increasing our cash conversion.\nLooking beyond the income statement, our efforts to preserve free cash flow are producing results as well.\nWe expect to be free cash flow positive in 2020.\nThis is made possible through capital spending discipline and our ability to convert working capital into cash.\nThey took quick actions to protect cash in the near term while maintaining our ability to grow and be recovery ready.\nWe ended the quarter with approximately $950 million of total liquidity, including $572 million of cash in the bank.\nOur debt maturity profile also adds strength to our financial position.\nOur next meaningful debt maturity does not occur until 2023, three fiscal years away.\nWe are focusing on three key levers to drive cash generation: cost structures, inventory levels and capex.\nExpect to see continued focus on these three areas in 2021 as we adapt our business to fit dynamic end market demand.\nAt the same time, we'll continue to protect our strong balance sheet.\nThese actions will enable us to manage through the down cycle and capitalize on opportunities in the coming up-cycle.\nIn terms of outlook, looking ahead to the fourth quarter, we anticipate increasing demand stabilization in commercial aerospace.\nThis starts with jet engine OEMs working to better align production and demand levels.\nAirframe OEM inventory destocking is expected to persist in the fourth quarter.\nBeyond aerospace, some industrial markets are seeing modest recovery.\nOthers, namely oil and gas, will likely remain at low levels.\nAs a result, we expect a fourth quarter adjusted earnings per share loss in the range of $0.36 to $0.44 per share, similar to our third quarter's adjusted EPS.\nMoving to our free cash flow guidance.\nOur consistent efforts to generate and preserve cash have produced tangible results.\nWe reduced managed working capital by $115 million in the third quarter in the midst of the steep economic decline.\nWe expect to further reduce inventory in Q4.\nJust as the team quickly pivoted to cost reductions, we managed our capex spending to better match demand.\nTo that end, we're again lowering our capital spending target for the full year.\nOur updated capex forecast range is $125 million to $135 million, about 60% of the original 2020 projections.\nWe are raising our full year 2020 free cash flow expectations to a range of $135 million to $150 million before pension contribution.\nWe're able to do this because of the successful achievements in working capital, capex and cost structures, a great accomplishment in the midst of a very challenging environment.\nLooking beyond the fourth quarter, we will stay diligent to preserve or even improve on the gains that we made in 2020.\nFirst, we believe that working capital represents an opportunity for further cash flow improvement.\nAt the end of the third quarter, managed working capital was approximately 50% of revenue.\nThis compares to 30% at the end of 2019.\nWe understand what it takes to get back to those 2019 levels, and we plan to make further improvements in 2021.\nNext, we'll continue to keep a close eye on our capital spending.\nWe'll balance the need to fund growth and improve manufacturing efficiency with ongoing lower demand levels.\nFinally, we will stay disciplined on costs.\nWe will carefully preserve our structural reductions and minimize additions as volumes return to the business.\nThe way we operate today is fundamentally different than how we used to work.\nWe will strive to maintain the hard-fought gains.\nYour points were right on.\nIt's been a real team effort in a very uncertain time and much appreciate the contributions of everyone who's part of ATI, our customers and our suppliers.\nOur comments today focused on what matters most to our shareholders and to us.\nThese priorities are at the core of how we lead on a daily basis.\nFirst, we're managing decisively in times of great market uncertainty.\nThat includes quickly and effectively adjusting our cost structures and inventories to match demand, and we're keeping our people safe.\nSecondly, we're preserving cash and maintaining liquidity.\nWe're preserving our ability to deploy cash accretively for our shareholders.\nWe'll be recovery ready, capitalizing on industry volume growth as well as our strategic share gains and new business awards.\nFinally, we're working with our customers, new and long standing, who value our material science capabilities and advanced process technologies.\nOur goal is to be integral to their success, helping them grow, solving even greater challenges together, in so doing, earning an ever-increasing share of their business.\nWe're taking the actions necessary to emerge from this crisis a stronger, leaner and more focused ATI.\nScott, back to you.\nOperator, we are ready for the first question.\n", "role": "user" }, { "content": "q3 adjusted loss per share $0.38 excluding items.\nexpect q4 to be negatively affected by the ongoing pandemic.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Today's discussion is being broadcast on our website at atimetals.com.\nParticipating in today's call are Bob Wetherbee, President and Chief Executive Officer; and Don Newman, Senior Vice President and Chief Financial Officer.\nBob and Don will focus on full year and fourth quarter highlights and key messages, but may refer to certain slides within their remarks.\nThese slides are available on our website atimetals.com and provide additional color in detail on our results and outlook.\nDuring the Q&A session, please limit yourself to two questions.\nNo surprise, we're glad 2020 is over.\nIt was a challenging year amplified by a significant uncertainty, yet we made the best of it.\nOur team persevered and focused on doing the right things quickly and decisively to position ATI to emerge from the crisis stronger, a company focused on aerospace and defense.\nFor the year, our free cash flow generation was positive overall at $168 million pre-pension contributions, free cash flow exceeded our full year guidance by 18%.\nIn today's call, my remarks will focus on three major things: the leadership priorities that drove our actions and results; our transformation to a more profitable aerospace and defense focused company; and our outlook for our key markets.\nSo, let's start with our leadership priorities.\n2020 began with reasonably strong customer demand and without a hint of a looming global pandemic.\nATI posted solid first quarter 2020 financial results.\nWe enjoyed the benefit of stable jet engine demand bolstered by increased customer volumes that were delayed from the second half of 2019.\nWhile these results were made for a difficult year-over-year comp in the first quarter 2021, it did help to offset the significant headwinds we've faced in the subsequent three quarters of 2020.\nWhen the pandemic took hold late in the first quarter, we responded quickly and decisively.\nThe leadership priorities shown on Slide 4 drove our results and continue to guide our actions today.\nFirst and foremost, we focused on keeping our people safe.\nSafety is a core ATI value.\nWe quickly enacted policies and procedures around the world to ensure a virus-free work environment, mitigating the risk of spread.\nOur efforts continue to be largely successful.\nWe remain vigilant to ensure our people go home safely each and every day.\nSecond, we took the necessary actions to preserve cash and maintain liquidity.\nWe ended the year with more than $950 million of total liquidity, including nearly $650 million of cash on hand.\nWe extended our debt maturity profile and now have no significant debt maturities before mid-2023.\nDon will cover some additional achievements in more detail in a few minutes.\nThird, we proactively and aggressively optimize our cost structure.\nOur close customer relationships enabled us to match capacity with the rapidly declining demand expectations.\nWe did what was necessary to ensure ATI would not only survive the global recession, but emerged stronger in recovery.\nBy quickly reducing our costs, we've minimized detrimental margins limiting the steep demand drops impact on our bottom-line.\nWe eliminated approximately $170 million of costs in 2020.\nWe continue to pursue operational improvements.\nWe expect total cost reductions to grow to at least $270 million over the next few quarters as actions implemented in the second half of 2020 reached their full run rate.\nImportantly, we expect about $100 million of these cost savings to become structural, continuing to benefit ATI as we return to growth over time.\nIt's worth noting that the additional savings we announced in December as part of our strategic transformation are incremental to these savings.\nFourth, we focused on supporting our customers through continued strong execution and operational excellence.\nOur customers count on us to deliver the mission critical materials and components to keep their planes flying, vehicles moving, energy flowing and medical equipment and electronics working flawlessly.\nI'm proud of how the team has led through 2020.\nFocused on our people's health, our company's financial health and strengthening our customer partnerships.\nBeing recovery ready, our fifth leadership priority positions ATI to serve our customers and become a more sustainably profitable company over the long term.\nWe've been rewarded with more of our customers' business as a result.\nIn 2021, our share of jet engine materials and components on key programs is increasing.\nWe've also won new business on airframes and are well-positioned to win upcoming specialty energy projects.\nThe bottom line here, we've accomplished a lot in 2020.\nOur actions created the necessary foundation for the transformation we announced in December.\nYou may recall, we're exiting standard stainless sheet products by year-end 2021 as we redeploy our capital to high return opportunities.\nThese actions are major steps to becoming a more profitable-focused aerospace and defense leader.\nWe're accelerating the creation of significant shareholder value.\nIn eight weeks since the announcement, we've hit the ground running and are executing.\nOn Slide 5, you'll see two of the leading indicators we're using to track our progress toward this transformation: a streamline footprint and an improved product mix.\nWe have a third metric that we'll share in future progress updates.\nIt attracts working capital release to largely self-funded projects' capital expenditures.\nSo, let me take a moment to review the major actions we're taking.\nFirst, we're consolidating our Specialty Rolled Products finishing operations to create a more competitive flow path, focused on increasing production of high-value differentiated materials.\nThis includes closing five plants within the AA&S segment by year-end 2021.\nIn the fourth quarter, we closed two finishing facilities: one in Western Pennsylvania and the other in Connecticut.\nThe three additional closures are expected in the second half of 2021.\nSecond, we're on track to exit 100% of standard value stainless sheet products by year-end 2021.\nIn the fourth quarter, sales of these products represented 17% of AA&S segment revenues down from 22% in full year 2019.\nAnd finally as a reminder, on the third action, we intended largely self-fund upgrades to our specialty finishing capabilities in Vandergrift Pennsylvania.\nThis investment of $65 million to $85 million spread over three years will be largely self-funded through working capital releases, triggered by the transformation.\nWe'll make progress on this initiative as we streamline our footprint and we'll report our results as part of our next transformation update later in 2021.\nSo let's cut to the chase here.\nWith these actions, we're on our way to a leaner, more competitive aerospace and defense focused powerhouse, poised to substantially increased margins in the AA&S segment and generate a significantly higher return on capital for ATI.\nSuccess is largely within our control.\nWe know we have more work to do and we're doing it.\nWith the demand recovery that we know will come, we're confident we'll meet our longer term objectives.\nBefore Don provides detail about the fourth quarter financial results, let me share my thoughts about our recent experience in key end markets and provided near to mid-term outlook for each.\nLet's start with commercial aerospace, our largest end market.\nAs predicted in our last update, demand for jet engine forgings increased modestly in the fourth quarter.\nDemand for engine-related specialty materials principally ingot and billet continue to soften as customers destock to align inventories with near-term demand expectations.\nLooking ahead, we expect jet engine product sales to recover slowly in the first half of 2021 with the pace increasing in the second half of the year.\nWe expect continued weakness in airframe sales throughout 2021 due to excess supply chain inventories.\nThis is consistent with the guidance we provided last quarter, which already accounted for decreasing widebody production rates.\nNext up, defense sales.\nIn the fourth quarter we returned the year-over-year double-digit percentage growth.\nEach of ATI's defense market verticals expanded.\nNaval nuclear products in support of the U.S. Navy's increased long-term demand for new ships grew by nearly 50%.\nMilitary aerospace and ground vehicle armor each grew at a strong double-digit rate versus the prior year.\nWe expect continued defense growth in 2021 albeit at a slower pace due to uneven demand levels across major platforms supplied by ATI.\nLet me give a couple of examples to illustrate what I mean by uneven demand across platforms.\nIn naval nuclear, we expect continued demand growth.\nIn ground vehicle armor, we expect a temporary contraction due to a one-year pause in demand on the customer's major program.\nLonger term, we expect ATI's advanced materials to be integral to the success of future government defense initiatives such as hypersonics.\nWe're also pursuing increased participation and defense applications in other parts of the world.\nShifting to our energy markets.\nSales continue to decline in the fourth quarter compared to prior year, but at a slower pace than in the third quarter.\nOur fourth quarter oil and gas and chemical processing submarket sales dropped by more than 35%.\nSales to our specialty energy markets were more resilient declining only 6% versus the prior year.\nGrowth continued in our civilian nuclear and pollution control product sales while demand for electrical energy generation products remained weak.\nWe expect fourth quarter trends to hold in the coming quarters as demand for oil and gas remain soft, especially energy demand will improve due to ongoing nuclear refueling requirements and strength in Asia from land-based gas turbines, solar and applications to reduce fossil fuel emissions.\nRobust demand for our consumer electronics products was driven by two factors: first, customer product launches in China; and second, the increased need for our specialty alloy powders to support the growth of next-generation consumer products globally.\nWe expect increased demand levels to continue in 2021 with first quarter sales falling sequentially mainly due to the impact of Lunar New Year shutdowns with our precision rolled strip operation in China.\nOur medical markets continued to decline, both for MRIs and implant materials, primarily due to the effects of the pandemic.\nFewer elective surgeries and restricted hospital access to install new equipment have reduced end customer demand and created excess supply chain inventory.\nWe expect these negative trends to continue until vaccination programs reach critical mass.\nOver the next few minutes, I will focus on highlights from two key areas: first, our Q4 financial performance; and second, our expectations for 2021.\n2020 was a difficult year for all of us.\nFor ATI, it started with 737 MAX challenges that carried over from 2019.\nOf course, those challenges grew exponentially with the global pandemic.\nIts impact on our key end markets including commercial aerospace, energy, and medical was profound.\nEven with those challenges, we took the strategic and tactical steps necessary to improve our business and position it for a healthy future.\nNow, let's discuss Q4 performance.\nFor the third quarter in a row, our results exceeded expectations.\nIn the Q3 earnings call, we noted seeing signs of stabilization in the number of our key end markets by commercial aerospace.\nAt that time, we said we expected our Q4 performance to be similar to Q3.\nIn fact, Q4 revenue increased 10% to $658 million versus Q3 levels.\nWe see this as a further indication of stabilization in our key end markets and a sign that the worst of the lingering aerospace downturn is behind us.\nOur adjusted EBITDA increased 39% to $23 million in Q4 from Q3 levels.\nAdjusted earnings per share was a loss of $0.33 per share in Q4.\nThis was better than the optimistic end of our earnings per share guidance range, which was a loss of between $0.36 and $0.44 per share.\nOur improved performance was largely due to stronger cost reduction actions and a higher-than-expected sales.\nSpeaking of cost reductions, in our early 2020 we announced targets to cut costs by between $110 million and $135 million for the year.\nWe increased those targets multiple times in 2020 as we built momentum.\nIn the last earnings call, we shared a target of $160 million to $170 million of 2020 savings.\nThe final tally, reductions near the high-end of our guidance and nearly $170 million in 2020.\nThat means a run rate of $270 million to $180 million of cost reductions that will benefit full year 2021.\nThose cost reductions, continue to contribute to favorable detrimental margins, which are below 30% for the third consecutive quarter.\nWe expect approximately $100 million of those reductions to be structural.\nThose take outs should continue to benefit earnings in the up cycle, increasing incremental margins in the future.\nWorking capital actions initiated in Q2 and Q3 gain momentum in Q4.\nOur free cash flow was $168 million for full year 2020, well in excess of the top end of our guidance range of $135 million to $150 million.\nWe're extremely pleased that we closed 2020, with nearly $650 million in cash and more than $950 million of total liquidity.\nThat's a great outcome and one that we can build on in the future.\nWe ended Q4 with managed working capital at 41% of revenue, down 1,000 basis points from the end of Q3, great progress.\nOur goal is to reduce managed working capital for less than 30% of revenue over time.\nI can assure you this will remain a key focus in 2021 and beyond.\nIn addition to a strong cash and liquidity position, we continue to maintain a manageable debt maturity profile.\nOur nearest significant debt maturity does not occur until Q3 of 2023.\nAnother area of success in 2020 was CapEx management as we adjusted capital spending to fit the new demand levels.\nWe started 2020 with a CapEx forecast $200 million to $210 million.\nActual CapEx spend in 2020 totaled $1.37 million, 33% below the initial forecast.\nWe manage that reduction by carefully analyzing future demand requirements, including recent share gains and adjusting timing on large growth-related projects.\nWe also ensured that our facilities were not over maintained in the current period of low demand.\nWe understand the importance of being recovery ready and we are prepared to handle our customer's desired pace of recovery.\nNow, let's move to pensions.\nDespite the broader demand challenges, we also made meaningful strides managing our pension glide path.\nOur goal is to reduce our net pension obligations each year.\nWe ended 2020 with a net pension liability of $674 million that's nearly $60 million lower than the opening 2020 level.\nStrong pension asset performance and Company contributions in 2020 more than offset an 80 basis point decrease in discount rates.\nThis drove the drop in net liability.\nThe lower net pension level at the end of 2020 brings multiple earnings and cash flow benefits in 2021 and the coming years.\nI will detail that when I share the 2021 outlook.\n2020 will be a year remembered for severe economic challenges and personal hardships for many.\nAs a company, we have worked through this crisis to improve the business and prepare for the upcoming recovery.\nThe team's work on strategic positioning, liquidity and cost structure's should benefit our shareholders into the future.\nWith that, let's look ahead to 2021.\nWhile we are seeing stabilization there is still uncertainty in terms of end market recovery timing as the COVID vaccines are in the early stages of distribution.\nWith that uncertainty we are going to continue the guidance structure that we started in Q2 2020.\nWe will provide earnings per share guidance for the upcoming quarter, as well as certain elements of our full year cash flows that we believe we can reasonably estimate.\nWe'll also provide insights into what we're seeing as key trends and indicators in our business.\nBob shared his thoughts regarding our key end markets.\nLet me recap our forward demand views and the pace of recovery within our business.\nWe expect jet engine product sales to recover slowly in the first half of 2020 with the pace increasing in the second half.\nWeakness in airframe materials will continue throughout 2021 consistent with our prior estimates.\nOur defense sales will likely grow it at a more modest pace, compared to 2020 rates.\nRecovery in our other significant markets, namely, energy, and medical is dependent on the global pace of containing the pandemic.\nFinally, our electronic sales should continue to expand.\nWe expect adjusted earnings to improve in Q1 of 2021 relative to Q4 2020 due to a modest demand pickup in segments, continued cost management and lower pension expense.\nWe expect to Q1 2021 adjusted earnings per share loss of between $0.23 and $0.30 per share.\nLet's talk about free cash flow.\nWe expect to generate between $20 million and $60 million of free cash flow in 2021 prior to our required US defined benefit pension contributions.\nAlthough we get there using the same disciplined applied in 2020 by managing our cost, being disciplined with capital investments and reducing manage working capital and pursuit of our working capital targets.\nNow CapEx; we plan to spend between $150 million and $170 million on capital investments in 2021.\nWe adjusted our 2020 capital spending to reflect the new demand levels.\nIn 2021 we will maintain that discipline but plan to increase spending marginally in anticipation of coming market recovery.\nAs announced in December, we will also invest modestly to enhance specialty finishing capabilities within our specialty rolled products operations.\nI have good news on our expected 2021 pension plan contributions.\nAs you know contributions to the US pension plans in 2020 were $130 million.\nDue in part to strong 2020 pension asset returns required contributions to the US plans are anticipated to be $87 million in 2021, a reduction of more than $40 million year-over-year.\n2021 pension expense will also decrease dropping $17 million year-over-year.\nPension expense will be $23 million in 2021, down from $40 million of recurring pension expense in 2020.\nIn regard to working capital, we expect to continue improving our levels in 2021.\nWe will pursue our goal of returning working capital levels to 30% of sales as our key end markets recover.\nWorking capital reductions related to our transformational project, but will also support the significant improvement.\nOverall we expect working capital to be a modest source of cash in 2021 even after contributing significantly to our cash balances in 2020.\nFinally, in terms of income taxes we do not expect to be a cash taxpayer in the US for years to come.\nThat said, we do anticipate paying taxes in certain foreign jurisdictions.\nWe are not able to provide an estimated annual tax rate for 2021 due to uncertainty of the rates and low earnings.\nHowever we can say that we expect to pay between $10 million and $15 million in cash taxes during the year.\nWe are proud of what our team has achieved in 2020 and look forward to continuing to build on our efforts to make ATI a leaner and more profitable company.\nWe are well positioned to benefit from the coming aerospace recovery.\nWell, there you have it some pretty good outcomes and we're proud of it, we accomplished a lot in 2020.\nEven still great to be starting 2021 was a clear plan and were boosted by the first signs of favorable multi market trends we've seen in over a year.\nAs Don described, we ended the year with a strong performance in a challenging market environment.\nOur progress in 2020 was a total team effort that delivered results.\nWe worked diligently to control what we could and responded nimbly to where we couldn't.\nOur entire organization remains relentlessly focused on cash generation.\nI'm proud of how we're living our values, guiding us every step of the way.\nToday, in 2021 we still battle a fair amount of uncertainty but there is already a lot less turbulence than we saw last year.\nWe're gaining velocity aligned and accelerating in a clear direction as we move ahead.\nWe're well positioned to emerging this downturn leaner more profitable ATI.\nA fierce competitor not waiting for markets to recover as we gain momentum.\nScott, back to you.\nOperator, we are ready for the first question.\n", "role": "user" }, { "content": "q4 adjusted loss per share $0.33.\nq4 sales rose 10 percent to $658 million.\nactions to exit standard stainless sheet products and enhance high-return capabilities on-track.\nlooking ahead to q1, we expect a continued difficult market environment.\nq1 2021 compares to a robust pre-pandemic quarter for ati that included a surge in wide-body jet engine product sales.\nfor full year 2021, we are optimistic that worst is behind us.\nexpect our demand to improve in second half of 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: Factors that could cause such material differences are outlined on Slide 25 and are more fully described in our SEC filings.\nWe appreciate you joining us and your interest in Atmos Energy.\nYesterday, we reported fiscal '22 first quarter net income of $249 million, a $1.86 per diluted share.\nOur first quarter performance was in line with our expectations, reflecting the ongoing execution of our operating, financial and regulatory strategies.\nConsolidated operating income decreased to $276 million in the first quarter, primarily due to a $39 million decrease in revenues associated with the refund of excess deferred tax liabilities.\nAs a reminder, beginning in the second quarter of fiscal '21 and through the end of last fiscal year, we reached an agreement with regulators in various states to begin refunding excess deferred tax liabilities.\nGenerally, over a three to five-year period, these refunds reduce revenues throughout the fiscal year when those revenues are billed.\nThe corresponding reduction in our interim annual effective income tax rate is recognized at the beginning of the fiscal year.\nTherefore, period-over-period changes in revenues and income tax expense may not be offset with interim periods that will substantially offset by the end of the fiscal year.\nExcluding the impact of these excess deferred tax liability refunds, operating income increased $16 million over the prior-year quarter.\nSlide 5 summarizes the key performance drivers for each year operating segments.\nRate increases in both of our operating segments, driven by increased safety reliability capital spending totaled $47 million.\nContinued robust customer growth and our distribution segment increase operating income by $4 million.\nIn the 12 months ended December 31st, we added 55,000 new customers, which represents a 1.7% increase.\nThese increases are partially offset by a $20 million increase in consolidated O&M expense.\nAs a reminder, in the prior-year quarter, we deferred non-compliant spending to fight in the fiscal year.\nAs we evaluated our customer load during that time period.\nTherefore, the period-over-period variance partially reflects this time indifference.\nThe first quarter increase is primarily driven by increased pipeline maintenance activities.\nConsolidated capital spending increased to $684 million, a $227 million period-over-period increase reflecting an increased system of modernization spending in our distribution segment.\nSpending to close out Phase 1 of APT's Line X and Line X2 projects and project timing.\nWe remain on track to spend $2.4 billion to $2.5 billion of capital expenditures this fiscal year with more than 80% of the spending focused on modernizing the distribution and transmission network, which also reduces methane emissions.\nWe're also on track with our regulatory filings.\nTo date, we have implemented $73 million in annualized regulatory outcomes excluding refunds of excess deferred tax liabilities.\nAnd currently, we have about $36 million in progress.\nSlides 17 through 24 summarize these outcomes.\nAnd Slide 16 outlines our planned filings for the remainder of this fiscal year.\nTo date, we have completed over $1 billion of long-term financing.\nFollowing the completion of the $600 million 30-year senior note issuance in October, we executed four sales rates under our ATM program for approximately 2.7 million shares for $260 million, and we settled forward agreements on 2.7 million shares or approximately $262 million.\nAs of December 31st, we were probably $295 million in net proceeds available under existing forward sale agreements.\nAs a result of this activity, we've now priced a substantial portion of fiscal '22 equity needs and anticipate satisfying remaining equity needs through our ATM program.\nAs a result of this financing activity, direct recapitalization excluding the $2.2 billion of winter storm financing, was 59% as of December 31st.\nAdditionally, we finished the quarter with approximately $3.1 billion of liquidity.\nIn January, we completed the issuance of $200 million of long-term debt through [Inaudible] our existing 10-year 2.625% notes due September 2029.\nThe net proceeds were used to pay off or $200 million term loan that was scheduled to mature in April.\nFollowing this offering, excluding the interim winter storm financing, a weighted average cost of debt decreased to 3.81% and our weighted average maturity increased 19.23 years, which further strengthens our financial profile.\nAdditional details for financing activities or equity forward arrangements, as well as our financial profile, can be found on Slides 7 through 10.\nAnd we continue to make progress on securitization.\nYesterday, the Texas Railroad Commission unanimously issued a financing order authorizing the Texas Public Financing Authority to issue custom rate relief bonds to securitize costs associated with winter storm Uri over a period not to exceed 30 years.\nWe currently anticipate the securitization transaction will be completed by the end of our fiscal year.\nUpon receipt of the securitization funds, we will repay the $2.2 billion of winter storm financing we issued last March.\nAnd in Kansas, we started our securitization proceedings at the Kansas Corporation Commission in late January.\nBased on the current procedural schedule, we are anticipating a financing order by the end of our fiscal third quarter.\nOur first quarter performance was a solid start in the fiscal year, the execution of our operational, financial, regulatory plans is on track, which positions us well to achieve our fiscal '22 earnings per share guidance of $5.40 to $5.60.\nDetails around our guidance can be found in Slides 12 and 13.\nIt is through your dedication, your focus, and the effort that we safely provide natural gas sales to 3.2 million customers in 1,400 communities across our eight states.\nAnd as you just heard, we're off to a great start.\nThe results, Chris summarized, reflect the commitment of all 4,700 Atmos Energy employees as we work together to continue modernizing our natural gas distribution, transmission, and storage systems on our journey to be the safest provider of natural gas services.\nDuring the first quarter, we achieved several project milestones to further enhance the safety, reliability, versatility, and supply diversification of our system.\nFor example, at APT, we placed into service Phase 1 of a 2-phase pipeline integrity project that will replace 125 miles of Line X. As a reminder, Line X runs from Waha to Dallas and is key to providing reliable service to the local distribution companies behind the APT system.\nPhase 1 replaced 63 miles of 36-inch pipeline.\nPhase 2 includes an additional 62 miles of 36-inch pipeline and is anticipated to be completed late this calendar year.\nAdditionally, we completed the first of a 3-phase project to replace our existing Line S2.\nThis 91-mile 36-inch project will provide additional supply from the Haynesville and Conn Valley shale plays to the east side of the growing Dallas-Fort Worth Metroplex.\nPhase 1 replaces 21 miles of this line and Phase 2 will replace an additional 18 miles and is expected to be completed late this calendar year.\nPhase 3, which will replace the remaining 52 miles is expected to be in service in 2023.\nDuring the completion of Phase 1 for Line X and Phase 1 for Line S2 our teams used recompression practices to avoid venting or flaring over 70,000 metric tons of carbon dioxide equivalent.\nThis is an excellent example of how Atmos Energy's environmental strategy is being integrated into our daily operations.\nAPT's third salt-dome cavern project at Bethel is now approximately 80% complete and remains on track to be placed in service late this calendar year.\nAs a reminder, this project is anticipated to provide an additional five to six Bcf of Cavern storage capacity.\nAs I mentioned during our November call, we have started work on a 22-mile 36-inch line that will connect the southern end of the APT system with a 42-inch Kinder Morgan Permian Highway line that runs from Waha to Katy.\nThis new line will support the forecasted growth and increased supply diversity to the north of Austin in both Williston and Travis County in Texas.\nThis line is expected to be in service in late December of this year.\nIn addition to those system modernization projects, we continue to make progress in advancing our comprehensive environmental strategy that is focused on reducing Scope 1, 2, and 3 emissions and reducing our environmental impact from our operations in the following five key areas, operations, fleet, facility, gas supply, and customers.\nAt APT storage fields, we are making progress with the installation of the remaining gas cloud imaging cameras for continuous methane monitoring and anticipate completion by the end of this fiscal year.\nOur RNG strategy focuses on identifying opportunities to transport RNG for our customers.\nWe currently transport approximately eight Bcf a year and anticipate another four projects to come online within the next 12 to 18 months.\nThose four projects are expected to provide an additional Bcf a year of RNG capacity.\nFurthermore, we are evaluating approximately 20 opportunities that could further expand our RNG transportation.\nTwo, zero net energy homes are underway in Texas, one in Taylor and the other in Dallas.\nThe home in Taylor is being developed through our partnership with the Williamson County Habitat for humanity, and we estimate the home to be completed in late March.\nAnd in Dallas, we are working with the Dallas habitat humanity and estimate construction of this zero net energy home to begin mid-March.\nThese homes use high-efficiency natural gas appliances doubled with rooftop solar panels and insulation to minimize the home's carbon footprint.\nThe zero net energy homes demonstrate the value and the vital role natural gas plays in helping customers reduce their carbon footprint in an affordable manner.\nProviding these families with a natural gas home that is environmentally friendly and cost-efficient is just one-way Atmos Energy fuels safe and thriving communities.\nAnd finally, over the next five years, we will invest $13 billion to $14 billion in capital support, the replacement of 5,000 to 6,000 miles of our distribution transmission pipe, or about 6% to 8% of our total system.\nWe will also replace 100 to 150 steel service lines, which is expected to reduce our inventory by approximately 20%.\nThis level of replacement work is expected to reduce methane emissions from our system by 15% to 20% over the next five years.\nOur first quarter activities and initiatives reflect the continued successful execution of our strategy to modernize our natural gas distribution, transmission, and storage systems as we continue our journey to be the safest provider of natural gas services.\nThese efforts, along with the strength of our balance sheet, our strong liquidity, have atmos energy well-positioned to continue serving the vital role we play in every community that is delivering safe, reliable, efficient, and abundant natural gas to homes, businesses, and industries to fuel our energy needs now and in the future.\n", "role": "user" }, { "content": "compname reports q1 earnings per share of $1.86.\nq1 earnings per share $1.86.\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 consolidated earnings for the first quarter of 2021 were $0.98 per diluted share compared to $0.72 for the first quarter of 2020.\nNow, I'll turn the discussion over to Dennis.\nYet we know it could still be a while before we're able to return to the offices or settle into any type of new normal.\nIn the meantime, we'll continue to provide care and compassion for those who are struggling to make ends meet through energy assistance programs, through payment arrangements, and even COVID-19 debt relief grants.\nI am extremely proud of our employees, despite these unique times, they have adapted easily and continue to move our business forward on all fronts.\nThe quarterly results, we are sharing with you today demonstrate their drive and determination to get the job done.\nRecently, we've taken steps to move us toward a clean energy future.\nA few weeks ago, we announced our aspirational goal to reduce our carbon emissions for natural gas by setting new natural gas goal of being carbon-neutral by 2045, with a near-term goal of reducing greenhouse gas emissions by 30% by 2030.\nOur strategy to achieve lower emissions includes investing in new technologies like renewable gas, RNG, which is RNG hydrogen or other renewable biofuels.\nWe're evaluating how to best integrate RNG into our gas supply portfolio and researching hydrogen as another renewable fuel.\nWe will also focus on reducing consumption through conservation and energy efficiency and improving our infrastructure.\nWe realize this is a heavy lift.\nThere are several critical pieces that will need to fall into place in the coming years.\nTechnology costs must come down, new innovations need to occur, and regulatory support will be necessary for us to achieve these goals.\nAs we identify our strategies keeping costs affordable will be a priority.\nWe're committed to executing on this goal in ways that support affordability and reliability for our customers.\nOur natural gas goal demonstrates that our vision of a clean energy future income consists both electric and natural gas resources.\nAnd then we are dedicated to reducing greenhouse gases from the energy we deliver to our customers.\nWe're also moving the dial toward achieving our clean electricity goal of providing customers with carbon-neutral electricity by the end of 2027, and carbon-free electricity by 2045.\nLast month, we entered into a contract with the Chelan County Public Utility District that will add more renewable hydropower to our electric generation portfolio.\nThe contract delivers on the strategies included in the 2021 Electric Integrated Resource Plan that we filed recently and also supports the goals of Washington State's Clean Energy Transformation Act or CETA.\nIn regards to our quarterly results, we're off to a good start in 2021, and we are on track to meet our earnings targets for the full year.\nAvista Utilities' earnings were better than expected while AEL&P's earnings met expectations for the first quarter, and our other businesses exceeded our expectations.\nThat new law will help transform the regulation of electric and natural gas companies toward multi-year rate plans and take the first steps toward performance-based rate-making.\nThe benefits we see with the passage of this important legislation is a requirement to file multi-year rate plans from two to four years in length with the foundation of the rate plan being set using methodologies the commission may use to minimize regulatory lag.\nUltimately, it will require current and future commissioners to implement the change, but we feel this is an important first step toward progressing the regulatory model in the State of Washington.\nMeanwhile, here's an update on our regulatory filings in January.\nAs you know, we filed two-year general rate cases in Idaho, one for electric, one for gas.\nAnd in 2020, we filed general rate cases in Washington again, one for electric and gas.\nWe continue to work through the regulatory process in these jurisdictions.\nIn Oregon, we expect to file a rate case in the second half of 2021.\nWe reached a significant milestone in our focus on electric transportation when the Washington Utilities and Transportation Commission approved three tariffs that allow us to proceed with several programs outlined in our transportation-electrification plan.\nAmong other things, the UTC's approval allows us to establish both an optional general service and large commercial electric vehicle rates which will help us enable and accelerate fleet electrification for commercial customers such as the Spokane Transit Authority.\nOur transportation, electrification plan and newly approved tariffs will serve as a valuable model for others.\nAnd it's a great example of our industries' role in electric transportation and our clean energy future.\nOnce again, Avista is leading the way.\nLooking ahead, we remain focused on running the great utility and continue to invest prudent capital to maintain and update our infrastructure and provide reliable energy service to our customers.\nWe are confirming our 2021 through 2023 earnings guidance.\nSo last night, my Blackhawks were eliminated from the playoffs.\nSo we have five more games left, but we have no chance for postseason play this year.\nSo that's a sad day for me.\nBut on the happy note, we had a great first quarter, the Avista Utilities contributed $0.92 per diluted share compared to $0.68 last year.\nAnd compared to the prior year, our earnings benefited from higher utility margin.\nAnd we had general rate increases and customer growth.\nThe first quarter also included an accrual -- the first quarter of the prior year had some negative accruals in it related to the Washington remand case, a 2015 case, and disallowances around Colstrip in an accrual for the Colstrip community fund.\nThat all happened in 2020 that were drags on 2020 earnings.\nThe ERM in Washington with a pre-tax benefit of $4.3 million in the first quarter compared to $5.2 million in the first quarter of 2020.\nWe continue to be committed to investing the necessary capital in our utility infrastructure, and we expect Avista Utilities' capital expenditures to total about $415 million in 2021.\nWith respect to liquidity on April 5 of 2021, we repaid the outstanding balance of our one-year credit agreement that we entered into in April of 2020, and that was to remind you to make sure we had sufficient liquidity at the start of the pandemic.\nOn April 30, we had $182 million of available liquidity under our $400 million line of credit, and we expect to extend that line of credit into a multi-year deal in the second quarter.\nWe expect to issue approximately $120 million of long-term debt in 2021, and $75 million of equity.\nAs Dennis mentioned earlier, we are confirming our 2021, 2022, and 2023 earnings guidance with consolidated ranges of $1.96 to $2.16 per diluted share in '21, $2.18 to $2.38 in 2022, and $2.42 to $2.62 in 2023.\nAnd this puts us on track to earning our allowed return by 2023.\nOur guidance does assume timely and appropriate rate relief in all of our jurisdictions.\nOur '21 earnings guidance reflects again unrecovered structural cost estimated to reduce our return on equity by approximately 70 basis points.\nAnd in addition, our '21 guidance reflects a regulatory timing lag estimated to reduce our equity return by approximately 100 basis points.\nThis results in a return on equity for Avista Utilities of approximately 7.7% in 2021.\nWe are currently forecasting customer growth of about 1% annually for Avista Utilities.\nFor 2021, Avista Utilities is expected to contribute in the range of $1.93 to $2.07 per diluted share with the midpoint of our guidance range, not including any expense or benefit under the Energy Recovery Mechanism.\nOur current expectation is to be in the 75% customer, 25% Company sharing band, which is expected to add approximately $0.06 per diluted share.\nFor 2021, we expect AEL&P to contribute in the range of $0.08 to $0.11 per diluted share, and our outlook for both Avista Utilities and AEL&P assumes among other variables normal precipitation and slightly below normal about 92% for Avista Utilities hydroelectric generation for the year.\nFor 2021, we expect our other businesses to be between a loss of $0.05 to $0.02 per diluted share.\nOur guidance generally includes only normal operating conditions and does not include any unusual or non-recurring items until the effects of such items are known and measurable.\n", "role": "user" }, { "content": "compname reports q1 earnings per share $0.98.\nq1 earnings per share $0.98.\nconfirming 2021, 2022, and 2023 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: Our consolidated earnings for the second quarter of 2020 were $0.26 per diluted share, compared to $0.38 for the second quarter of 2019.\nFor year-to-date, consolidated earnings were $0.98 per diluted share for 2020, compared to $2.14 last year.\nNow, I'll turn the discussion over to Dennis.\nWe hope everyone is staying safe and healthy during these uncertain times.\nIt's hard to believe that we've been managing through the COVID-19 pandemic for five months now.\nAnd every day, I continue to be inspired by how our employees continue to rally on all fronts to respond to the crisis.\nI couldn't be more proud of how we're staying vigilant and adapting across the organization to the new policies and procedures that can quickly change in the states where we serve.\nI appreciate their patience, their persistence and professionalism, as we all navigate through these unchartered waters to seek out our new normal, all while still providing the energy that is so essential to our customers.\nAs always, our top priority is to preserve the health and safety of our customers, our employees, contractors and our communities.\nAs the regional economies across the areas we serve move forward with fits and start, we're doing our best to support those customers, who we know are struggling.\nYou may have seen recently the Avista Foundation provided more than $500,000 to support 37 different organizations throughout our service area.\nAnd so far in 2020, our foundation has provided more than $1.5 million to help those in need.\nAlthough the majority of our employees are still working from home, it hasn't impacted our ability to complete important work across our business.\nWildfires continue to be an important topic for our industry and our company, especially this time of year.\nBefore the wildfire season arrived, we enhanced our 10-year wildfire resiliency plan to expand our current safeguards for preventing, mitigating and reducing the impact of wildfires to help minimize the possibility of wildfires and the related service disruptions.\nOur team spent the last year developing our plan through a series of internal workshops, industry research and engagement with state and local fire agencies.\nThe plan has certain key areas that include grid hardening, vegetation management, situational awareness, operations and emergency response and worker and public safety.\nIn total, we expect to spend approximately $330 million implementing the plan components over the life of the 10-year plan.\nWe're also excited for construction to be completed on the Catalyst Building and the Scott Morris Center for Energy Innovation.\nWe can hardly wait for the buildings to open next month and when they do, Scott Morris' vision to create the five smartest blocks in the world will become a reality.\nAvista will be able to continue to innovate and test new ideas about how to share energy in a shared economy model.\nAnd what we learn could not only shape how the grid of the future will operate, but also could provide a transformative new model for the entire utility industry.\nLast year, we established a goal to serve our customers with a 100% clean electricity by 2045 and a 100% carbon-neutral resources by 2027.\nConsistent with our goal and our 2020 Integrated Resource Plan, we are seeking proposals from renewable energy project developers, who are capable of constructing, owning and operating up to 120 average megawatts.\nOur intent is to secure the output from the renewable generation resources, including energy, capacity and associated environmental attributes.\nThis will allow us to offset market purchases and fossil fuel thermal generation, which is a key step to achieving our goals.\nWith respect to results, our second quarter consolidated earnings were in line with expectations and we are on track to meet our 2020 earnings guidance at Avista Utilities, AEL&P and our other businesses.\nAs such, we are confirming our 2020 consolidated earnings guidance, a range of $1.75 to $1.95 per diluted share.\nAnd finally, one last point.\nOur Senior Vice President, Chief Legal Counsel, and Corporate Secretary, Marian Durkin, just retired on August 1.\nDuring her tenure, Marian defined our business needs and -- to build our legal department from the ground up to the robust team that it is today.\nAs the focus and scrutiny on compliance has grown across many different industries, Marian also centralized the company's compliance efforts and has taken our compliance department to a new level.\nAlso, under Marian's leadership, earlier this year, Avista was named as one of Ethisphere's World's Most Ethical Companies.\nI have big news for you.\nI'm very excited about that.\nThe Blackhawks, because of the pandemic, made the playoffs and we're currently 1-1 with Edmonton with a game tonight.\nSo, those on the East Coast, it's a 10:30 game, but I'd like you to stay up and route for my Blackhawks.\nFor the second quarter of 2020, Avista Utilities contributed $0.26 per diluted share, compared to $0.32 in 2019.\nCompared to the second quarter of 2019, our earnings decreased due to lower electric utility margin and from higher power supply costs and decreased loads related to COVID-19, which was partially offset by rate relief and customer growth.\nWe also had lower operating expenses in the second quarter of 2020.\nThe Energy Recovery Mechanism in Washington was a small benefit in this year of $0.4 million, compared to a much larger benefit in 2019 of $6 million.\nFor the year-to-date, we recognized a pre-tax benefit of $5.6 million in 2020, compared to $3.5 million in 2019, all with respect to the ERM.\nWith respect to the COVID-19 impacts on our results, we recorded an incremental $3.3 million of bad debt expense for the year-to-date and we expect the incremental amount to be $5.7 million for the full-year, including the first quarter as -- first half, as compared to our original forecast.\nIn July, the Idaho Commission issued an order that allows us to defer certain costs, net of any decreased costs and other benefits related to COVID-19.\nDuring the second quarter, we deferred $1.1 million of bad debt expense associated with this order.\nCompared to normal, in the second quarter there was a -- our loads, there was a decrease of approximately 6% on overall electric loads, which consisted of approximately 10% decrease in commercial and a 14% decrease in Industrial, which was partially offset by about 4% increase in our residential loads.\nThese loads decreased earnings by about $0.03 in the second quarter and we expect to have continued lower loads throughout most of the year, with a gradual recovery toward the end of the year.\nWe expect to be able to mostly offset the lower utility margin through our cost management activities, and this is reflected in our consolidated guidance.\nWe do expect a gradual economic recovery, but prolonged high unemployment that will depress load and customer growth into 2021.\nWe have decoupling and other regulatory mechanisms, which help mitigate the impact of these load changes on our -- the impact on our revenues for residential and certain commercial customers.\nOver 90% of our utility revenue is covered by regulatory mechanisms.\nDuring the second quarter, we began experiencing some supply chain delays due to the effects of the COVID-19 pandemic, with delays ranging from a couple of weeks to up to six weeks in some cases.\nHowever, we do not expect this to have a significant impact on our planned projects and we continue to be committed to investing the necessary capital in our utility infrastructure and expect our spending in 2020 to be still be about $405 million.\nWith respect to liquidity, at June 30, we had $160 million of available liquidity under our $400 million line of credit and we had $100 million in cash from our term loan.\nIn the second quarter, we extended our line of credit agreement a year to April 2022.\nWe expect to issue this year approximately $165 million of long-term debt and up to $70 million of equity, and that includes $24 million that we've issued through June.\nAs Dennis mentioned earlier, we are confirming our 2020 guidance, with a consolidated range of $1.75 to $1.95.\nWe're expecting that COVID-19 impacts at Avista Utilities of increased operating expenses include bad debt expense, reduced industrial loads and increased interest will be mostly offset by expected tax benefits from the CARES Act and other efforts to identify cost reduction opportunities that we have implemented.\nWe have filed for deferred accounting treatment in each of our jurisdictions.\nAnd as I said earlier, in Idaho, the Idaho Commission issued an order that allows us to defer certain costs related to COVID-19, net of any decreased costs and other benefits.\nThe Idaho Commission will determine the appropriateness and prudency of any deferred expenses when we seek recovery.\nWe continue to expect -- to experience regulatory lag until 2023, we filed the general rate case in Oregon in March of 2020 and continue to anticipate filing in Washington and Idaho in the fourth quarter of this year.\nWe expect our long-term earnings growth after 2023 to be 4% to 6%.\nNow, with the specifics on the ranges for each segment.\nWe expect Avista Utilities to contribute in the range of $1.77 to $1.89 per diluted share.\nThe midpoint of our range does not include any expense or benefit under the ERM and our current expectation is that we will be in a benefit of a 90/10 sharing band, which is expected to add $0.06 per diluted share.\nOur outlook for Avista Utilities assumes, among other variables, normal precipitation, temperatures and hydroelectric generation for the remainder of the year and we have implemented the cost reduction measures to help mitigate the impacts of costs related to COVID-19.\nFor 2020, we expect AEL&P to contribute in the range of $0.07 to $0.11 per share and our outlook for AEL&P assumes, among other variables, normal precipitation and hydroelectric generation for the remainder of the year.\nAnd we continue to expect our other businesses to have a loss of between $0.09 and $0.05 per diluted share.\nOur guidance generally includes only normal operating conditions and does not include any unusual items; such as settlement transactions or acquisitions and dispositions until the effects are known and certain.\nWe cannot predict the duration or severity of the COVID-19 global pandemic.\nAnd the longer and more severe economic restrictions and business disruption, the greater the impact on our operations, results of operations, financial condition and cash flows.\n", "role": "user" }, { "content": "compname reports q2 earnings per share $0.26.\nq2 earnings per share $0.26.\nreaffirms fy earnings per share view $1.75 to $1.95.\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 consolidated earnings for the second quarter of 2021 were $0.20 per diluted share compared to $0.26 for the second quarter of 2020.\nFor the year-to-date, consolidated earnings were $1.18 per diluted share for 2021 compared to $0.98 last year.\nNow I'll turn the discussion over to Dennis.\nI hope your summer is going well and that you're staying safe.\nOn June 30, Washington State officially lifted most of the remaining restrictions that have been in place during the pandemic.\nWe're excited to see our local economies continue to recover.\nWe're experiencing increased loads, and customer growth is steady.\nLike many other businesses, we continue to monitor the pandemic very closely and watch what's happening with variants and case count in our communities.\nWe're ready and able to successfully adjust our business as needed and also continue to provide care and compassion for those who are struggling.\nNow let's look at some highlights from our second quarter.\nWe had a challenging second quarter, which included an unprecedented heat wave that brought with it several consecutive days of triple-digit record-breaking temperatures across the region.\nOn June 29, Spokane temperature soared to 109 degrees, setting new record -- a new record high temperature and was even higher in many of our neighborhoods.\nThat same day, Avista experienced a major increase in customer usage, which resulted in the highest energy usage in our company's 132-year history.\nThe intense temperatures, combined with record high usage, strained parts of our electrical system and caused some of the equipment that runs our electric grid to overheat.\nSix of our 140 distribution substations were impacted.\nTo prevent the equipment from overloading and to avoid extensive and costly damage to our electric system, we implemented protective outages for customers served by the equipment that was most impacted by the heat.\nOver the course of the event, we were able to reduce the impact to customers through system modifications.\nWe appreciate our customers' patience for those who experienced outages.\nHigher customer loads, related to the extended heat wave, were the primary driver for an increase in net power supply cost to serve our customers, which negatively affected the Energy Recovery Mechanism, or ERM.\nOverall, we've experienced hotter and drier-than-normal weather across the Pacific Northwest, which contributed to lower-than-normal hydroelectric generation and increased power prices.\nFor these reasons, we had to rely on thermal generation and purchased power at higher prices to serve those additional loads.\nAs a result, Avis Utilities' earnings were below expectations for the second quarter.\nAEL&P's earnings met expectations in the second quarter, and they are on track to meet the full year guidance.\nIt was a strong quarter for our other businesses, which exceeded expectations due to gains on our investments and the sale of certain subsidiary assets associated with Spokane steam plant.\nWildfire resiliency continues to be a focus for Avista.\nOur region has experienced extremely dry conditions all spring and summer.\nAnd combined with high temperatures, wildfire risk is high.\nIn response to these conditions, Avista has been operating in, what we call, dry land mode since late June, and dry land mode decreases the potential for wildfires that could occur when reenergizing a power line.\nNormally, under normal conditions, these lines, located in rural and/or forested areas, are generally reenergized automatically.\nHowever, during the current dry weather conditions, Avista's line personnel physically patrol in outage area before a line is placed back into service.\nThis can require more time to restore service, but it decreases a potential fire danger.\nThis practice is in line with Avista's wildfire resiliency plan, which was released last year, building on prevention and response strategies that have been in place for many years.\nAvista has committed to a comprehensive 10-year wildfire resiliency plan that includes improved defense strategies and operating practices for a more resilient system.\nIn regards to regulatory matters, we are pleased to have reached an all-party settlement in our Idaho general rate case.\nThe new rates are fair and reasonable for our customers, the company and our shareholders and will allow Avista to continue receiving a fair return in Idaho.\nOur Washington general rate cases continue to work their way through the regulatory process.\nOur hearings have been held, and we expect a decision by the end of September.\nIn Oregon, we expect to file a rate case in the fourth quarter of 2021.\nWe are confirming our 2021 earnings guidance with a consolidated range of $1.96 to $2.16 per diluted share.\nWhile we are confirming our consolidated range, we are adjusting our 2021 segment ranges to lower Avista Utilities by $0.10 per diluted share and raise other by $0.10 per diluted share.\nFor 2022, we are lowering consolidated earnings guidance by $0.15 per diluted share to a range of $2.03 to $2.23 per diluted share.\nFor 2023, we are confirming our earnings guidance with a consolidated range of $2.42 and to $2.62 per diluted share.\nAlthough we expect to experience headwinds in 2022 from regulatory lag, we are confident that we can meet our earnings guidance for 2023 and earn our allowed return.\nLooking ahead, we'll continue focusing on our utility operations, while prudently investing in the necessary capital to maintain and update our infrastructure to provide safe, reliable and affordable energy to our customers and our communities.\nI know everybody is sitting on the edges or seat waiting for the Blackhawk's next acquisition, which is a Spokane native.\nWe got Tyler Johnson, a 2-time Stanley Cup Champion, who is a Spokane native.\nSo we're pretty excited about that.\nThere's your Hawks update.\nAs Dennis mentioned, we're confirming our 2021 earnings guidance, lowering our utility guidance for '21 and also '22 and confirming '23 consolidated guidance.\nOur guidance -- I'll spend a little time on that.\nOur guidance assume, among other things, a timely and appropriate rate relief in our jurisdictions.\nThat's very important as we need -- Dennis mentioned, we settled our Idaho case.\nWe're still awaiting approval from the commissions, which we expect before those rates go into effect September 1.\nFor 2021, we expect Avista Utilities to contribute in the range of $1.83 to $1.97 per diluted share, and the lower end of our guidance in '21 and '22 for the Avista Utilities is primarily due to increased regulatory lag.\nThat's due to increase capital expenditures primarily due to growth and higher-than-expected depreciation expense.\nBut that is, we believe, all timing, and we begin -- as we begin to plan for our next Washington general rate case to be filed early in the first quarter of '22, we expect that to be a multiyear rate plan as required under the new law.\nWe will seek to include all capital investment through the end of the rate plan period in rates in an effort to earn our allowed return by 2023.\nIn addition, we have experienced an increase, as Dennis mentioned, in actual and forecasted net power supply cost.\nAlthough the midpoint of our guidance range does not include any benefit or expense under the ERM in Washington, the increase in power supply cost has reduced the opportunity for us to be in the upper half of the guidance range.\nAnd our current expectation for the ERM is a surcharge position within the 90-10 sharing -- company sharing band, which is expected to decrease earnings by $0.08 per diluted share.\nAnd recall, last quarter, our estimate for the ERM for the year was in a benefit position, which was expected to add $0.06 per diluted share.\nIn addition, we are also absorbing more net power supply cost under the PCA in Idaho.\nFor 2021, as Dennis mentioned, we expect AEL&P to contribute $0.08 to $0.11.\nAnd we increased the range in our other businesses by $0.10, which really offsets the utility reduction, and that's largely due to a range of $0.05 to $0.08 of diluted share because of investment gains and the gain we experienced from the sale of Spokane Steam Plant.\nOur guidance generally includes only normal operating conditions and does not include unusual or nonrecurring items until the effects are known and certain.\nMoving on to earnings for the second quarter.\nAvista Utilities contributed $0.11 per diluted share compared to $0.26 in 2020.\nCompared to the prior year, our earnings decreased due to an increase in net power supply costs, as Dennis mentioned, mainly due to higher customer loads from the heat wave, and we had lower-than-normal hydroelectric generation because of the hot and dry conditions.\nOur hydroelectric generation is about 91% of -- our expectations are normal for this year.\nThe ERM in Washington also moved significantly.\nHad a pre-tax expense of $7.6 million in the second quarter of '21 compared to a pre-tax benefit of $0.4 million in 2020.\nYear-to-date, we've recognized $3.3 million of expense in '21 compared to $5.6 million in benefit in 2020.\nIn addition to the higher power supply cost, we also had higher operating expenses in the quarter, mainly due to the timing of maintenance projects, as many of those maintenance projects were delayed in 2020 because of COVID-19, whereas in 2021, we returned to our original schedules and performed that maintenance in the second quarter.\nThe higher maintenance costs were partially offset by lower bad debt expense as we are continuing to defer bad debt through our COVID-19 regulatory deferrals.\nMoving on to capital.\nAs Dennis mentioned, we're committed to be continuing to invest the necessary capital in our utility infrastructure.\nWe currently expect Avista Utilities to have increased capital expenditures up to $450 million in 2021 and $415 million in 2022 -- or $445 million in '22 and '23.\nThat's a $35 million and $40 million increase in '21, '22 and '23, $40 million in '23 as well.\nAnd this is really to support continued customer growth.\nOur customer growth's about 1.5%, which is up from 0.5% to 1% in prior expectations.\nWe expect to issue approximately $140 million of long-term debt and $90 million of common stock, including $16 million that we've already issued through June on the common stock side in 2021.\nThe increase in long-term debt and common stock is to fund the increased capital expenditures.\n", "role": "user" }, { "content": "compname posts q2 earnings per share $0.20.\nq2 earnings per share $0.20.\nconfirming 2021 consolidated earnings per share guidance with a range of $1.96 to $2.16.\nlowering our 2022 consolidated earnings guidance to a range of $2.03 to $2.23 per diluted share.\nfor 2023, confirming earnings per share guidance with a consolidated range of $2.42 to $2.62.\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: By way of introduction, I have been with Avista since 2009, working in our accounting group.\nI'm very excited to be taking over from John for my first earnings call, and I look forward to working with all of you in the coming year.\n, President and CEO, Dennis Vermillion; Executive Vice President, Treasurer, and CFO, Mark Thies; Senior Vice President, External Affairs and Chief Customer Officer, Kevin Christie; and Vice President, Controller and Principal Accounting Officer, Ryan Krasselt.\nOur consolidated earnings for the third quarter of 2021 were $0.20 per diluted share compared to $0.07 for the third quarter of 2020.\nFor the year-to-date, consolidated earnings were $1.38 per diluted share for 2021 compared to $1.04 last year.\nNow I'll turn the discussion over to Dennis.\nAs you heard, this is Stacey's first call today, and we're just so happy to have her in this role, and she's going to be with us at EEI too.\nSo you'll -- everybody will have a chance to meet Stacey and get to know Stacey a little bit.\nAnd unfortunately, looks like we still have a ways to go.\nWe will, no doubt, face more challenges as we move forward.\nOur region and our nation, we're recovering and rebuilding from this, and we're ready for the challenge.\nI continue to be extremely proud of our employees, and I'm just so grateful for the resolve and resiliency that they've all demonstrated and the flexibility they've displayed.\nAnd then the commitment and concern they have for our customers and communities just really fantastic.\nAnd just so proud of our team.\nI'm confident that no matter what the future brings, that we have the team and we have what it takes to manage through whatever the future may bring.\nNow, let me turn to our earnings results at Avista Utilities.\nOur earnings were above expectations primarily due to the timing of the recognition of income taxes.\nAnd over at AEL&P, their earnings remain on track to meet the full year guidance.\nAnd in our other business, we've had a great year so far, and we are pleased with our investments.\nThey produced significant gains in 2021, exceeding expectations.\nWe continue to expect these investments to contribute $0.05 to $0.10 per diluted share going forward.\nIn regards to regulatory matters during the third quarter, we concluded our Idaho and Washington general rate cases with rates effective September one and October 1, respectively.\nWe are pleased with both Commissions' support of our ongoing investments in the infrastructure that serves our customers and offers us the opportunity to continue to provide our customers with safe and reliable and affordable energy without immediately impacting customer bills.\nHowever, we did get -- we did not get recovery of certain operating expenses through the Washington general rate cases.\nIn October, we filed our general rate case in Oregon.\nWe have proposed that the increase in base revenues included in the rate case be fully offset for a 2-year period with tax customer credits of the same amount, resulting in no impact to customer bills.\nEarly in the first quarter of 2022, we expect to file general rate cases in Washington, both electric and gas.\nThey will be multi-year rate plans as required under the new law, and we will seek to include in rates all capital investments and expected operating expenses through the end of the rate plan period in an effort to earn our allowed return by 2023.\nIn other regulatory filings, we were the first utility to file its Clean Energy Implementation Plan with the Washington Commission in October.\nOur plan sets the course for an equitable transition to clean energy and provides a road map for specific actions to be taken over the next four years to show the progress we're making toward achieving clean energy goals established by the Clean Energy Transformation Act or CETA.\nAnd that plan is available on our website under the Clean Energy Future tab, and there's a good executive summary there if you have interest in checking that out.\nFocusing back on earnings, we are confirming our consolidated earnings guidance for 2021 and 2023 of $1.96 to $2.16 per diluted share for 2021, and $2.42 to $2.62 per diluted share for 2023.\nWe are lowering our consolidated guidance by $0.10 per diluted share in 2022 to a range of $1.93 to $2.13 per diluted share.\nWe look forward to seeing everybody down at EEI as well and talking about our company, which we're excited about.\nFor everybody's reference, the Blackhawks are on a one game winning streak.\nI can only say that because it's the only game they won this year.\nWe've had a tough start.\nBut for us, at Avista, the third quarter has been a good quarter for us.\nAs we mentioned, Avista Utilities is up, we have $0.13 a share compared to $0.08 in the prior years.\nBut this is really primarily due to income taxes and how we record the timing of such income taxes, and we expect that outperformance to offset in the fourth quarter to back to normal performance for Avista Utilities.\nThe ERM, the energy recovery mechanism in Washington had a pre-tax expense of $3.8 million in the third quarter compared to a benefit in the prior year.\nAnd for the year-to-date, we've recognized an expense of $7.1 million compared to a benefit of $5.9 million.\nBut when we look at it for the year compared quarter-over-quarter, last quarter, we expected for the full year to be a negative $0.08, and we currently expect it to be a negative $0.09.\nSo it's really just a slight move in our expectations over the year, within the year, and we had a big recognition in the quarter though.\nFor capital expenditures, we continue to be committed to investing the necessary capital, as Dennis mentioned, in our utility infrastructure.\nWe currently expect Avista Utilities to spend about $450 million in 2021 and $445 million in '22 and '23 to continue to support customer growth, and maintain our system to provide safe, reliable energy to our customers.\nTo fund that capital, we expect to issue approximately $140 million of long-term debt and $90 million in equity in 2021.\n$70 million of the debt has already been issued.\nWe issued that and also $61 million of the common stock has been issued through September.\nDuring 2022, we expect to issue $370 million of long-term debt, which is really covering a $250 million maturity and then also $90 million of common stock, which will help us fund our capital expenditures and maintain a prudent capital structure.\nAs Dennis mentioned, we are confirming our '21 and '23 guidance, but we're lowering '22.\nAnd as we look at it, for lowering '22, there are a few factors.\nAs he mentioned earlier, we didn't get all the recovery.\nWe believe we had a fair order in our Washington rate case and our Idaho rate case, and we had many big projects that Kevin will be able to answer questions on in the order in Washington, but we didn't -- so we got our capital, we believe in a fair way, but we had some operating expenses that we were not allowed to recover.\nWe believe that we'll be able in our next case.\nWe expect to file our next case in -- early in the first quarter of '22, and we expect that case to be completed by the end of '22 if the normal timing works.\nAnd we believe we'll be able, as Dennis mentioned, to get our capital and our operating expenses for the rate period in that rate case.\nWith respect to our guidance range at Avista -- we expect Avista for '21, we expect Avista Utilities to contribute in the range of $1.83 to $1.97 per diluted share.\nAnd primarily due to the impact of the ERM, as I mentioned earlier in my comments, we expect to be down about $0.09.\nWe expect to be near the bottom of the range at Avista Utilities.\nOur current expectation is to be in a surcharge position in the 90% customer/10% company band, which is expected to decrease earnings by $0.09.\nIn addition, based on our year-to-date results, we expect to be above the top end of our range with respect to our other investments.\nWe had, as Dennis mentioned, significant gains.\nWe've had strong performance in our investments that we've been investing for the last several years.\nA number of different investments, not just one, a number of different investments had positives, and we expect to be above the top end of the range.\nSo when you add that together with AEL&P matching their expectations, we expect to be near the middle of our range for 2021, including the negative impact of the ERM.\nFor 2022, we are lowering our guidance due to the lower recovery of certain costs.\nAnd those costs really included insurance costs, increases in labor as we've seen inflationary pressures impacting labor and other costs, IT costs and certain Colstrip-related costs.\nEarly in -- in the first quarter of '22, we do expect to file our general rate case, and it will, as Dennis mentioned, be a multi-year plan as required by our new law, and we will seek to include all of our capital and projected operating expenses for the planned period to allow us to have the opportunity to earn our allowed return by 2023.\nAs always, our guidance assumes, among other things, timely and appropriate rate relief in all of our jurisdictions as well as normal operating conditions and does not include any unusual or non-recurring items until they're known and certain.\n", "role": "user" }, { "content": "compname reports q3 earnings per share of $0.20.\nq3 earnings per share $0.20.\nlowering consolidated guidance by $0.10 per diluted share in 2022 to $1.93 to $2.13 per diluted share.\nlowering 2022 guidance due to lower recovery of certain operating costs in washington general rate cases, and higher operating costs.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: President and CEO, Dennis Vermillion; Executive Vice President, Treasurer and CFO, Mark Thies; Senior Vice President, External Affairs and Chief Customer Officer, Kevin Christie; and Vice President, Controller and Principal Accounting Officer, Ryan Krasselt.\nOur consolidated earnings for the fourth quarter of 2020 were $0.85 per diluted share, compared to $0.76 for the fourth quarter of 2019.\nFor the full year, consolidated earnings were $1.90 per diluted share for 2020 compared to $2.97 last year.\nNow, I'll turn the discussion over to Dennis.\nAs we begin 2021 continuing to work through the COVID pandemic, we hope you're staying safe and healthy.\nLooking back on the last year, I'm just so proud of our employees for navigating the challenges presented by the pandemic, continuing to provide energy like they always do to our customers and progressing our business plans forward.\nWe continue to help those who are struggling and most in need in our communities.\nIn 2020, Avista and the Avista Foundation provided more than $4 million in charitable giving to support the increased need for services that community agencies are still experiencing throughout the areas we serve.\nFinancially, our earnings for 2020 were better than expectations, and Mark will provide further details here in just a few minutes.\nOperationally, we finished installing nearly all of our smart meters, electric smart meters and natural gas modules across Washington in one of the largest projects in our history.\nThe deployment of this infrastructure will provide customers with more real-time data, so they can better manage their energy use.\nThe technology enables us to proactively push high energy alerts to notify customers, if they could exceed their preset energy budgets, which of course, helps eliminate surprises when their bill arrives at the end of the month.\nBeyond generating bills, we're using the data from smart meters to run a more reliable and efficient power grid and to deliver a higher level of service for our customers.\nFor example, we now have more visibility into our system, which allows us to detect and restore power outages more quickly.\nWe also made strides to meeting our clean energy goals, as the Rattlesnake Flat Wind Farm went online last December.\nDuring its construction the project created clean energy jobs for our local communities and now that it's completed the project's 20 -- project's 57 wind turbines excuse me will provide 50 average megawatts of clean renewable energy for our customers at an affordable price.\nThat's enough energy to power 38,000 homes for years to come.\nAs wildfires continue to have an impact on our region we implemented a new comprehensive 10-year wildfire resiliency plan that aims to improve defense strategies and operating practices for a more resilient system.\nWe expect to invest about $330 million implementing the components of this plan over the life of the plan, which as I said was 10 years.\nWe were proud to announce yesterday that Avista has been recognized again as one of the 2021 World's Most Ethical Companies by Ethisphere, a global leader in defining and advancing the standards of ethical business practices.\nThis marks the second year in a row that Avista has achieved this distinction.\nWe are only one of nine honorees recognized in the energy and utilities industry based on their assessment.\nIn 2021, 135 honorees in total were recognized spanning 22 countries and 47 industries.\nIn January, we published Avista's 2021 Corporate Responsibility Report on our avistacorp.com website and I urge you to check it out when you have some time.\nThis content provides a broad look at our operations and how we're fulfilling our commitments to our people, our customers, our communities and our shareholders.\nThe website also provides links to Avista's reporting on a series of industry and financial ESG disclosures.\nThe updated content supports Avista's long-standing commitment to corporate responsibility and sharing this information with our stakeholders.\nSwitching gears with respect to regulatory filings, in January we filed two-year general rate cases in Idaho.\nAnd as you know in 2020 we filed general rate cases in Washington.\nAnd we continue to work through the regulatory processes in both of these jurisdictions.\nWe take our responsibility to provide safe, reliable energy at an affordable price very seriously.\nAnd we work hard to make prudent financial investments in our infrastructure, manage our costs and identify ways to best serve our customers that contribute to keeping energy prices low.\nFor example, our proposed tax customer credit would completely offset an immediate increase in electric and natural gas bills for our Washington customers.\nIn Oregon new rates went into effect on January 16 of this year and we expect to file another rate case in the second half of 2021 in Oregon.\nLooking ahead, we remain focused on running a great utility and continue to invest prudent capital to maintain and update our infrastructure and provide reliable energy service to our customers.\nWe are initiating our 2021, 2022 and 2023 earnings guidance with consolidated ranges of a $1.96 to $2.16 per diluted share for 2021, $2.18 to $2.38 in 2022 and $2.42 to $2.62 per diluted share for 2023.\nThis puts us on track to earning our allowed return by 2023.\nLastly, earlier this month the board increased our dividend by 4.3% to an annual dividend of $1.69 per share and a dividend increase approved by the board marks the 19 consecutive year the board has raised the dividend for our shareholders, and I believe it demonstrates the board's commitment to maximizing shareholder value.\nWe had low expectations coming into this year.\nNo, not the company, the Blackhawks and the Blackhawks have really started off pretty good after a slow first four games.\nWe've had five rookies score their first goals ever in the NHL, so pretty exciting times for all you hockey fans out there.\nFor the company in the fourth quarter, Avista Utilities contributed $0.81 per diluted share compared to $0.67 last year.\nOur earnings increased primarily due to higher utility margin and customer growth.\nAlso in the fourth quarter, the Oregon and Washington Commissions joined the Idaho Commission to allow for the deferral of certain COVID-19 related expenses for future -- possible future recovery.\nAdditionally, Avista Utilities earnings were better than expectations due to higher utility margin and lower income taxes, which were partially offset by higher operating expenses.\nWith respect to COVID-19, as I mentioned earlier, we have now received accounting orders in each of our jurisdictions to defer the costs and benefits associated with COVID-19.\nAnd those will be addressed in future proceedings with each of those commissions.\nWe expect a gradual economic recovery that will still have some depressed load and customer growth in '21.\nWe expect that to start improving in the second half of '21, our economy.\nWe do have decoupling and other regulatory mechanisms, which mitigate the impacts of changes in load for our residential and certain commercial customers.\nOver 90% of our revenue, as you recall, is covered by regulatory mechanisms.\nAs Dennis mentioned, we continue to be committed to investing the necessary capital in our utility infrastructure.\nWe expect our capital expenditures in 2021 to be about $415 million and at AEL&P we expect about $7 million and about $15 million in our other businesses.\nWith respect to our liquidity, as of December 31, we have $270 million of available liquidity under our committed credit line at Avista Utilities and in 2020 we issued about $72 million in stock in 2020.\nIn '21 we expect to issue about $75 million of equity or stock and up to $120 million of long-term debt.\nAs Dennis mentioned, we are initiating guidance not only for 2021 but also for 2022 and 2023.\nAnd as we mentioned those ranges, this is to get us back to earning our allowed return by 2023 and our guidance does assume timely and appropriate rate relief in each of our jurisdictions relative to the capital expenses that we have going forward.\nWe experienced regulatory lag during '20 and expect this to continue through the end of '22 due to our continued investment in infrastructure and our delayed filings.\nWe again delayed last year as we talked about with the pandemic in Washington and Idaho.\nDennis mentioned those earlier.\nWe expect our cases in Washington and Idaho along with new rates to provide some relief in 2021 and begin reducing that regulatory lag.\nGoing forward we'll strive to continue to reduce debt and closely align our returns to those authorized by '23.\nAfter '23 we expect to grow at 4% to 6% our earnings.\nOur '21 guidance reflects unrecovered structural cost estimated to reduce the return on equity by approximately 70 basis points and in addition our timing lag, which is what we're trying to reduce with rate cases has reduced it by about 100 basis points.\nThis results in expected return on equity for Avista Utilities of approximately 7.7% in 2021.\nWe are forecasting operating cost growth of about 3% and customer growth of about 1% annually, which has slightly improved from prior numbers on the customer growth side.\nFor 2021 we expect Avista Utilities to contribute in the range of a $1.93 to $2.07 per diluted share and the midpoint of our guidance does not include any expense or benefit under the ERM.\nOur current expectation for the ERM is in the benefit position within the 75% customer, 25% company sharing band which is expected to add $0.05 per diluted share.\nFor 2021 we expect AEL&P to contribute in the range of $0.08 to $0.11 per diluted share and our outlook for both Avista Utilities and AEL&P assumes among other variables, normal precipitation and hydroelectric generation for the year.\nWe expect a loss between $0.05 and $0.02 per diluted share for our other businesses as we continue to develop opportunities for the future.\nWe'll spend a little bit of money in the next couple of years to continue to get those earnings up over the course of the next five years and we look forward to those opportunities.\nThey're both in our service territory and in funds.\nOur guidance generally includes only normal operating conditions and does not include any unusual or non-recurring items until the effects are known and certain.\n", "role": "user" }, { "content": "q4 earnings per share $0.85.\nearnings guidance of $1.96 to $2.16 per diluted share in 2021.\nearnings guidance of $2.18 to $2.38 per diluted share in 2022.\nearnings guidance of $2.42 to $2.62 per diluted share in 2023.\nexpect to experience increased costs in 2021 associated with exploring strategic business opportunities.\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: American Vanguard will file our Form 10-Q with the SEC tomorrow.\nBefore beginning, we should take our moment for a usual cautionary reminder.\nSuch factors can include weather conditions, changes in regulatory policy, competitive pressures and various other risks that are detailed in the company's SEC reports and filings.\nWe appreciate your continued support of American Vanguard.\nIn our last call, we gave you our first impression of the coronavirus pandemic, which had begun to spread into the United States partway through the first quarter.\nAs part of the critical infrastructure, we were permitted, indeed, expected to continue operating in the midst of a global pandemic, the likes of which we had not seen in over a century.\nIn order to operate without disruption during the first quarter, we had to adapt.\nWhere we could do so, we shifted from in-person to remote work.\nWhere we had to maintain physical operations as in our factories, we implemented COVID protocols to keep the workplace safe and healthy.\nAt the same time, we learned to do business remotely while constantly checking on supply chain stability, logistics and customer demand.\nFast forward to the second quarter, the pandemic has become the norm.\nWe, and our suppliers, peers and customers, have become more accustomed to doing business through Zoom meetings, webinars and email.\nWe continue our efforts to ensure that internal communication was frequent and continuous.\nIn fact, I continue to hold weekly 2-hour state of the company calls with over 40 of my key managers during which I solicit input on operational challenges, sales opportunities and regional developments to ensure that we are all moving in the same direction.\nIn addition, on a daily basis, our pandemic working group advises the workplace regarding COVID-related news, government orders, research and company protocols.\nDuring the second quarter, the pandemic shifted from Asia and Europe into the Americas, where we do most of our business.\nIn spite of that shift, I am pleased to report that we have had a low very low incident of coronavirus infection within our workforce.\nThat nearly all of the cases were community transmissions outside of our facilities and that our operations have not been adversely affected by the pandemic to date.\nAt this point, I want to pause to note that given the circumstances where so many businesses are struggling for survival, cutting workforces, taking federal loans or filing free organization, we are generating stronger returns than what we did while operating in the normal course of last year at this time.\nSpecifically, even while quarterly net sales declined by 8%, net income increased by 25% over the period.\nAt the same time, and I hate to steal David's thunder here, as of June 30, we have strengthened our balance sheet by reducing inventory even with expanded product offerings, reducing debt and improving cash from operations by $38 million so far this year.\nBefore turning the call over to David, let me take a moment to focus on the future.\nWe are still constrained from making specific forecast because we do not yet know how long the pandemic will last nor how it may affect our business or markets.\nNevertheless, we have adapted to the coronavirus with increasing success.\nAs we look forward to the balance of the year, we continue to believe that we are poised to perform in line with our peers.\nThis is so for a number of reasons, including favorable conditions for our mosquito control products, larger supply of Krovar and Hyvar herbicides for use on citrus, pineapple and McCabe and expansion of our Vapam fumigant business in Mexico, Central America and Australia.\nI will then return to give you an update on some exciting initiatives to grow our business through new products and technology innovation.\nAs Bill mentioned, we will be filing our Form 10-Q for the three and six months ended June 30, 2020, tomorrow.\nEverything I'm covering here is included in more detail in that document.\nAs Eric indicated, the company is fortunate to participate in industries that are considered part of critical infrastructure in all countries in which we operate.\nAs a result, our customers and suppliers have all operated more or less without disruption during the pandemic.\nHaving said that, the pandemic has impacted us in a few ways, including our ability to present new sales and marketing ideas, such as new products, face-to-face with customers in the field.\nOn the other hand, you will see in our financial statements the same restrictions have caused us to spend less on operating expenses.\nFurthermore, the company has been able to operate normally throughout the first half of 2020 without the need to apply for any COVID-related federal stimulus package loans.\nLooking forward to the balance of 2020, we do not expect to need to seek such loans resistance.\nWith regard to our financial performance for the three months ended June 30, 2020, the company's net sales decreased by 8% to $105 million as compared to sales of $113 million this time last year.\nWithin that overall decline, our U.S. sales were down about $6 million and our international sales were down about $2 million.\nInternational sales accounted for 44% of net sales as compared to 43% of net sales this time last year.\nEric has already discussed the main factors that have affected our second quarter sales performance.\nIn addition, the sales and expenses of our businesses in Mexico and Brazil were affected by the devaluation of the related currency exchange rates with the dollar, as compared to this time last year.\nWe believe these exchange rate devaluations were caused at least in part by the COVID pandemic.\nWithout the adverse currency translation effect on our Brazilian and Mexican sales, our second quarter consolidated sales would have been $3 million higher.\nFor the quarter, our manufacturing performance was strong, with factory operating costs well controlled and activity improved as compared to 2019.\nAs a result of these various dynamics, we improved our gross margin performance when expressed as a percentage of sales to 39% of sales in the second quarter of 2020 as compared to 37% in the same period of 2019.\nFor the three months ended June 30, 2020, our operating expenses decreased by $1.9 million or 5% as compared to the expenses incurred in the same period of the prior year.\nIn the prior year, however, we had a benefit of approximately $1.8 million, primarily associated with adjustments to deferred liabilities on a past acquisition.\nThat did not repeat in the current year.\nMaking adjustments for that item, our underlying reduction in recurring operating expenses is greater and amounted to approximately $3.7 million or about 10%.\nDuring the second quarter, we recorded reduced interest expense.\nOur average debt was a little higher because of all the acquisition activity during the last year, but we got a benefit from reduced borrowing rates in the United States.\nFinally, our effective tax rate remained approximately flat compared to the same period of 2019.\nIn summary, for the second quarter, though our sales were down, selling prices and overall mix of sales remain good, factory performance was improved compared to 2019 and gross margins as a percentage of sales increased from 37% to 39%.\nOur operating expenses and interest expenses were lower.\nAnd as a result, net income increased by 25% in comparison to 2019.\nNow let us turn to the six-month period ended June 30, 2020.\nSales were down about $12 million or 6% as compared to the prior year.\nWithin that performance, net sales of both our domestic and international businesses were down about $6 million each.\nThe devaluation in key currencies resulted in about $4 million lower sales when sales originally recorded in the Brazilian real and the Mexican peso were translated to dollars for inclusion in our consolidated financial statements.\nOur factory performance for the six-month period was excellent, with costs up only 0.006% and factory output up about 13%.\nThis resulted in a much improved rate of recovery factory costs.\nOverall, gross margin when expressed as a percentage of net sales was flat period-over-period at 39% of sales.\nOur operating expenses remained almost flat in the first six months of 2020 as compared to the prior year.\nIn the prior year, however, we had a benefit of approximately $3.3 million, primarily associated with adjustments to deferred liabilities on a past acquisition.\nThat did not repeat in the current year.\nMaking adjustments for that item, our underlying reduction in recurring operating expenses amount to about $3.3 million or about 5%.\nOur net income for the first six months of 2020 ended at $4.4 million or $0.15.\nThis compared with $7 million or $0.24 in the same period of 2019.\nFrom my perspective, the operating and financial focus for the company remains as follows.\nWe continue to follow a disciplined approach to planning our factory activity, balancing overhead recovery with demand forecasts and inventory levels.\nAt the end of June 2020, our inventories were at $180 million.\nThis includes about $5 million of inventory related to acquisitions completed since June 30, 2019.\nAn adjusted or underlying inventory of $175 million represents an $18 million reduction as compared to $193 million this time last year.\nWe are highly focused on our balance sheet as we navigate through this pandemic period and having lower inventories at this point in the year is pleasing to report.\nLooking forward, we expect inventories to reduce during the balance of the year.\nOur present forecasts indicate that we will be below prior year numbers for both the remaining reporting periods of 2020.\nThe estimate of $145 million that we previously indicated remains a good estimate, excluding any acquisitions.\nWith regard to accounts receivable, as I noted earlier, our customers have continued to operate without significant disruption.\nThey are placing orders for our products and making payments when expected.\nAs a result, we have not seen any material change in the assessment of our credit risk exposure at the end of the second quarter of 2020 in comparison to prior quarters.\nThe variation between accounts receivable this year and prior comparative periods relate entirely to mix of products, specific markets, individual customers and contractual terms.\nOur business has a distinct annual cycle, and we routinely experienced expansion in working capital in the first half of the year and a reversal in the second half of the year.\nYear-to-date, in 2020, working capital has increased by only $8 million as compared to $45 million in the same period of 2019.\nThis careful management of working capital is driving the improved cash generation from our operating performance.\nIn the first six months of 2020, we have generated $6 million from operations as compared to using $32 million in the first half of 2019.\nComparatively, that amounts to a positive change of $38 million period-over-period.\nWith regard to liquidity, at the end of the second quarter, availability under our credit line was $49 million, which compares to $31 million at the same point in 2019.\nAs we progress through 2020, we intend to continue to focus on both working capital and debt levels.\nIndebtedness ended at $159 million at June 30, 2020, as compared to $165 million this time last year.\nDuring the last year, in addition to paying down $6 million in debt, we have funded more than $35 million in investments, including fixed assets, product acquisitions and technology investments from the cash generated from operations.\nThese investments are focused on developing our businesses for the future.\nDuring the first six months of 2020, we have continued our normal business cycle of expanding working capital in support of our globally situated businesses.\nHowever, we are focusing very carefully on every dollar of working capital, and our usual annual cycle expansion has been much more muted than in previous comparable periods.\nIn summary, though our sales are down in comparison to prior year, our product mix has remained strong, our factories have performed well and gross margins have remained solid.\nWe have performed well at controlling underlying operating expenses which are down.\nFinally, our interest expense is down.\nFrom a balance sheet and cash perspective, we are doing very well managing working capital, and our debt is lower than this time last year, notwithstanding our investments in long-term growth of our businesses.\nFinally, availability under the credit line has improved.\nWith that, I will hand back to Eric.\nI would now like to focus on the key strategic initiatives that will define and enrich our enterprise.\nFirst, we continue to expand our product portfolio through core growth.\nThat is taking existing products and developing new formulations and mixtures tailored for use on new crops for providing greater views of application.\nAs we've reported in the past, at any given time, we are launching some of these solutions while several are in the pipeline.\nWe expect that these core growth products will generate over $100 million in high-margin revenues per annum within the next five years.\nBeyond core growth, Envance technologies continues to broaden market opportunities with their insect receptor targeting technology.\nAs we've reported Envance technology and products are being commercialized by Procter & Gamble for their emerging, safe and effective Zevo brand consumer pest control products.\nWe are pleased that the Chief Executive Officer of P&G, David Taylor, mentioned Zevo in his recent earnings conference call last Thursday.\nWe see this as another positive sign for Envance's innovation partnership with P&G.\nIn addition to Envance's superior technology for households, we believe that this patented nontoxic alternative to traditional pesticides will be successfully leveraged into numerous consumer, commercial and agricultural markets to meet the increasing demand for low-impact solutions.\nThe Envance R&D team has also developed a new technology a new application for their technology to kill weed pests.\nThe company's new herbicide platform delivers broad spectrum efficacy that is safe for people and pets.\nWe intend to pursue all potential market applications to fully exploit the superior safety, functional performance and environmental sustainability of these herbicide solutions.\nOf course, the Capstone of our technology innovation is SIMPAS, and I'm pleased to announce that the launch of this game-changing prescription application technology has arrived.\nAs we've previously discussed, SIMPAS enables growers to precisely target multiple crop inputs solely to the locations where they are needed in order to realize higher yields, significant cost savings and sustainable environmental benefits.\nHaving successfully completed multiple field trials this past spring, we'll be ready to commercialize the SIMPAS system in the fourth quarter of this year.\nThis launch represents a milestone for American Vanguard, and this is how we see it playing out.\nOur market campaign will proceed on several fronts.\nFirst, a group of the industry's largest distributors and retailers, including Nutrien, Helena, Simplot, Harvest Land Co-Op and Asmus Farm supply, all of whom participated in our 2020 spring trial, will use their positive experiences to promote the benefits of SIMPAS to some of their most valued customers.\nSecond, the AMVAC sales and marketing team, in conjunction with BEC Ag marketing consultants will identify progressive growers in each region who have analyzed their soil health and crop protection needs and can significantly benefit from the multiple capabilities of SIMPAS.\nThird, SIMPAS will enable us to provide economically beneficial product solutions to a much broader segment of the corn market than we've reached with our SmartBox corn worm products.\nFor over 20 years, our current SmartBox users have recognized the benefit of using our granular insecticide products, primarily to address corn rootworm pressures which tends to be greatest in the I-70, I-80 corridor, where most farmers also grow soybeans.\nAs we expand our SIMPAS product portfolio to include soybean inputs, we'll be able to offer these same growers both corn and soybean solutions through SIMPAS.\nIn addition, unlike corn rootworm, nematodes are present and economically damaging numbers throughout the entire corn build.\nBy offering counter through SIMPAS for Nematode control, farmers throughout the entire region can significantly improve the return on investment as compared to the current practice of having to apply counter at a uniform rate across the entire form.\nAdd in Southern soybeans and cotton akers and SIMPAS becomes a vehicle to help us increase product sales in all three of these major row crops throughout the United States.\nAs a bridge for SmartBox users who aren't yet ready to make the jump to simultaneous prescriptive application of multiple products, we'll be offering a lower cost system called SmartBox Plus by SIMPAS in Q4 of this year, featuring SIMPAS components such as meters, harnesses and an ISO-based prescriptive controller.\nThe SmartBox plus by SIMPAS will enable farmers to gain the benefits of prescriptively applying a single product like counter for a smaller capital investment.\nLike SIMPAS, SmartBox Plus by SIMPAS supplies only what's prescribed precisely where it's needed.\nThat's good for the environment and for the farmers' bottom line.\nFourth, this year, we plan to introduce SIMPAS into the largest crop protection market in the world, Brazil, where we'll be conducting field development trials in the fourth quarter.\nHaving just completed a comprehensive study with our consulting firm, context of the Brazilian market, we believe there is robust opportunity for our technology in that region, particularly given the extremely large row crop farming operations in such states as and Mapitoba.\nOur market approach in Brazil will vary from that of the U.S. as we will generate sales both through distribution and from direct sales to large growers.\nWe also expect that regional crop input manufacturers will market their own products through smart cartridges, thereby increasing demand for the SIMPAS platform.\nFurther, having Trimble as our global partner, will give us ready access for both sales and support in that country.\nAs an additional entree into Brazil, in 2021, we plan to introduce SmartBox Plus by SIMPAS as a way to prescriptively apply counter to control nematodes in soybeans, the largest row crop in Brazil.\nThis market access was one of the key reasons for our acquisition of Defense Agrovant earlier this year or early last year.\nIn preparing for our domestic Q4 SIMPAS launch, we are manufacturing smart cartridge containers to meet demand for all the SIMPAS applied solutions that will be sold in 2021.\nThe initial filling of these product cartridges will occur in our access Alabama manufacturing plant, and they will be refilled in Q3 and Q4 of 2021 and using Smartfill refilling equipment that we've positioned with select SIMPAS applied solution retailers.\nWe are also adding staff to provide sales, installation and support training to Trimble dealers who will begin SIMPAS sales activities in October of this year.\nIn addition, we are working under NDAs with multiple peer crop protection chemical manufacturers as they conduct application trials of their own products using SIMPAS equipment.\nIt is gratifying that industry leaders are recognizing SIMPAS as a technologically advanced application system.\nFrom the outset, we have aspired to have other manufacturers package and sell their own proprietary products for use as SIMPAS applied solutions.\nAccess to products from multiple companies greatly increases the utility of SIMPAS equipment for farmers.\nWe'll be announcing some of these collaborations in the coming months.\nOn a related note, we have seen strong enthusiasm for our SIMPAS at plant seed treatment process.\nSince seed treatments are generally liquid products, we are focused on expanding our liquid product portfolio offering.\nFinally, we recently received a U.S. patent for our ultimate supply chain tracking software.\nAs crop inputs are applied via SIMPAS, Ultimas enables complete traceability of individual product containers through every step of the supply chain, from the factory to the farmer and to the geotag field location where the product is applied.\nUltimas makes it possible to know precisely when, where and how much product was applied to any given location in the field and to identify the product containers associated with the application.\nWith consumers and food marketers demanding greater transparency as to how food is produced, Ultimas answers those demands through automated and verifiable traceability of applied crop inputs.\nSo on closing, I'm encouraged by what we have accomplished over the course of the second quarter and the year.\nThere is in part to managing a business in the best of times, but the true test is delivering results in the hardest of times.\nIn response to the turmoil brought on by the pandemic, our team has shown discipline from top line to bottom line, selling higher-margin products, launching newer acquired product lines, improving factory use, driving down inventory and debt and generating cash.\nAll the while, we have continued investing in our future through self-funded technology innovation.\nAnd from SmartBox insecticide applications to SIMPAS multiproduct prescriptive applications to automated and verifiable product application traceability through Ultimas, we are on the leading edge of precision ag.\nAnd with that, we'll field any questions you may have.\n", "role": "user" }, { "content": "american vanguard corp qtrly net sales of $105 million, compared with $113 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 little reminder for those of you who may be listening by phone.\nIf you are unable to listen to our entire call today, the conference call will be archived on the company's website for your review at a later date.\nBefore beginning, let's take our usual cautionary reminder.\nSo it's factors can include weather conditions, changes in regulatory policy, competitive pressures, and various other risks that are detailed in the company's SEC reports and filings.\nWe appreciate your continued support and interest in the company.\nToday, I want to give you a quick view of our financial performance supported by commentary on market conditions.\nThen I will turn to the global supply chain, which is a subject of strong interest to most industries.\nI will then ask David to cover financial and operational matters in great detail.\nAfter that I will return with an update on our green solutions and precision application initiatives.\nSo at the -- on Slide four here at the end -- as we ended Q2s conference call, we presented a scorecard on how we did in the first half of '21 versus what we had given at the beginning of the year as our target.\nSo I'm going to update that now through the third and year-to-date through third quarter.\nAnd so with revenue, we were at 25% through the first half through three quarters were exactly still 25%.\nWith our gross profit margin, we were tracking right on 39% through three quarters last year we had slipped a little to 38%, we're still holding at 39% at this point.\nOur operating expenses, you know, we said we would maintain hope to move down slightly if we could as a percent of sales in the first half we had dropped from 35% to 34% and year-to-date, we are now at 33% versus 34%.\nOur interest expense is down now at 20%, so we're attracting certainly below 2020 and believe we'll outperform our initial forecast.\nOn our tax rate, we were 31% versus 23% at -- through the first half, we're now at 27% versus 20% at this point last year.\nWe do expect that rate to drop in the fourth quarter and certainly to meet or exceed our mid-20% range.\nOn our debt to EBITDA, you can see we've dropped from 2.5 times to 2.1 times and as we look at it now, we expect to drop further and probably below the 2 times target that we had drawn out.\nAnd as far as net income is concerned, pretty much the same we were at 86% for the three quarters we're at 87% increase.\nDefinitely a faster rate than our 25% revenue growth and our EBITDA is moving up, as we're now 39% increase from where we were at this time last year.\nSo our strong performance was across all sectors, but our domestic crop business led the way, we benefited from a combination of factors.\nLet me just focus first on commodity prices and I'll start with cotton.\nAnd what we've done is we've measured the price per pound.\nThis is with macro trends as of September 27th of '20 and then comparing that to September 27th of '21, a pretty dramatic increase, it's about 59% increase.\nAnd so this has prompted growers to invest heavy -- more heavily in corn.\nWe've benefited from our corn, I mean, from our cotton insecticides Bidrin, which had a very strong third quarter.\nIn addition, we've had an increase in our cotton defoliant, Folex, which was very strong in the third quarter and we're still seeing orders in -- we saw orders in through October, so that's a big part of our benefit here so far.\nLet's get this back up to where we were.\nSo, soybeans have -- we're at $10.21 a bushel, have increased to $12.85 over that year period, 26% increase.\nYou may recall that we have improved our soybean portfolio with several herbicides we've acquired over the last three years, and as such, soybeans are moving up as a crop for us.\nI think currently or last week we were around 7%, 8%, but -- so it's looking positive for us in that sector.\nAnd then, corn moving from $3.79 a bushel up to $5.42.\nAnd with that, we've seen strong performance with Aztec and our number one corn soil insecticide and IMPACT, which is our number one herbicide -- corn herbicide and we've launched of two new, we had IMPACT C, which was with Atrazine, we've launched off now IMPACT CORE, which is with Seed to [Phonetic] CORE, and SINATE with IMPACT plus glufosinate.\nAnd all four of these are performing well at this point.\nSo our increase overall in the ag sector was up 38% for US crop.\nAnd so that certainly did lead the way for us and this is despite us having logistics issues for our biggest product normally, which is our soil fumigant products where large volume and certainly impacted by the supply chain disruptions.\nOn the remaining sectors, OHP continues to see strong performance, particularly in the markets of the horticulture and plants and in greenhouse activity.\nAMGUARD again professional pest market that is also recovering well.\nAgNova, our Australian business, which is tripled where we were last year.\nAgrinos, which is adding incremental new business.\nMexico is performing well as our other two sectors, Brazil and Central America.\nOverall, these combine to increase17% versus where they were this time last year.\nSo I want to take a second to just talk about supply chain.\nAnd I was at an industry meeting last week, where I was asked to talk a little bit about supply chain from a manufacturing side.\nAnd as I was driving from our plant in Alabama up to the conference in Memphis, I was listening to the radio and the COO of Toyota was talking about specifically the jam that's occurred in the Long Beach Harbor, which is where I grew up.\nAnd he was saying that there are currently 540,000 containers and you're looking at boats here that have about 500 containers on them and 540,000 that are sitting at the port today that have not been -- that are backed up waiting to be unloaded.\nSo that's about 100 vessels and if you go down there, you can see them anchored all up and down the Southern Coast there.\nAnd the current ability to unload at that port is about 18,000 containers a day.\nSo if you looked at it and said, well, I guess in 30 days, we would be able to unload those 540,000 containers, which is true, but the problem is that 29,000 new containers are arriving each day.\nAnd so we're not going the right way and there doesn't seem to be any real solution at the moment.\nSo why is this happening?\nAnd I guess, you know, we talk about maybe a perfect storm that's occurred.\nWe have a shift in buying pattern due to COVID, people got behind, they panicked on certain items.\nSo things shifted around.\nSome items are plentiful, some are short, as you certainly were aware, as you hit your supermarkets or if you try to get a car, anything with circuit boards.\nWe've been operating with the same port capacity for years and generally, being able to kind of make it through, but we just haven't had this bigger shift in buying pattern.\nSame thing with containers, there is limited number of containers and those containers are being delayed as they're sitting waiting to be unloaded or in some cases, the empties are having trouble getting back.\nAnd just a word, we've got products that we were -- we've been trying to ship to Australia and we can't get a truck to take us -- to take it from the 20 miles from our plant down to Long Beach Harbor.\nIf they get there, they're going to wait eight hours and truckers don't particularly want to do that.\nAs such -- lot of the empty containers are just winding up on residential streets throughout the harbor area, as truckers are frustrated and they're just dropping the trailers anywhere and moving on.\nSo, it's created quite a miss and of course, we're dealing with somewhere in that 60,000 to 80,000 truckers short, which makes even once those containers do get offloaded, it gets difficult to actually move them out of the harbor.\nSo what's to be done?\nHow do you deal with it?\nAnd I really, kind of, boil this down to three key factors: first is, production itself.\nWe've got to decide if the product that you're searching for, whether it's intermediate or finished good is going to be produced and when it's going to be produced.\nI'll talk a minute about us dependence on China.\nBut for instance, China has shut down a number of factories for environmental, not necessarily that factor, but production sites.\nAlso, the government is, kind of, prioritizing energy and certain high energy products are not getting permitted to continue for production.\nSo that's putting a squeeze that goes across the world.\nSo first is, can you -- is the product -- can you make that purchase order.\nWe've had products that we've ordered and they've come back and said, you've got to pay more.\nAnd so we say, OK, and then it's like, well, we're not going be able to ship anything.\nSo that's certainly the first thing that you've got to identify, are you going to be able to produce or get the product itself?\nThe second is on logistics, which we talked a little bit about, but those containers that you saw that come over -- last year, we were running about $2,500 to $3,000 per container.\nThis year they've picked up to $26,000 per container and that's just bringing them into the US.\nOnce they are here, then you've got to get it moved from there to your factory or your production site and then from that standpoint, you've got to get it delivered and you've got this shortage of truckers and you've got to try to figure out how you're going to get it, and then how much you're going to pay.\nSo it gets to be sometimes a bidding war.\nIf you want the product to get to point A, how much we'll pay to do it rather than kind of standard fares.\nSo that kind all boils down to maybe -- and the most important point is, let's assume you do get your goods, you clearly need to do quick calculations to understand exactly how much those goods are costing.\nWe're also seeing cost rises in factories as labor wages are going up.\nAnd so we're working with our finance team to look at all SKUs and doing analysis in real-time of what our costs are and making sure that we present those to our commercial product managers, so they have a vision of what's their cost of goods that they're selling.\nAnd so I think the companies that can go through this process will fare the best.\nThere is no real clear vision as to when this disruption I think will cease.\nIt will hit other areas harder than others and will be cyclical.\nAnd so I think you just got to be nimble to understand where this is going.\nSo, on the positive side, again, we're sitting here with six production sites here in North America that gives us the ability to produce and be in a stronger position to handle the instructions.\nI mentioned with China about 8% of our portfolio is dependent on materials from China.\nFew years ago, we've started the process of second sourcing, if we could, outside of China, due to the tariffs, which were pushing up to 31%.\nSecond, we manufacture 46% of our portfolio within our six North American factories.\nHaving these manufacturing facilities gives us both greater independence and the ability to respond quickly to market conditions.\nThird, we order goods from overseas on a comparatively sporadic basis.\nBy contrast, many of our consumer businesses or many of the consumer businesses that's being computing goods, probably and that sort of thing rely upon a steady stream of imported goods.\nNevertheless, we are working closely with our logistics partners to ensure that we can get good from Point A to Point B, and we are ordering good from overseas further and advance sound looking at lesser congested ports, through that means we have been able to manage through the supply chain conditions and at this stage we're optimistic that we will be able to continue to do so without material interruption.\nWith regard to our public filing, I understand from my controller that we are in the file and the queue to file and so I expect that we will file within the half hour or 45 minutes.\nAnd as I have mentioned in previous conference calls, our industry is one that considered critical in all jurisdictions in which we operate and during the pandemic in 2020 and now throughout the nine months of 2021, our business, our customers, our suppliers have all operated without major disruption throughout, so it's been a good place to be during this difficult time.\nAnd this is our quarterly sales performance, you can see that our sales have increased, as Eric mentioned since the first -- the third quarter of 2020.\nOverall, our sales were up about $30 million to a $147 million, that's a 25% increase over the prior year.\nOur US sales were up about 33% or $22 million and our international sales were up about 16% or $8 million.\nAnd because of the very strong US performance, despite the strong international performance, our international sales reduced to about 40% of total sales, whereas this time last year there were at about 43%.\nAnd during the third quarter of 2021, our production performance has been much better this was we expected.\nAnd that has an impact on our gross margin performance and when I look at the crop business, our gross margin performance improved by about 50%, including the impact of the recovery of [Indecipherable] in the factory.\nAnd our non-crop business had significant mix changes in 2021 in comparison to the prior year.\nWith some higher margin business happening earlier in the year in 2020, as compared to this year.\nAnd as a result, our margins have remained comparatively flat in the quarter.\nFor international sales gross margin improved, as compared to the prior year and is primarily the result of the addition of businesses acquired late in 2020, which generate margins higher than our pre-existing business performance.\nI particularly like this graph, because I think it gives a quick way of visualizing the impact of the factory performance has on our results.\nAnd you can see that in the third quarter of 2021, on the far right of the graph, our factories cost is about 1.2% of net sales on the recovery and that compares, if you look back a couple of quarters to the third quarter of 2020, you will see that the cost amounted to 2.5% and that's just a reflection of the kind of activity that we managed to record in the factory in this third quarter.\nOperating expenses increased by about 24% and that amounted to $9 million.\nOur newly acquired businesses accounted for about 14% of the increase and freight accounted for 17%, and then the balance was incentive compensation linked to financial performance, some legal expenses, and increased marketing costs.\nAnd overall our opex as a percentage of sales remained steady at 33%.\nOur operating income in the third quarter was up 112% versus last year.\nIn addition, we made some immaterial adverse changes in the value of two investments we've had for some time.\nAs Eric mentioned, our interest expense continues to track about 24% below the prior year.\nOur tax rate is a little higher than last year, primarily as a result of the strong taxable income in comparison to the prior year.\nAnd finally, our bottom line is about $5.5 million, which is up 88% in comparison to the prior year.\nFor the first nine months of 2021, our sales were up 25%.\nGross margin in absolute terms are up 27%.\nAll our main activities in US crop, US non-crop and international, contributed to this exciting performance.\nOur operating expenses increased primarily as a result of the new businesses acquired in the final quarter of 2020, increased performance linked incentive compensation, legal costs, some increases in travel and costs associated with the volume changes, such as freight and warehouse costs.\nOverall, operating costs were up 22%, as compared to the net sales increase I mentioned a moment ago of 25%, and operating costs, compared to sales improved 33% in 2021, as compared to 34% last year.\nInterest expenses reduced by 23% as a result of cash generated over the last 12 months, and overall, our net income has increased by 87%.\nNow, I'd like to turn my attention to the balance sheet.\nAs you can see from this slide, during the third quarter, we increased cash generated from operations by 56%, as compared to the same quarter of the prior year.\nFurther, you can see that the movements on working capital was in line with the prior year and this performance includes the expanded scope related to the businesses acquired in the fourth quarter of 2020.\nOverall, net cash from operations increased by 34%.\nAt the end of September 2021, our inventories were about $167 million, as compared to $176 million this time last year.\nIf for a moment, we exclude the impact of products and entities acquired since December 2019, which accounted for $10 million of inventory at the end of Q3, our base inventory decreased by 11% from this time last year.\nSo we feel that we have controlled inventory well during this phase of the company's annual cycle.\nOur current inventory target for the end of the financial year remains at $155 million that compares with $164 million at the end of 2020.\nThat target is, obviously, dependent on a few things, including a continued low impact from the pandemic, normal weather patterns, and no more acquisitions this year.\nWith regard to liquidity, under the terms of the credit facility agreement, the company uses consolidated EBITDA as defined in that agreement to determine leverage.\nOur consolidated EBITDA for the trailing four quarters to September 30th, 2021, was $66 million, as compared to $49 million for the four quarters to September 30th, 2020.\nThis taken in conjunction with outstanding indebtedness translates to borrowing availability amounting to $95 million at the end of September 30th, 2021, as compared to $45 million at the same time last year.\nAs you can see from this chart, we've been controlling debt well even as we work through the annual cycle and as we continue to invest in the business for the future.\nOverall, in summary then, the second -- the third quarter of 2021, we have increased sales by 25%, improved overall margins, we have managed operating expenses, which increased in absolute terms, but declined when expressed as a percentage of sales, our net income increased by 88%.\nWe have a similar story for the first nine months of 2021, we increased sales by 25%, gross margins by 24%, operating costs have reduced when compared to net sales, our interest expense is down and net income has improved by 87%.\nFrom a balance sheet perspective, accounts receivables increased driven by strong sales, inventories have been well-controlled, working capital has been held flat during the quarter and debt is lower than this time last year.\nDespite three acquisitions in the intervening 12-months.\nAnd finally, our liquidity position has improved significantly.\nWith that, I will hand back to Eric.\nAnd recently, in quarterly earnings calls, we've provided updated information on our two strategic growth initiatives in green solutions and prescriptive application technology.\nSo let me just go into green solutions.\nSo we mentioned last time that we have, kind of, grown our technology on the green solutions and we've now -- see that we've got 100 different products in our expanding portfolio.\nSo in this slide, we break out the functional categories of our offerings.\nAs you can see, it's a balanced range of solutions with a strong emphasis on bio-fertilizers, bio-stimulants, bio-pesticides, and micronutrients.\nThese products allow us to offer not only our traditional crop protection, kind of, defensive products but beneficial plant nutrition and soil health amendments, as well and so we've developed quite a balanced and growing portfolio.\nSo green solutions has posted steady recent growth as seen on this slide.\nFor Q3, we increased about $10 million, which is 26% increase from Q2.\nAnd I think most of -- a good portion of that growth anyway was attributed to increased sales in LatAm, Brazil, India, and Australia.\nYear-to-date, our revenue is at just $27 million and for the full-year, we're up in our forecast from the $32 million to $35 million range.\nWe're now sticking somewhere in that $35 million to $37 million range.\nAnd of that, about $10 million is coming from.\nLatAm, which is our largest so far.\nSo when you look through what we're focusing on and keeping our eyes on the targets of what we're trying to do in expansion, we've got registrations underway in LatAm, the Columbia business has been transitioned over completed and working well.\nWe've got a pipeline building for further distribution in Europe and Africa.\nWe've got our US group that's looked at opportunities now for some significant increases in '22.\nAnd part of that's a result of the 1,500 spot trials we mentioned last time that we were doing in '21, which are basically looking to benefit in the '22 period.\nWe've also linked this with our SIMPAS trials where we're introducing iNvigorate, which again is a nitrogen fixation product that looks extremely promising.\nWe've got turf and ornamental, our trials are near completion at this point.\nWe've got large scale customer demo plots that we're doing.\nAgain, looking for a pickup for next year.\nWithin then AMGUARD, we mentioned before, our bioherbicide product that we are looking for both consumer and professional pest use on our way to potentially developing for agricultural use.\nThis is significant given Bayer's decision to exit the consumer market through -- at least, domestically through Scotts with RoundUp the kind of leading herbicide in that space.\nSo we see demand for solutions, strong and we think we're well-positioned there.\nWe think Greenplants, which we acquired as part of Agricenter in the latter part of 2017, we knew we had some strong products with which to expand, but it has taken us a while to work that into our other areas.\nAnd we recently moved product into China, and Colombia.\nWe have got other areas down in Australia where we think we've got some strong growth potential.\nBi-PA, which is a consortium in Belgium that we became part of six, seven years ago, maybe, David?\nAnd we've got really our first product that's come out of that.\nIt's a biofungicide that's called Vintec, originally developed in Europe for grapes.\nThey tried this on grapes and -- but we've seen some very strong activity in almonds, and we received our registration in California recently.\nThere's over 1 million acres of almonds in California, and we think we've got a nice fit for a biotreatment for canker, a particular disease that hits almonds.\nAnd we're also doing testing in bananas in Central America that also is looking promising and we're hoping to get registrations there as well.\nSo I guess what we're saying here is, it's a modest change just that we're looking -- kind of moving the needle a few million dollars up in '21 on our target which basically we're looking to double that in the next couple of years and then double that in the next couple of years as well.\nSo it's an aggressive growth, but given all the products that we have and the development work we're doing, the high demand for solutions in that space, currently, we're feeling that our forecast is looking good.\nShifting over to SIMPAS, again, you guys have seen how this graphic demonstrates how the system works.\nDuring our last call, we've updated our forecast revenue for SIMPAS through '25.\nAt this point, the forecast remains unchanged.\nWhat we did do since our last call, as we talked about that we were going to be reaching out to progressive retailers to then focus on their precision farmers begin that shift to prescription application of crop inputs.\nAnd so, with this, we've identified a number of retailers that fit this.\nWe've got over a dozen retailers so far that have entered into agreements for distribution of SIMPAS with us.\nWe expect that, that number to double over the next few months and we've identified I think there is 26 here mostly in the Midwest, but also we've got five retailers in the South.\nSo I guess one question is what's in it for a retailer?\nSorry about that, so these retail partners can provide agronomy and prescription software capabilities needed for targeting SIMPAS inputs of crop protection, plant nutrition, and the soil health fertility enhancements.\nWith this on-the-ground template, SIMPAS can dispense and deposit ingredients that will give the grower maximum yield, minimum cost, elevated return on investment, and beneficial environmental outcomes.\nThese precision ag services help build a strong bond between the grower and the retailer creating a long-term business loyalty.\nKind of one final point that I want to make as we showed this slide before about the attention of the Ultimus software data retention that's part of SIMPAS, which allows concrete documentation through MDR to beneficial agricultural treatment practices.\nAs we pointed out in the emerging carbon credit market, the ability to authoritatively validate such beneficial practices can facilitate securing financial compensation that could substantially offset the investment outlay in adopting technologies such as SIMPAS.\nSo we are working with USDA on sharing this technology, which they were very excited about and they asked us or invited us to apply for a grant and which is under the Agricultural Innovation Center for Program of USDA, and we did get the grant at the end of September.\nA decision-making process is somewhere in that two to eight months, so we expect a decision by Q2 of '22.\nBut this grant that we submitted is for nitrogen reduction by using a SIMPAS Ultimus system, decreasing the use of synthetic fertilizer and in its place applying soil health products.\nSo Ultimus gives the carbon credit program a way to verify, measure, and validate what the grower is doing to qualify for the credits.\nWhen linked to the permanent ledger, since it's blockchain, Ultimus makes an immutable record of everything that was applied to the field by volume and by location.\nAs I've mentioned before, we know of no one else in our industry that has climate-friendly technology as comprehensive of our SIMPAS Ultimus system, particularly when used to dispense our green solutions.\nSo let me end these comments by letting somebody else have the last word.\nThis quote is from Jason Ore, who is an Ore Farms in Iowa and a happy user, I think he has been in the last year or two with SIMPAS and so his words are, the opportunities are endless.\nI can foresee in the future dozens of SIMPAS supplied solutions being applied this way.\nThis is going to change the way we producers look at in-furrow application.\nSo with that, I'd like to open it up to any questions you may have.\n", "role": "user" }, { "content": "compname reports q3 net sales up 25% and net income up 88%.\ncompname reports improved financial results with third quarter net sales up 25% and net income up 88%.\namerican vanguard corp - qtrly net sales up 25% to $147 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Please note that throughout today's discussion, we'll be making references to non-GAAP financial measures.\nWe remind you that we'll make certain predictive statements that reflect our current views and estimates about our future performance and financial results.\nOn the call today are Mitch Butier, Chairman, President and Chief Executive Officer; Greg Lovins, Senior Vice President and Chief Financial Officer; and Deon Stander, Vice President and General Manager, RBIS.\nWe delivered another strong quarter ahead of our expectations, raised our outlook for the second half and announced an agreement to acquire Vestcom, a leader in shelf-edge pricing and branded labeling solutions in the U.S. Vestcom has roughly $400 million in revenue with a consistent history of strong growth and above company average margins.\nVestcom will further expand our position in high-value categories, while adding channel access and data management capabilities that have the potential to further advance our Intelligent Labels strategy.\nDeon will tell you more about the acquisition, both the strength of the company and how it will accelerate our strategies, in a moment.\nIn the second quarter, earnings rebounded significantly as sales grew 29% on a constant currency basis, reflecting a strong rebound in RBIS and IHM and continued strength in LGM.\nThe quarter was even more impressive relative to 2019, with revenue up 14%, EBITDA margins up 80 basis points and earnings per share up 30%.\nNow while we are pleased with the results, our strong performance comes at a time of continued uncertainty, given the global health crisis and constraints within supply chains.\nWhile the rate of new cases among our team remained stable, many parts of the world are experiencing an increase in COVID-19 cases.\nCertain countries, particularly in South Asia, have experienced a significant rise in infection rates leading to the recent disruptions at a few RBS manufacturing locations.\nWhile this is impacting July, we don't anticipate these disruptions will impact demand in the back half of the year.\nIn addition to the effects of the pandemic, supply chains remain constricted, affecting end markets and adding to inflationary pressures.\nThis constraint on the availability of raw materials, freight and in the U.S., labor, continues to impact the industries in which we operate.\nDespite these constraints, we've been able to deliver record volumes as our team continues to leverage our global network and scale to minimize disruptions to our customers.\nThe current environment further reinforces our determination to remain vigilant in protecting the health and well-being of our team and agile to ensure we continue to meet customer needs.\nNow a quick update by business.\nLabel and Graphic Materials posted strong top line growth for the quarter and demand for consumer packaged goods and e-commerce labels continued to drive strong volume in our Label and Packaging Materials business, while our Graphics and Reflective Solutions business rebounded significantly off prior year lows.\nAs for profitability, LGM margins remained strong despite increasing inflationary headwinds, including costs in the quarter from the supply chain constraints.\nGiven the increasing inflationary pressures, we are redoubling our efforts on material reengineering and again raising prices.\nWe are targeting to close the inflation gap relative to mid last year by the fourth quarter.\nRetail Branding and Information Solutions delivered robust growth in the quarter and expanded margins significantly compared to prior year lows.\nCompared to 2019, margins expanded further as the segment grew 25% on a constant currency basis and 14% organically, driven by strength in both high-value product categories, particularly Intelligent Labels as well as the core apparel label business as retailers and brands continued to gear up for a strong rebound in end demand.\nEnterprisewide, Intelligent Labels sales were up 40% compared to 2019.\nAs expected, the strong growth in our RFID business was primarily driven by apparel.\nWhile outside of apparel, we continue to see strong momentum building for new applications in all key geographies.\nIn the food segment, for example, a North American restaurant chain recently began rolling out RFID across their network after a successful pilot over the past year.\nAnd in logistics, we saw positive momentum, including the adoption of an Intelligent Labels solution at a large global player in the transport of hazardous materials, such as batteries, which requires special shipping protocols.\nThese are just two examples of programs of what will be many in the years to come.\nIn the Industrial and Healthcare Materials segment, sales rebounded off prior year lows, showing positive growth compared to 2019 as the segment is on pace for its fourth consecutive year of margin expansion.\nGiven our strong performance in the second quarter and our increased expectations for the rest of the year, we have raised our full year outlook for the company, both on the top and bottom lines.\nOverall, I am pleased with the continued progress we are making toward the success of all of our stakeholders.\nOur consistent performance reflects the strength of our markets, our industry-leading positions, the strategic foundations we've laid and our agile and talented team.\nWe remain focused on the consistent execution of our five key strategies to drive outsized growth in high-value categories, grow profitably in our base businesses, focused relentlessly on productivity, effectively allocate capital and lead in an environmentally and socially responsible manner.\nWe are confident that a consistent execution of these strategies, both organically and through M&A, such as the Vestcom acquisition, will enable us to achieve our long-term goals, including consistently delivering GDP+ growth and top quartile returns.\nTurning to slide 14.\nVestcom is a market-leading provider of pricing and branded labeling solutions for the retail shelf-edge powered by advanced data management capabilities.\nIt's a high-growth, high-margin business generating rough $400 million in annual revenue.\nVestcom is a highly synergistic adjacency to RBIS, building on our pricing and data management capabilities in adjacent markets and increasing our presence in high-value categories.\nVestcom, led by an excellent management team, has been consistently growing at a high single-digit rate organically over the long term with strong track records across cycles and highly accretive EBITDA margins.\nAs you may recall back in March at the Investor Day, we outlined RBIS' key strategies, which include delivering outsized growth in high-value categories, unlocking growth in value in food and logistics, growing profitably in the base business and strengthening our digital capabilities and solutions.\nVestcom is an accelerator for all of these strategies.\nIn particular, Vestcom provides an opportunity to help accelerate our Intelligent Labels ambitions in food through their additional access to end users in retail, grocery, drug and dollar in particular, and to consumer packaged goods companies, who are key decision makers in the food ecosystem as well as their sophisticated and complementary data management capabilities.\nTurning to how Vestcom delivers for its customers.\nAs you can see on slide 15, Vestcom solutions create real value for retailers and brands, and they do so by combining data management with outstanding customer service delivery.\nVestcom solutions start with taking multiple data files, including price, promotion, planogram and brand content files and merging these to create uniquely integrated shelf-edge labels that have impacts at the point where the majority of consumers make their purchase decisions.\nTheir solutions, which provide both productivity and consumer engagement benefits, include stats which delivers integrated price and promotion labels to each store in time for store associates to label the shelf with the latest pricing and promotion updates in walk sequence that is sorted and ready to walk and tag based on the exact planogram layout for that particular store.\nAs slide 16 indicates, the reduction in store labor time to execute these weekly price and promotion changes so efficiently is significant.\nAnd in addition, the improved level of pricing and planogram compliance drives greater consumer impact and commensurate higher sales lift for the retailer.\nVestcom then builds on this effective productivity and pricing solution by uniquely leveraging the same label real estate to add branded content from CPGs or the retailer to support their time-specific marketing campaigns.\nThese consumer engagement solutions include shelfAdz, which allows for highly effective in-store shelf-edge advertising with the unique advantage of combining all three elements in front of the consumer, the price, the promotion and the brand message of content.\nThis solution provides real value in both sales lift and return on advertising spend for both CPGs and retailers.\nThe strong return on investments delivered by both their productivity and consumer engagement solutions positioned Vestcom as a strategic partner to their customers, reflected in the deep relationships they have across the grocery, drug and dollar segments they serve.\nIt is these relationships and solutions in combination with our own that will help complement our strategy to accelerate IL adoption beyond apparel.\nThis is particularly true in food, where we are already investing in our IL and digital capabilities and where the need for visibility and problems through the supply chain, inventory and date freshness accuracy on shelf, pricing effectiveness and managing an increasingly omnichannel environment are key success factors for retailers.\nAdditionally, the combination of our businesses provides the opportunity to create a unique end-to-end inventory management and pricing solution for retail in the next evolution of our data solutions and digital journey, building on the acquisition of ZippyYum and the launch of our atma.io platform.\nLastly, we are pleased to add this high-performing business to our portfolio.\nAnd I am personally looking forward to both welcoming the Vestcom team and the future prospects of the combined businesses.\nAnd with that, I'll hand the call over to Greg.\nI'd like to first add a few points about Vestcom, and I'll be referring to the transaction summary on slide 17 of our supplemental materials.\nAs Mitch and Deon already mentioned, Vestcom's annual revenue is roughly $400 million, with strong historical growth and EBITDA margins above our company average, including synergies.\nThe purchase price of $1.45 billion represents an EBITDA multiple below our overall company multiple, and we expect this deal to be accretive to earnings per share by 2022.\nWe're currently planning to fund the acquisition through a combination of cash and debt.\nIf the deal closes in Q3, as anticipated, we expect our leverage ratio to be near the low end of our target range at the end of this year, giving us ample capacity to continue executing our capital allocation strategy.\nNow jumping back to our Q2 results.\nAs Mitch said earlier, we delivered another strong quarter with adjusted earnings per share of $2.25, which was above our expectations by about $0.10 and roughly $1 per share above prior year, driven by significant revenue growth.\nSales were up 29% ex currency and 28% on an organic basis compared to prior year, driven by strong, broad-based demand and the benefit from easier comparisons, given that the pandemic had the biggest impact on our results in Q2 of last year.\nCompared to 2019, our growth has also been strong with organic sales up 11% versus Q2 2019.\nOur strong growth, combined with productivity gains, more than offset the headwind of last year's temporary cost reduction actions as well as an increasing inflation and new organic investments to deliver an adjusted operating margin of 12.8%, up 210 basis points from last year.\nWe realized $17 million of net restructuring savings in the quarter, the majority of which represented carryover from projects we have pulled forward into 2020.\nWe also recorded two items, which largely offset each other in our GAAP results in the quarter.\nThe first is a gain related to the recovery of Brazilian indirect taxes paid in previous years, and the second is a liability related to the previously disclosed ruling in the ADASA legal matter, which the company disputes and remains confident in the prospects of a more favorable outcome upon appeal.\nNow as Mitch mentioned, supply chains remained tight and input costs have been increasing.\nBoth raw material and freight inflation were above our initial expectations, and we have continued to see costs rise as we entered the third quarter with expected sequential inflation in Q3 at a mid- to high single-digit rate with variations by region and product category.\nWe are addressing the cost increases through a combination of product reengineering and pricing and have announced additional price increases in most of our businesses and regions across the world.\nTurning to cash generation and allocation.\nYear-to-date, we've generated $388 million of free cash flow with $206 million in the second quarter, up significantly compared to previous years.\nIn the first half of the year, we paid $108 million in dividends and repurchased over 500,000 shares at an aggregate cost of $95 million, for a total of $203 million returned in cash to shareholders so far this year.\nAnd as I said earlier, our balance sheet is strong with a net debt-to-adjusted EBITDA ratio of 1.3 at quarter end.\nThis gives us ample capacity, even after the Vestcom acquisition, to continue executing our capital allocation strategy.\nNow turning to the segment results.\nLabel and Graphic Materials sales were up 17% ex currency and 16% on an organic basis, driven by higher volume and pricing.\nCompared to 2019, sales were up 11% on an organic basis.\nLabel and Packaging Materials sales were up roughly 12% organically, with strong volume growth in both the high-value product categories and the base business.\nGraphics and Reflective sales continued to rebound nicely compared to the trough we saw in Q2 of last year and were up 49% organically.\nNow similar to last quarter, we do believe that Q2 benefited from customers pulling forward some volume from Q3, ahead of new price increases.\nLooking at the segment's organic sales growth in the quarter by region, North America sales were up high single digits.\nIn Western Europe, sales were up mid-teens as demand in both regions increased from Q1.\nAnd emerging markets overall were up roughly 20%, continuing their strength from the first quarter.\nThe Asia Pacific region grew roughly 20%, led by significant growth in India, in the ASEAN region with easier comps, given the pandemic impacts we saw in Q2 last year.\nAnd then low -- and then we had low double-digit growth in China.\nAnd Latin America grew over 30% with particular strength in Brazil.\nAnd while LGM's adjusted operating margin remained strong, it decreased slightly from last year to 14.5%.\nThis was partially driven by the impact of supply constraints, which led to both increase in inflation and some incremental costs in the quarter such as expedited freight and overtime to ensure we had supply to service our customers' needs.\nShifting now to Retail Branding and Information Solutions, RBIS sales were up 73% ex currency and 72% on an organic basis, as growth was strong in both the high-value categories and the base business due in part to lower prior year comps.\nCompared to 2019, organic growth was 14%.\nThe apparel business continued its strength as retailers and brands prepared for increasing demand with particular strength in the value and performance channels and continued double-digit growth in external embellishments.\nIntelligent Labels sales were up organically roughly 65% and up 40% compared to 2019.\nAdjusted operating margin for the segment increased to 13.1% as the benefits from higher volume and productivity more than offset the headwind from prior year temporary cost reduction actions, higher employee-related costs and growth investments.\nThe RBIS team has continued to deliver, increasing their top line growth and margins significantly over the last four years with margin expansion of more than four points since 2016.\nTurning to the Industrial and Healthcare Materials segment.\nSales increased 39% ex currency and 33% on an organic basis, reflecting strong growth in industrial categories, particularly in automotive applications, which more than offset a decline in personal care tapes due to tougher comps.\nCompared to 2019, sales were up 6% on an organic basis.\nAdjusted operating margin increased 490 basis points to 11.7% as the benefit from higher volume more than offset the headwind from prior year temporary cost reduction actions and higher employee-related costs.\nNow shifting to our outlook for 2021.\nWe have raised our guidance for adjusted earnings per share to be between $8.65 and $8.95, a $0.20 increase to the midpoint of the range.\nThe increase reflects the strong performance in Q2 as well as an increased expectation for the rest of the year, driven by continued strong organic sales growth.\nAnd as a reminder, this guidance does not yet include the impact of the Vestcom acquisition, which is expected to close later in the third quarter.\nWe now anticipate 14% to 16% ex currency sales growth for the full year above our previous expectations, driven by both higher volume and the impact of higher prices.\nIn particular, the extra week in the fourth quarter of 2020 will be a headwind of a little more than one point to reported sales growth and a roughly $0.15 headwind to earnings per share in 2021.\nWe estimate Q1 benefited by roughly $0.15 based on the shift of the calendar and then anticipate a roughly $0.30 headwind in Q4.\nThe anticipated tailwind from currency translation is now roughly 3.5 points to sales growth and $35 million in operating income for the year based on current rates.\nAnd we now estimate that incremental pre-tax savings from restructuring, net of transition costs, will contribute $60 million to $65 million, down somewhat from our April estimate as the strong demand environment has led us to delay certain projects.\nAnd given the increased outlook for earnings and working capital productivity, we are now targeting to generate over $700 million of free cash flow this year, which is up roughly 30% from last year and 40% from 2019.\nNow given the distortion in our year-over-year comparisons due to the pandemic last year, let me provide you with some color on our second half outlook in relation to the first half of this year.\nThere are four primary drivers which are each worth roughly $0.15 plus or minus, in the second half compared to the first half.\nFirst item is the calendar shift I just mentioned a minute ago.\nSecondly is the impact from the prebuy of volume from Q3 into Q2.\nThird, there is a sequential price inflation gap in the third quarter, which we expect to close in Q4, driven by the timing of passing new pricing increases through.\nAnd lastly, given our continued confidence in our business, we are ramping up our pace of investments to drive our long-term strategies.\nSo in summary, we delivered another strong quarter in a challenging environment, and we remain on track to deliver on our long-term objectives to achieve GDP+ growth and top quartile returns on capital, which, together, drives sustained growth in EVA.\n", "role": "user" }, { "content": "compname posts q2 adjusted non-gaap earnings per share $2.25.\nq2 adjusted non-gaap earnings per share $2.25.\nsees fy 2021 adjusted earnings per share range $8.65 to $8.95.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Please note that throughout today's discussion, we'll be making references to non-GAAP financial measures.\nWe remind you that we'll make certain predictive statements that reflect our current views and estimates about our future performance and financial results.\nOn the call today are Mitch Butier, Chairman, President and Chief Executive Officer; and Greg Lovins, Senior Vice President and Chief Financial Officer.\nI'm pleased to report, we delivered another strong quarter.\nOur two primary businesses achieved impressive top and bottom line growth and momentum in our Intelligent labels platform continues.\nWe are in a higher demand environment that comes at a time of continued and increasing challenges.\nThe ramping up of COVID infections and restrictions in some countries, continued supply chain challenges and additional inflationary pressures are taxing the industry, our customers and our teams.\nThe biggest challenges have been in LGM North America due to raw material shortages and labor and capacity constraints, and in RBIS Vietnam, where output was significantly constrained in the quarter due to COVID restrictions.\nWhile we are encouraged by recent trends in these businesses as we've been able to increase output in recent weeks, the supply chain constraints continue.\nAs for inflation, the pressures continue to increase.\nWe previously expected some abatement in raw material input cost toward the end of the year, whereas, we now expect additional inflation in Q4, as well as Q1 of next year.\nNow for context on the magnitude of the inflation, in our materials businesses alone, we will be exiting this year with annualized inflation of more than $600 million.\nThat's a nearly 20% increase; a rate we have not seen in decades.\nWe are thus in the midst of another round of price increases.\nDespite these hurdles, we continue to achieve impressive results.\nThe team is doing a tremendous job managing through these compounding challenges, focusing on keeping our team safe and delivering for our customers.\nNow a brief recap of the segments.\nLabel and Graphic Materials posted strong topline growth for the quarter over coming the challenges I just highlighted as demand for consumer packaged goods and e-commerce trends continued to drive strong volume growth in our Label and Packaging Materials business, while growth in our Graphics and Reflective Solutions business continues to rebound.\nLGM's profitability remained strong, though margins were down from last year due to the increasing inflationary headwinds and higher costs in the quarter from the supply chain constraints.\nGiven the increasing inflationary pressures, we have redoubled our efforts on material reengineering and, as I mentioned previously, are raising prices again.\nRetail Branding and Information Solutions delivered strong revenue growth in the quarter and continued to expand margins significantly.\nThe segment grew 22% on a constant currency basis and 14% organically, driven by strength in both high-value product categories, as well as the core Apparel business.\n[Technical Issues] Impressive performance is despite the significant constraint in South Asia where we have major manufacturing hubs, once again demonstrating the advantages of our global manufacturing network.\nIntelligent Labels sales, enterprisewide, were up 15% in the quarter and we are on track for approximately 30% organic growth for the year versus 2020 and 40% versus 2019, toward the higher end of our long-term target.\nAs expected, the continued strong growth in our RFID business was primarily driven by Apparel.\nApplications outside of Apparel, particularly food and logistics grew faster than the average, though obviously off of a small base.\nAnd in Q3, we also closed the acquisition of Vestcom, a business that further expands our position in high-value categories and has the potential to further advance our Intelligent Labels strategy.\nIn the Industrial and Healthcare Materials segment, sales continue to rebound off prior year lows and were up relative to 2019 by 11% on a constant currency basis.\nAs for margins, they are down as inflationary pressures [Technical Issues] and costs from supply chain disruptions have impacted the segment to a greater degree than LGM.\nOverall, I am pleased with the progress we're making at the company on our long-term strategies, while also executing in the near term.\nWe are providing superior service to our customers despite the challenging environment, keeping our team safe and engaged, ramping up investments for the long term and ensuring we continue to deliver for our shareholders.\nGiven our strong performance in the quarter, we have raised our outlook for the year.\nWe now anticipate an earnings growth of roughly 25% over last year's record and are on track to achieve all of our five-year companywide goals that we established in early 2017.\nWith that, I'll now hand it over to Greg.\nWe delivered another strong quarter with adjusted earnings per share of $2.14, up 12% over prior year, and up 29% compared to 2019, driven by significant revenue growth and strong margins.\nSales were up 17% ex-currency and 14% on an organic basis compared to prior year, driven by strong volume across the portfolio and higher prices.\nWe also delivered strong growth compared to 2019 with organic sales up 10% versus two years ago.\nAs Mitch mentioned, our supply chains remain tight and input costs have continued to rise.\nBoth raw material and freight inflation were above our expectations for the quarter and we've continued to [Technical Issues] cost rise as we enter the fourth quarter.\nWe continue to address the cost increases through a combination of product reengineering and pricing, and have announced additional price increases in most of our businesses and regions across the world.\nDespite the impact of inflation, supply chain disruptions, and the headwind of last year's temporary cost reduction actions, we delivered a strong adjusted EBITDA margin of 15.4%, down 70 basis points from last year and up 120 basis points compared to 2019.\nTurning to cash generation and allocation.\nYear-to-date, we've generated $639 million of free cash flow, up over [Phonetic] $251 million in the third quarter.\nThat's up significantly compared to previous years, driven by our strong net income growth and working capital productivity.\nAnd we closed the Vestcom acquisition in the quarter for a total purchase price of roughly $1.45 billion.\nTo fund the acquisition, we used the net proceeds from an $800 million senior note offering in August, along with cash in commercial paper.\nAdditionally, in the first three quarters of the year, we returned a total of $290 million in cash to shareholders, through $164 million in dividends and the repurchase of over 700,000 shares at an aggregate cost of $126 million.\nOur balance sheet continues to be strong with a net debt to adjusted EBITDA ratio of 2.3 at quarter end, at the bottom end of our long-term target leverage range.\nThis gives us significant capacity to continue the disciplined execution of our capital allocation strategy.\nNow turning to the segment results.\nLabel and Graphic Materials sales were up 15% ex-currency and 14% on an organic basis, driven by strong volume and roughly 5 points from higher prices.\nCompared to 2019, sales were up 11% on an organic basis.\nLabel and Packaging Materials sales were up roughly 15% organically, with strong volume growth in both the high-value product categories and the base business.\nGraphics and Reflective sales were up 11% organically.\nAnd looking at the segments' organic sales growth in the quarter by region, North America sales were up low-double-digits, despite raw material availability challenges that have continued to create extended lead times.\nWestern Europe grew more than 20%, partially due to easier comps, given the impact of the pandemic we saw in Q3 last year.\nWith that said, the business was still up double-digits versus 2019.\nAnd overall, emerging market sales were up low-double-digits in the quarter, with double-digit growth in both ASEAN and Latin America and mid-single-digit growth in China.\nWhile LGM's profitability remained strong, adjusted EBITDA margin decreased from last year to 15.9%.\nThis was partially driven by the increased inflationary pressures and the impact of supply constraints, which led to some incremental costs in the quarter, such as expedited freight and overtime to minimize disruptions to customers.\nAnd as you know, our goals are to deliver GDP-plus growth and top-quartile returns on capital, with a focus on driving EVA.\nOur approach to price increases in material reengineering is designed to do just that as we looked [Technical Issues] at higher material costs on a dollar basis by the end of an inflationary cycle.\nHowever, the revenue base from such price increases alone, especially the magnitude we are seeing in the back half of this year, reduces operating margin on a percentage [Technical Issues] with no impact to returns.\nThis pricing impact led to a reduction in operating margin by roughly 0.75% [Phonetic] in the third quarter.\nShifting now to Retail Branding and Information Solutions.\nRBIS sales were up 22% ex-currency and 14% on an organic basis as growth remained strong in both the high-value categories and the base business due, in part, to lower prior year comps.\nCompared to 2019, organic growth was up 9%.\nThe Apparel business saw particular strength in the performance and premium channels, and continued double-digit growth in external embellishments.\nAs Mitch mentioned, Intelligent Labels sales were up organically, roughly 15% and up about 40% compared to 2019.\nAdjusted operating margin for the segment increased to 13.8% as the benefits from higher volume and productivity more than offset the headwinds from prior year temporary cost reduction actions, higher employee-related costs, and growth investments.\nThe RBIS team is continuing to deliver in this high-growth, high-margin business.\nTurning to the Industrial and Healthcare Materials segment.\nSales increased 20% ex-currency and 15% on an organic basis, reflecting strong growth in both the Industrial and Healthcare categories.\nCompared to 2019, sales were up 6% on an organic basis.\nAdjusted operating margin decreased to roughly 10% as the benefit from higher volume was more than offset by the net impact of pricing, higher freight and raw material costs and higher employee-related cost.\nFreight, in particular, had an outsized impact on IHM in the quarter, given the significant increases in global shipping costs.\nNow, shifting to our outlook for 2021.\nWe have raised our guidance for adjusted earnings per share to be between $8.80 and $8.95, a roughly $0.08 increase to the midpoint of the range.\nAnd we now anticipate roughly 15% organic sales growth for the full year, at the high end of our previous range reflecting strong volume growth and the impact from higher prices.\nIn particular, the impact of the extra week in the fourth quarter of 2020 and the resulting calendar shift will be a headwind to reported sales growth of roughly 8 points in the fourth quarter of this year, with a roughly $0.30 earnings per share headwind.\nThe anticipated tailwind from currency translation is now $30 million in operating income for the full year, based on current rates.\nMost of this benefit came in the first half and will thus create a headwind as we go into 2022 if rates stay where they are now.\nAnd we expect a modest earnings per share benefit from Vestcom in 2021, net of purchase accounting amortization, which we estimate to be nearly $60 million on an annualized basis and net of financing costs.\n[Technical Issues] target over $700 million of free cash flow this year, up significantly from previous years.\nIn summary, we delivered another strong quarter in a challenging environment and we remain on track to deliver on our long-term objectives to achieve GDP-plus growth and top-quartile returns on capital, which together will drive sustained growth in EVA.\n", "role": "user" }, { "content": "q3 adjusted non-gaap earnings per share $2.14.\nsees 2021 adjusted earnings per share range of $8.80 to $8.95.\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 on the call today are Vic Grizzle, our CEO; and Brian MacNeal, our CFO.\nActual outcomes may differ materially from those expected or implied.\nBoth are available on our website.\nIt's good to be with you today to review our first quarter results.\nA solid start to what we expect will be a robust year of growth for Armstrong.\nOverall in the quarter, we continue to see sequential improvement and the recovery of our markets.\nOur total company daily shipping rate sequentially improved and accelerated through the end of the quarter and that acceleration has continued nicely into April.\nThis first quarter comparison is against the last of the pre-COVID market conditions as we saw very little impact from our -- from COVID in our base period.\nIn this first quarter of 2021, adjusted revenue of $253 million increased 2% from prior year, driven by sales of our 2020 acquisitions, which more than offset COVID-driven volume reductions in our organic business.\nAdjusted EBITDA of $85 million declined 12% from the prior year driven by COVID-related volume declines, continuing investments in our growth initiatives and the resumption of spending that was deferred when the pandemic hit.\nThe Mineral Fiber business has started the year as we expected.\nOur Mineral Fiber daily shipping rate posted a third consecutive quarter of sequential improvement as people return to work and markets continue to reopen.\nLike-for-like pricing exceeded input cost inflation, top-line mix was positive as sales of our premium products continue to outpace the rest of our product offerings and channel mix was once again a headwind, although to a lesser extent driven by relatively strong sales in the lower price point home center channel.\nChannel mix as we have experienced during the pandemic has already begun to subside and is not expected to be a headwind going forward.\nThe territory mix challenges we faced for the past few quarters have diminished as New York City and the other six major metro areas we've recently called out are essentially in line with the rest of the country.\nOn the operations side, our Mineral Fiber plants ran well with solid productivity despite the challenges created by the winter storms.\nAnd our WAVE joint venture performed well and was able to price ahead of rising steel costs to deliver a strong first quarter.\nOur architectural specialty business delivered solid top-line growth of 25% versus prior year quarter driven again by our 2020 acquisitions of Turf, Moz and Arktura.\nA real highlight in the quarter was the acceleration in order intake with the sequential organic order intake at a record level that's resulted in a stronger-than-expected backlog.\nWe continue to be encouraged by our win rates on projects and our ability to differentiate our offering versus our competition.\nGiven our strong backlog, we remain confident in delivering our 2021 sales outlook of more than 30% growth.\nIn the quarter, we continued our investment in architectural specialties to further extend our capabilities and our capacity to support our expectation of continuing strong growth in this segment.\nIntegration of our three new acquisitions continues to go well and I remain excited by the potential for incorporating their technology and design capabilities across the Armstrong platform.\nOur acquisition pipeline is robust and continues to grow, and we have the balance sheet, liquidity and appetite to execute additional acquisitions and alliances.\nIn terms of the overall macroeconomic environment and marketplace conditions, markets have improved and are showing signs of gaining momentum.\nI am encouraged by the trends we are seeing in the data and by the tone of the conversations with our customers and distribution partners.\nBidding activity continued to improve through the quarter and more projects delayed last year are being released.\nGDP estimates are being revised upwards, which is a positive leading indicator for increasing renovation activity.\nCEO confidence is rising and return-to-office statistics are improving signaling a desire for an expectation of return to the marketplace.\nThere's a strong desire to get students and teachers back in the classroom, where they can be most productive and to get work teams back together, so they can be most effective in collaborating, innovating and networking.\nThese trends along with the potential for trillions of dollars in government spending on infrastructure, including spending specifically targeted for renovating schools is creating greater optimism and a more favorable economic backdrop.\nAlong with stronger economic outlook inflationary pressures are ramping up.\nThe raw material most impacted in our operations thus far has been steel used primarily at our WAVE joint venture in the manufacturing of our suspension systems.\nAs a result, beginning back in December, we have implemented five price increases totaling more than 40%.\nIt's been a challenging body of work for both our sales teams and our distribution partners to manage, but they have performed well and as evidenced by WAVE's first quarter results.\nWe are also experiencing rising input and freight costs in our Mineral Fiber and Architectural Specialties segments.\nAs a result, we have announced a heavier-than-normal 10% price increase on Mineral Fiber products and pulled the effective date up to May, earlier than normal.\nThis is on top of the implemented February increase of 7%.\nIn Architectural Specialties, we have also increased pricing on standard products and are adjusting our quoting processes on custom projects.\nWith these actions, I remain confident that we will once again deliver like-for-like price realization greater than input cost inflation.\nOverall, both segments are operating at a high level.\nWe have fortunately not experienced any supply chain disruptions, allowing for outstanding service levels.\nAnd because of our recent digitalization initiatives, we are staying more closely connected to our customers and partners than ever before supporting a strong project backlog position.\nAnd our teams are executing well on our price initiatives to stay ahead of inflation.\nSo with this healthy state of operation, a solid first quarter result and our market outlook for the remainder of the year, we are reiterating the full year 2021 guidance we provided in February.\nToday, I will be reviewing our first quarter 2021 results and our guidance for the full year.\nOn Slide 4, we'll begin with our consolidated first quarter results.\nAdjusted sales of $253 million were up 2% versus prior year.\nThese adjusted sales include approximately $700,000 of purchase accounting adjustments related to our 2020 acquisitions.\nThis is the last quarter for this adjustment.\nAdjusted EBITDA fell 12% and EBITDA margins contracted 520 basis points.\nAs Vic stated earlier, this contraction was expected given the pressure that persists this quarter from COVID-related demand declines, the investments we continue to make in our growth initiatives and the fact that we have reinstituted the cost we temporarily cut last year.\nFurthermore, as a reminder, when you look at our adjusted EBITDA reconciliation in the appendix on slide 12, Q1 of 2020 earnings as reported were significantly impacted by our Q1 pension annuitization.\nAdjusted diluted earnings per share of $0.84 were 23% below prior year results.\nThis result includes $6 million or $0.09 of amortization expense related to our 2020 acquisitions.\nAdjusted free cash flow declined by $13 million versus the prior year.\nOur balance sheet remains in a strong position as we ended the quarter with $397 million of available liquidity, including a cash balance of $122 million and $275 million of availability on our revolving credit facility.\nWhile net debt of $587 million was $43 million above Q1 2020 results, our net debt-to-EBITDA ratio of 1.9 times as calculated under the terms of our credit agreement remains well below our covenant threshold of 3.75 times.\nWe have considerable headwind in this measure.\nIn the second quarter, we repurchased 126,000 shares for $10 million or an average price of $79.60 per share.\nSince the inception of our repurchase program in 2016, we have bought back 9.9 million shares at a cost of $616 million for an average price of $62.57 per share.\nWe currently have $584 million remaining under our repurchase program, which expires in December 2023.\nSlide 5 summarizes our Mineral Fiber segment results.\nIn the quarter, sales declined 5% versus prior year due to the impact of COVID.\nMineral Fiber shipments exited the quarter on a positive note with March shipments flat to prior year on a rate-per-day basis.\nThrough Friday, April's month-to-date daily ship rate is up 58% versus prior year and higher than 2019.\nThe positive like-for-like pricing and favorable product mix continued.\nBut as Vic mentioned channel mix was a headwind in the quarter and affected the fall-through rate.\nWe expect this will be the last quarter we face this channel mix fall-through rate headwind.\nMineral Fiber segment adjusted EBITDA was down 10% as a result of the COVID-driven volume declines, SG&A spending to support our growth of investments and the reinstitution of the 2020 temporary cost reductions.\nThe Mineral Fiber plants ran well and drove productivity that fell through to the bottom line.\nInput cost inflation was temporarily offset by inventory valuations, but inflation is clearly ramping up and driving our proactive pricing actions.\nAs Vic mentioned, WAVE has been pricing out ahead of rising steel costs.\nMoving to our Architectural Specialties or AS segment on Slide 6.\nAdjusted sales grew 25% versus prior year were $13 million as the 2020 acquisitions of Turf, Moz and Arktura contributed $17 million in the quarter and more than offset COVID-driven organic sales decline of $4 million.\nEBITDA for our AS segment declined $3 million as EBITDA contributions from the 2020 acquisitions were more than offset by AS organic performance.\nSales for our AS organic business continue to be lumpy as projects were delayed out of the first quarter and we made growth investments in both capacity and capability to support our top line expectations for AS.\nWe remain confident in our sales guidance for the AS business as a result of the favorable trajectory of order intake in the first quarter that Vic mentioned.\nAs sales ramp up throughout the year, we expect EBITDA margins to improve.\nSlide 7 shows drivers of our consolidated adjusted EBITDA results for the quarter including a breakout of the impact from our 2020 acquisitions.\nSales from our acquisitions essentially offset organic volume declines.\nAUV was a positive contributor driven by like-for-like pricing in the Mineral Fiber segment, but was offset by higher SG&A.\nSlide 8 shows adjusted free cash flow performance in the quarter versus the first quarter of 2020.\nCash flow from operations was down $13 million driven by lower earnings.\nKeep in mind that the first quarter is typically our weakest for free cash flow generation as we build inventory to service the strong summer demand period.\nWe remain confident that we will deliver the 19% free cash flow margin that we have guided too for the year.\nSlide 9 summarizes our guidance for 2021.\nWe are reiterating our overall expectations to grow sales 10% to 13%; adjusted EBITDA 9% to 13%; adjusted earnings per share 5% to 15%; and deliver free cash flow yield of 19%.\nApril is off to a good start and we are optimistic with the trends developing in the second quarter.\nIt is too early to make any adjustments to our annual guidance and we will provide an update on our guidance in July when we have more data.\nSlide 10 reiterates the seasonality we expect for sales in 2021.\nThis is not something we typically share as our seasonality is usually very consistent year-to-year.\nHowever, given the disruptions experienced in 2020, the seasonal pattern of our year-on-year sales will be unusual in 2021, so we've included this page to provide additional insights.\nIn conclusion, I remain positive about the outlook for 2021, with an improving health and economic backdrop, an evolving portfolio of healthy spaces products, and new digital tools and capabilities, Armstrong is well positioned to advance our value creation model in 2021.\nBefore we get to some Q&A, I want to touch on a few important initiatives in the company namely ESG, Healthy Spaces, and our new digital platform Kanopi by Armstrong.\nOn our last call I mentioned that, ESG would be an area of focus for us in 2021 and beyond.\nAs we build on our history of community engagement and corporate responsibility, it's increasingly important to all our stakeholders and it has a natural fit with our mission, our history, our culture and our strategy.\nAs many of you have seen earlier this month, we launched a redesigned sustainability section of our website that reflects our three pillars of focus: People, planet and product and establishes our 2030 goals in these areas.\nIn addition, work is under way and on track to complete our first sustainability report this summer.\nThis comprehensive report will address the needs of GRI, SASB and TCFD.\nAnd because of the importance of this work, I want to take a moment and recognize the great deal of effort and commitment by our teams that has gone into capturing our achievements thus far, baselining our opportunity for improvement and to developing meaningful long-term goals.\nMore to come on this total effort as we progress along this important journey, which aligns well with our strategic emphasis on Healthy Spaces.\nAs Healthy Spaces continues to be a focal point in economic recovery, ceilings are becoming increasingly more relevant.\nAs the capstone to an interior space, ceilings are critical for managing air flow and providing for optimal ventilation, as well as delivering acoustical performance in design aesthetics.\nThese trends are revitalizing the ceilings category and making this category more relevant for the current and future need of healthy indoor spaces.\nAnd of course, this suits Armstrong well.\nAs the longtime category leader, Armstrong is becoming recognized as a thought leader on the importance of holistic space planning, design and construction, and the impact this approach can have on the confidence and well-being of people, while they're in doors, which is where we spend a large majority of our time.\nWe believe that the growth investments we've made in 2020 will bear fruit in 2021, with gains from new Healthy Spaces solutions and our new digital capabilities.\nOur product innovations are on target for what a post pandemic market will demand.\nHealthy Spaces is much more than an event-driven opportunity.\nIt's here to stay.\nHealthy Spaces has always been important, but the pandemic has forever changed the definition of healthy and our health and safety expectations for indoor spaces.\nArchitects, designers, facility managers, business owners are all looking for solutions that bring people back into commercial spaces and make them more suited for future use.\nAs offices dedensify and expansive collaborative space has become the norm, the need for acoustical performance in ceilings will only increase, as we -- as will the need to better clean and manage air flow.\nCeilings are central to providing these solutions.\nOur 24/7 defend family of products including AirAssure, CleanAssure and VidaShield ceiling solutions are designed specifically to help improve air quality and ventilation sustainably.\nWhat's encouraging is that despite being launched just five months ago, 24/7 defend products have been sold into all of our core sectors: office, education, healthcare, retail and transportation.\nThis clearly demonstrates the broad-based opportunity for Healthy Spaces.\nThese product innovations timed for the Healthy Spaces catalyst coupled with our new digital platform of Kanopi by Armstrong, positions Armstrong well to capture the evolving market recovery opportunity.\nLaunched earlier this year, kanopi by Armstrong that's what a small K is online at kanopibyarmstrong.com.\nKanopi utilizes artificial intelligence and machine learning to provide early access and enhanced visibility to a large part of the market opportunity, we were previously unable to efficiently track.\nThis technology is allowing us to influence an Armstrong solution, and is making purchasing easy.\nKanopi provides facility owners and managers an end-to-end solution, including diagnostic tools, consulting and pre-certified installation services.\nOnline consumer-friendly and fulfilled by our best-in-class distribution network, kanopi is tapping into pent-up renovation demand in smaller scale commercial spaces and driving Mineral Fiber volume growth.\nEarly results are encouraging.\nWe are seeing growth across all our critical metrics website traffic orders, order value and sales.\nTo date, each month has been significantly better than the last, and I expect this will continue throughout the year.\nAgain, we are encouraged by the improving market conditions and the increasing relevance of the ceiling category.\nAnd we are especially excited about the market opportunities ahead that Armstrong is so well positioned to capture that will enable us to deliver on our commitment, to deliver strong results for our shareholders, and on our mission to make a positive difference by creating healthier spaces, where we live work learn heal and play.\n", "role": "user" }, { "content": "maintaining 2021 guidance: net sales of +10% to +13% and adjusted ebitda of +9% to +13%.\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 on the call today are Vic Grizzle our CEO; and Brian MacNeal, our CFO.\nActual outcomes may differ materially from those expected or implied.\nBoth are available on our website.\nI'm pleased to be with you today from our corporate campus in Lancaster, Pennsylvania.\nArmstrong, like many companies, is adapting to a new normal of hybrid work activity.\nHere at Armstrong, safety protocols are in place and our physical spaces have undergone a first phase of modifications to allow our organization to return to the office safely.\nWe're actively working on more permanent changes to our facilities, including the use of new ceiling and grid solutions to create healthier spaces for our staff and visitors.\nOur manufacturing and distribution facilities continue to operate well and safely.\nQuality and service levels are high and our connectivity to customers, enabled by our digital tools, remains excellent.\nOverall, demand in the quarter improved sequentially much as we had expected.\nOn a seasonally adjusted basis, Q3 was 14% better than Q2, down 11% versus 25%.\nIn addition, we saw sequential improvement within the quarter, as daily Mineral Fiber sales improved from down 15% in July to down 11% in September.\nAnd October has continued this trend and is progressing better than September.\nOur top seven territories, which had lagged significantly in the second quarter, returned to the overall national average during the quarter.\nBut the New York Metro area, our highest AUV territory, continues to lag.\nOverall, sales of $247 million were down 11% a quarter versus prior year.\nVolume was down 10% and Mineral Fiber AUV was slightly negative.\nPositive like-for-like pricing improvement and favorable product mix were offset by negative channel mix and negative territory mix, primarily driven by the lag in New York metro area.\nIn addition, sales to big box customers were up in the quarter versus 2019, which is good from a volume perspective, but given the lower sales price in this channel, it was also a headwind to mix.\nWhile the overall demand trends in the quarter progressed largely as expected, there were some developments that we observed that I want to share with you to provide context on the market conditions.\nAs expected, construction activity picked up in the territories most impacted by COVID-related restrictions in the second quarter, namely the seven largest territories we referenced on our last call.\nThe easing of state and local regulations on job sites and the increasing ability of contractors to work with the newly imposed restrictions both helped this situation.\nHowever, as the quarter progressed we saw delays emerge in previously less impacted territories, namely the South and the Midwest following the migration of the virus.\nThis shift in regional activity reflects the impact of increasing COVID cases on construction activity and the overall uneven nature of the market reopening.\nNew construction activity has fared pretty well overall, as existing projects continue toward completion, while smaller and midsized renovation projects experienced greater headwinds.\nIn our conversations with our customers, it is clear that there remains a lot of near-term uncertainty as building owners work to determine the best path forward to adapt their facilities to enable the safe return of occupants.\nThis is also true with schools, with some remodel activity remaining on hold, as many students learn from home.\nAlso in the quarter we continued to experience softness in our low visibility flow business.\nThese are the small discretionary repair/remodel type projects that flow through our distribution partners and often without a specification.\nIn addition to the uneven opening of the markets, we also experienced minor business interruptions in the quarter due to protest activity in certain cities and Hurricane Sally which closed our Pensacola, Florida plant for a few days.\nThe Armstrong team and our partners continue to earn my admiration as they overcome obstacles and continue to deliver for our customers.\nAdjusted EBITDA in the quarter of $92 million was down 19% from 2019.\nThe pandemic-driven volume decline is really the entire story as the business continues to operate well and as expected otherwise.\nBrian will provide more details on our financial results in a moment.\nBut it has been an impressive performance by our operations team in an extraordinary environment.\nI could not be more proud of the work that they have done thus far.\nDespite the challenges in the market, our strong cash flow performance continues, and we remain on track to deliver over $200 million in adjusted free cash flow.\nBased on this continued strong cash flow generation and our confidence to continue to do so, our Board has approved a 5% increase in our regular quarterly dividend to $0.21 per share and we are restarting our share repurchase program.\nThe third quarter was also notable, in that we completed two M&A transactions.\nThe previously discussed, acquisition of Chicago-based Turf Design, the leading provider of custom felt-based ceilings and walls and then on August 24, we acquired Moz Designs.\nMoz is a Northern California-based designer and fabricator of custom architectural metal ceilings, walls, dividers and column covers.\nMoz brings unique capabilities that can be utilized to improve the product offerings of our three existing metal ceiling facilities, and further strengthens our already leading position in the growing category of metal ceilings and walls.\nThis transaction marks our seventh acquisition since 2017.\nWe are truly building an unmatched platform of specialty ceilings and walls and we are not done.\nOur M&A pipeline continues to grow as we see more and more opportunities to build out the most unique set of capabilities in the industry, and our financial strength allows us to do so.\nToday, I'll be reviewing our third quarter results.\nBeginning on slide 4, for our overall third quarter results, sales of $246 million were down 11% versus prior year, a significant sequential improvement from the second quarter when year-over-year sales were down 25%.\nAdjusted EBITDA fell 19% and margins contracted 370 basis points, again a substantial sequential improvement from the second quarter when year-over-year EBITDA was down 36% and margins contracted 590 basis points.\nAdjusted diluted earnings per share of $1.07, fell 22% and adjusted free cash flow declined by $53 million versus the prior year.\nI'll address the reasons for this decline in a moment.\nOur cash balance at quarter-end was $139 million, and coupled with $315 million of availability on our revolver, positions us with $454 million of available liquidity, down $33 million from last quarter as we completed the Turf and Moz acquisitions during this past quarter, and down $24 million from the third quarter of 2019.\nNet debt of $542 million is $4 million higher than last year as a result of our acquisitions, partially offset by cash earnings and the receipt of $19 million from the sale of our Qingpu plant in China, which was idled.\nAs of the quarter-end, our net debt to EBITDA ratio was 1.5 times versus 1.6 times last year as calculated under the terms of our credit agreement.\nOur covenant threshold is 3.75 times, so we have considerable headroom in this measure.\nOur balance sheet is in solid shape.\nIn the quarter, we did not repurchase any shares as our repurchase program remains suspended to preserve liquidity in light of the COVID-19 impact on the market.\nLast week, our Board of Directors approved the restart of the program.\nGoing forward, we will look to return to our customary approach of repurchasing shares subject to our normal processing protocols.\nSince the inception of the repurchase program, we've bought back 9.6 million shares at a cost of $596 million for an average price of $62.13.\nWe currently have $604 million remaining under our share repurchase program, which now expires in December of 2023.\nSlide 5, illustrates our Mineral Fiber segment results.\nIn the quarter, sales were down 14% versus prior year, but sequentially improved from the prior quarter when year-over-year sales declined 26%.\nCOVID-19 driven volume declines were the key driver.\nAUV was a headwind, as positive like-for-like pricing and favorable product mix, were offset by the channel and geographic mix issues that Vic mentioned.\nWhile sales in our key seven territories improved sequentially and converged with the performance in other territories, performance within these key seven territories was inconsistent and was a headwind to overall price and mix for the Mineral Fiber segment.\nAUV in the remaining territories was positive.\nAdjusted EBITDA was down $20 million or 21% as the volume decline fell through to the bottom line and AUV was a drag.\nContinued manufacturing productivity and cost reduction initiatives, lower raw material and energy costs, and SG&A cost management were all positive in the quarter.\nWAVE equity earnings were down due to lower sales and also as a result of a year-to-date true-up of allocated costs from Armstrong and Worthington.\nMoving to Architectural Specialties segment on slide 6, sales were up 1% as the acquisitions of Turf and Moz contributed almost $8 million in the quarter and offset COVID-driven organic sales decline of 12% which were sequentially better than the 22% decline we experienced in the second quarter.\nWhile current period sales activity was challenged given state and local restrictions, we continue to have exciting wins and have been awarded the Kansas City International Airport and the Princeton University Residential College projects.\nThese jobs will ship in 2021 and 2022 and demonstrate our continued ability to win complex and iconic projects.\nDespite flat sales direct margins expanded significantly driven by the higher margins of the Turf and Moz acquisitions relative to our base business and ongoing productivity in the network particularly at acquired facilities.\nFixed manufacturing costs and SG&A were up driven by the costs of Turf and Moz.\nSlide seven shows our consolidated results for the quarter and clearly illustrate the impact of COVID-related volume declines.\nSlide eight shows adjusted free cash flow performance in the quarter versus the third quarter of 2019.\nCash flow from operations was down $48 million, largely driven by volume due to COVID-19.\nAlso in the quarter despite lower income in Q3 2020, we actually paid $14 million more in cash taxes than in the third quarter of 2019.\nThis is largely driven by timing in certain discrete items in the base period.\nNot included in this cash flow bridge are two significantly positive non-recurring cash items.\nIn the quarter, we applied a $27 million tax refund related to the sale of our international operations.\nAnd we received $19 million from the sale of our closed Qingpu facility in China.\nWe have received an additional $2 million from the sale in October and this transaction is now complete.\nSlide nine shows our year-to-date results.\nAs you can see sales were down 12%, adjusted EBITDA is down 18%, and adjusted free cash flow is down 16%.\nSlide 10 is our year-to-date bridge.\nAgain, COVID-related volume declines are the main driver followed by the geographic and customer AUV issues we've called out.\nFor the year product mix and like-for-like pricing are both positive contributors to sales, but mix is a headwind to EBITDA due to geographic and channel mix.\nInput costs, deflation and the savings we are driving in manufacturing and SG&A despite our acquisitions helped mitigate the sales fall through the EBITDA.\nSlide 11 reflects our year-to-date free cash flow.\nAs with the quarter, operating cash flow was impacted by volume declines due to COVID-19, the tax refund in Qingpu sales proceeds mentioned earlier are excluded.\nCapital expenditures reflects the delaying actions we are taking to finalize or to prioritize cash in the near-term.\nInterest expense is lower as a result of our refinancing in September of 2019.\nWAVE earnings were impacted by volume declines.\nSlide 12 is our guidance for the year.\nWe now anticipate full year revenues in the range of $920 million to $935 million or down 10% to 11%.\nOverall the decline will be entirely volume as we anticipate AUV to be essentially flat for the full year.\nEBITDA will be in the range of $320 million to $330 million as the sales decline drops down and is partially offset by productivity and the impact of our cost containment actions.\nActions are in place to drive $40 million to $45 million of savings in manufacturing and SG&A down slightly by $5 million from our previous outlook as we invest for future growth.\nOur cash flow guidance is adjusted from our prior outlook as we have taken capital expenditures up, acquired the working capital of Turf and Moz and adjusted the seasonal trajectory of our fourth quarter to account for continued sequential improvement.\nThese are challenging times but Armstrong is laser-focused on controlling what we can control investing to drive growth and building on an already best-in-class platform.\nOur ability to execute two meaningful acquisitions during a global pandemic is testament to our focus and confidence.\nI have no doubt that we will emerge on the other side of this crisis in an even stronger position to grow and create value.\nHealthy spaces is the dominant topic in commercial construction conversations today.\n92% of architects and designers surveyed said they are having conversations with their clients on how to make their spaces healthier and safer.\nAnd it's a universally known fact that we spend 90% of our lives indoors.\nAnd even though healthy spaces have always been important this pandemic has made it an even greater priority, possibly the highest priority and the standards for which health and safe are measured are being raised to a whole new level.\nAt Armstrong, we have been the leading supplier of ceilings and spaces where healthy has mattered the most in operating rooms, in ICU wards and other isolation room applications.\nNow, we are bringing that experience to today's conversation about creating healthy spaces and how to create one.\nWe believe a healthy space and safe space is a space that protects us and fosters a feeling of well-being and comfort that allows people to be at their best.\nSo where do ceilings come in?\nYou're already familiar with how ceilings play a role in acoustics and aesthetics and in making the most of natural and supplemental light in interior environments, all of which are part of the healthy spaces equation.\nAs the structural capstone of any space, the right ceiling system can make a meaningful difference by bringing the additional elements of healthy spaces together.\nOur ceiling grid and partition solutions contribute to maximizing ventilation and minimizing the transmission of harmful pathogens.\nIn most buildings, the ceiling system is part of the supply and return air ducting.\nWe're already very in tuned with that with our current solutions for healthcare spaces.\nWe are now adapting this technology to be more affordable and effective in the office, the classroom and other settings to meet the new definition and the new standards for a healthy space.\nI'm very pleased to introduce a new family of products called 24/7 Defend.\nThese products represent innovative new solutions against harmful pathogens and other particles in indoor environments.\nOur 24/7 Defend product family already includes infusion partitions and CleanAssure disinfectable products, which are proven cleanable products.\nWhat's new is the AirAssure family of gasketed ceiling tile products that self-seal to the grid system and a new integrated VidaShield ultraviolet air purification and ceiling tile system.\nWhen placed in our standard grid system, AirAssure gasketed ceiling panels form a tight seal and reduce air flow leakage into the plenum by 300% over standard ceiling panels.\nReducing air leaks significantly increases the effectiveness of air ventilation and filtration systems allowing more air to flow through the return air vents where it can be filtered and purified and ensuring greater air quality.\nIn addition to allowing more filtering and cleaning of air vent spaces, AirAssure can also reduce the risk of pathogens traveling between spaces in a building, further protecting a greater number of people.\nIn addition to offices and healthcare facilities, this is vital for schools and senior living facilities as they are being asked to create more isolation rooms to prevent the spread of infections.\nReducing air leakage with AirAssure is an easy way to retrofit existing rooms and is available with our popular Sustain and Total Acoustics solutions.\nNow in a complementary way, the new patented scientifically proven VidaShield system pairs an active ultraviolet air purification system with Armstrong ceiling panels to provide cleaner, safer air in any commercial space.\nAn unobtrusive drop in ceiling system that draws air into a chamber above the ceiling exposes the air to UV light, neutralizing harmful pathogens and then returning clean air to the room.\nVidaShield can be used as a stand-alone solution or for even better results it can be integrated with AirAssure panels.\nTogether these two new solutions reduce the risk of indoor air transmission of harmful pathogens.\nThis pandemic is serving as a catalyst to renovating commercial spaces to create healthy and safer spaces unlike anything we've seen before.\nAnd we believe it will continue to evolve for many years to come because healthy spaces are now essential.\nThese new products are just the beginning of 24/7 Defend family as we have solutions in our innovation pipeline that we will add to this family in the coming quarters.\nArmstrong is a clear leader in the commercial construction market and we have been for many, many years.\nAs the need for healthier buildings evolves, we will be at the forefront driving positive change in our industry.\nWe believe these changes in the short and long-term will allow market leader like Armstrong to further grow our business and bolster our competitive advantage.\nTogether with our industry-leading position, our digitalization investments and now with our expanding health spaces platform Armstrong is well positioned for profitable top line growth.\nWith appending renovation renaissance in the medium-term and a whole new way of thinking about commercial interior spaces longer-term, we are both ready for and excited about the possibilities ahead.\nAnd this is all aligned with our commitment to continue to deliver strong returns for our shareholders and to making a positive difference by creating healthier spaces where people live, work, learn, heal and play.\n", "role": "user" }, { "content": "sees fy 2020 sales $920 million to $935 million.\nsees 2020 ebitda of $320 million-$330 million.\nquarterly adjusted earnings per share $1.07.\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 we have Vic Grizzle, our CEO; Brian MacNeal, our CFO to discuss Armstrong World Industries' third quarter 2021 results, our rest of the year outlook, and progress on our growth initiatives.\nBoth are available on our Investor Relations website.\nThese statements involve risks and uncertainties that may differ materially from those expected or implied.\nWe delivered strong third quarter topline growth, up 19% versus 2020 results with Mineral Fiber sales increasing 15% and Architectural Specialties sales improving 31%.\nAdjusted EBITDA of $99 million was 8% ahead of prior year results.\nWe are pleased to have achieved these results against the backdrop of a choppy market recovery, increasing inflation, and supply chain disruptions throughout the construction industry.\nUnrelated to these challenges, we also experienced a rare manufacturing equipment failure causing lower-than-expected production rates in September, which Brian will discuss in greater detail in a moment.\nDespite these challenges and the rare production issue, we reaffirmed the midpoints of our full-year 2021 guidance and expect to have a strong finish to the year.\nTo that point, these continue to be unprecedented times.\nInflation remains a strain on raw material, freight, labor, and energy costs throughout the construction industry.\nAt AWI, we have moved proactively throughout the year to increase prices and stay ahead of these inflationary pressures.\nAnd consistent with our performance over the past decade, we have successfully stayed ahead of inflation.\nWe recognize this is unique and it's a testament to the strength of our industry-leading service model and the high-quality innovative products we manufacture that allows us to earn those price increases in the marketplace.\nSpecifically within our Mineral Fiber segment, we reported third quarter AUV growth of 14% which is the highest level we've achieved since we separated from the flooring business in 2016.\nAnd this growth was largely driven by like-for-like pricing improvements.\nAnd not unrelated to inflationary pressures, supply chains throughout the economy have also been under unprecedented pressure.\nAgain our teams throughout the organization, have been on top of their game.\nThey have remained agile and dedicated to limiting disruptions to our customers and partners.\nThis is critical because of our best-in-class service model is an important component of our value proposition to our distributors and to the contractors who depend on them.\nBecause of this importance, we set a high bar for our service performance.\nWhile many companies may track two or three service performance metrics, we track six as part of what we call our perfect order measure.\nThese include order fill accuracy, on-time delivery, shipping damage, billing accuracy, product defects, and returns.\nAnd I can share with you with great satisfaction that this measure not only remained above our 90% threshold throughout 2021 for the Mineral Fiber segment in particular but it's improved in the third quarter.\nSo I'm proud of how our teams have executed to handle these unprecedented challenges internally to meet our customers' needs.\nNow externally, these challenges have impacted our business in the form of project delays, impacting both our Mineral Fiber and Architectural Specialties segments.\nDespite these challenges, Mineral Fiber sales volumes increased in the third quarter versus prior year on the strength of the R&R part of our business that has more than offset the impact of these project delays and the lower new construction activity.\nOur sales rate per shipping day also showed sequential improvement in the quarter.\nIn fact, September sales rate per day eclipsed that of 2019, and the quarterly results for this metric has now improved sequentially for the last five quarters.\nFrom a profitability perspective, the Mineral Fiber segment generated strong gross margins compared to prior year, reflecting positive like-for-like pricing, improved mix, and our ability to overcome the production headwind I mentioned earlier, with other productivity efforts, and in fact, this was the best gross margin level since 3Q of 2019.\nOur WAVE joint venture delivered another strong quarter as they have maintained excellent pricing discipline to stay ahead of inflationary pressures.\nWe're also pleased with the performance of one of the Group's newest innovation called SimpleSoffit.\nNow like many of our innovations, we've introduced SimpleSoffit drive efficiencies for our customers and for those who ultimately install our products.\nSoffit framing is a common design feature that requires a significant use of labor and materials on commercial construction jobs and has a variety of complexities based on interior design and the accommodation of HVAC systems.\nGiven the pressures on labor, we realized creating savings in this area could be a significant value generator for our customers.\nWhat the team at WAVE introduced are prefabricated soffit framing systems that are engineered using our automated design software to match the design specs and come prepackaged and easy to handle flat boxes.\nBecause of their design, our SimpleSoffit systems can be installed up to 3 times faster than traditional methods, with less material and labor hours.\nSimpleSoffits are making a significant difference in terms of speed and cost on the sites where they have been used, including some high profile projects such as the new PG&E headquarters in California, The Kansas City International Airport and for hockey fans out there, the UBS Arena at Belmont Park, where the New York Islanders will drop the puck for the first time in mid-November.\nWe're very excited about how this new innovative product has gained traction and the value it's creating for our customers.\nIn the Architectural Specialties, the segment had a strong top-line quarter as well, improving -- and improving margin performance.\nIn addition to the contributions from our 2020 acquisitions, sales and earnings from the organic business rebounded nicely from prior year lows.\nWe've also successfully introduced price increases for these products and that is helping address some of the inflationary pressures on this segment as well.\nNew construction and major renovation activity improved but was uneven due to project delays, even with those challenges and our continued growth investments in this segment, Architectural Specialties' EBITDA margin improved 350 basis points sequentially and I expect these improvements to continue back above the 20% level.\nWe remain optimistic about the '22 and '23 outlook for Architectural Specialties, given the fact that we are on track to exit 2021 with a very strong order backlog and bidding activity remains robust.\nAs new construction activity regains momentum we expect sales growth to further accelerate in this segment.\nThe broader industry indicators that we track also support our growing optimism for both the AS and the Mineral Fiber segments.\nAs many of these have continued to improve or remained in positive territory in the third quarter.\nGDP forecast remained above 5%, the Architectural Billing Index ended September well into expansionary territory at 56.6, up from August reading of 55.6, similar to the second quarter of Dodge data for both bidding and construction starts improved double-digits.\nThese are strong indicators for growth in 2022 and 2023 and with our recent investments, we are well-positioned to capture additional growth as the market recovers.\nToday, I'll be reviewing our third quarter 2021 results and our updated guidance for the year.\nOn Slide 5, we begin with our consolidated third quarter 2021 results.\nAdjusted net sales of $292 million were up 19% versus prior year.\nAdjusted EBITDA grew 8% and EBITDA margins contracted 320 basis points.\nEBITDA margins contracted due to continued investments in SG&A and lower manufacturing productivity.\nAdjusted diluted earnings per share of $1.17 was 9% above prior year results.\nAdjusted free cash flow was 28% above prior year results.\nOur balance sheet remains healthy as we ended the quarter with $439 million of available liquidity, including a cash balance of $94 million and $345 million of availability on our revolving credit facility.\nNet debt at the end of the quarter was $533 million and our net debt to EBITDA ratio of 1.5, as calculated under the terms of our credit agreement, remains well below our covenant threshold of 3.75.\nIn the quarter, we repurchased 187,000 shares for $20 million, for an average price of about $107 per share.\nAs of September 30, we had $544 million remaining under our repurchase program, which expires in December 2023.\nLast week, we announced a 10% increase in our quarterly dividend, this is our third increase in the last three years and when paired with our share repurchases, is a reflection of our commitment to our balanced and disciplined capital allocation priorities that continue to be investing in the business, expanding into adjacencies through acquisitions, and returning capital to shareholders.\nYou can see our consolidated third quarter EBITDA bridge from the prior year results on this slide as well.\nThe $8 million adjusted EBITDA gain was primarily due to favorable AUV driven by positive like-for-like pricing and favorable channel mix, increased volume driven by the 2020 acquisitions, and contributions from WAVE equity earnings.\nThis favorability was partially offset by higher SG&A costs, increased input cost on freight raw, materials, and energy, and an increase in manufacturing cost driven by the 2020 acquisitions.\nThe increase in SG&A was driven by more normalized discretionary spending compared to the prior year cost reductions, an increase in variable compensation, investments for future growth in our Healthy Spaces and digital initiatives, and the 2020 acquisitions.\nNot surprisingly, like many other manufacturing companies, we felt inflation impacts throughout our supply chain, albeit less than some other building product companies.\nOur strong supplier partnerships have never been more important and our teams have done a great job of managing through this challenge.\nWe expect inflationary pressure to continue into the fourth quarter, we now see cost of goods sold inflation somewhere in the 4.5% to 5% range for the full year 2021.\nAs demonstrated historically and in this quarter, we will work to drive like-for-like pricing above inflation.\nOur Mineral Fiber segment results are on Slide 6.\nIn the quarter, sales increased 15%, mostly due to favorable AUV previously mentioned.\nWe saw sequential improvement in our sales per shipping day metric and continue to track this closely in comparison to both 2020 and 2019.\nAUV fell through to EBITDA at historical highs, as a result of the price increases we announced in February, May and August, and again is the outcome of our ability to price ahead of inflation.\nMineral Fiber segment adjusted EBITDA increased 10%, driven by the AUV gains and another strong quarter of equity earnings from the WAVE joint venture.\nThe team at WAVE has done a great job of pricing ahead of the steel inflation and managing issues across the supply chain.\nThese gains were partially offset by higher SG&A spending due to the return of prior-year cost reductions, increased variable compensation and investments to support our growth initiatives.\nInput cost trended higher this quarter due to raw material, energy and freight inflation, which remains a top focus area for us as we end the year and prepare for 2022.\nIn addition, we experienced a $3 million headwind due to unplanned maintenance activities at two of our larger plants.\nThis caused downtime at both plants and drove lost productivity, higher scrap costs and additional freight cost to maintain our best-in-class service levels.\nBoth situations where remediated during the quarter and I'm happy to report that the plants are running very well in October.\nThis is an atypical event for AWI.\nAs many of you know, we consistently drive plant productivity year after year.\nMoving to Architectural Specialties or AS segment on Slide 7.\nThird quarter adjusted net sales grew 31% or $19 million with the 2020 acquisitions in terms of Turf, Moz, Arktura, contributing $16 million and organic sales increasing $3 million.\nAS segment adjusted EBITDA increased 1% as improved sales from the 2020 acquisitions and the organic business more than offset project push outs, higher SG&A, and increased manufacturing costs.\nThe adjusted EBITDA margin for the segment improved 350 basis points sequentially from the second quarter but contracted 500 basis points when compared to the third quarter 2020 results.\nThis segment is still being pressured by inflationary conditions continued along with a recent spike in project delays due to commercial construction labor disruptions and supply chain challenges.\nThe project push outs are delaying some revenue to Q4 and 2022.\nIn September, we announced an additional round of price increases for AS products, which have already gone into effect.\nWe've had AS price increases in each quarter of 2021.\nSlide 8 shows the drivers of our consolidated results for the nine-month period, including a breakout of the impact for our 2020 acquisitions.\nSales for the first nine months of the year were up 18% and adjusted EBITDA increased 10%.\nThe year-to-date results are driven by higher volumes as the second quarter lapped a prior year more significantly impacted by the pandemic, favorable AUV, and increased WAVE equity earnings, which were partially offset by higher SG&A spend and increased manufacturing in input costs.\nAdjusted diluted earnings per share increased 12% to $3.28.\nSlide 9 shows year-to-date adjusted free cash flow performance, which is flat versus the prior year.\nIncreases in cash earnings, working capital improvements, and WAVE-related dividends were offset by an increase in income tax payments and higher capex spending following a reduced prior year in an effort to manage cash and liquidity during the pandemic.\nOur cash generation through the first nine months is in line with our expectations.\nWe summarize our updated guidance for 2021 on Slide 10.\nPlease note, this guidance update assumes no significant pandemic-related shutdowns or material job delays due to supply chain issues.\nWe are narrowing our guidance ranges for all key metrics and now we expect year-over-year revenue growth of 17% to 18%, adjusted EBITDA growth of 13% to 15%, adjusted earnings per share growth of 14% to 16%, and adjusted free cash flow of down 7% to 2%.\nThe right side of the page highlights updates for the prior -- from the prior guidance communicated in July.\nYou'll notice the increase in Mineral Fiber AUV range from 9% to 11% as our teams continue to do a great job of realizing price from our three Mineral Fiber increases this year.\nWe're bringing down the range of our Mineral Fiber volume to 1% to 2% as near-term choppiness remains and projects are delayed into the out months and 2022.\nWe continue to invest in our Healthy Spaces and digital initiatives and believe they will be meaningful contributors to our future growth.\nBut the larger impact on volume for the current year is the project delays previously discussed.\nThis is a shift in contribution between the 2020 acquisitions and the organic business to the AS segment as revenue impacts are felt from the project delays.\nWe now expect the 2020 acquisitions to contribute about 30% growth and AS organic in the mid-to-high single-digit range.\nIn conclusion, I'm proud of the work our teams have accomplished throughout the third quarter in the face of supply chain challenges and a renewal of COVID-19 concerns.\nIt certainly wasn't easy but they delivered a solid quarter.\nThese are challenging times but I remain optimistic that our investments in the future, whether it's in people, growth initiatives, innovation, or partnerships, will unlock the next level of growth for AWI.\nBefore we get into the Q&A session, let me share a little bit more about how we see our current position and the progress on key initiatives and what that means for the future here at Armstrong.\nInflation and supply chain challenges are likely to persist into next year.\nBut at AWI, we're demonstrating that we can manage our way through this, successfully delivering price ahead of inflation and minimizing the impact from supply chain disruptions.\nMarket conditions are continuing to improve albeit and an uneven and choppy-like fashion.\nDespite the unevenness in the recovery, we have remained focused on strengthening our competitive advantage and improving our long-term growth trajectory.\nOur strong financial position has allowed us to continue investing in our growth initiatives, such as Healthy Spaces and digital innovation and those efforts are progressing well and gaining traction.\nOur Healthy Spaces product sales have continued to improve quarter-on-quarter and there are clear signs of the growing recognition of the role ceilings can play in ensuring indoor spaces are healthy.\nFor example, we have seen a significant uptick in our demand for health zone products.\nThis is the first line of our Healthy Spaces solutions.\nAs a reminder, these products were introduced a few years back to meet the needs of the healthcare environments in terms of disinfectibility and washability, which are now attributes important to any and all indoor spaces.\nOn a year-to-date basis, sales of these products have increased 38% versus 2020 and over 20% versus 2019 levels.\nWhat's most encouraging is that approximately 60% of these sales are now coming from outside of the healthcare vertical.\nThis is validating the broader need and the transferability of existing Healthy Spaces solutions to more general-purpose applications such as offices, schools, and hospitality.\nVidaShield and AirAssure, the two products that we introduced at the end of last year, again still early days, but the progress is encouraging.\nSales of these products in the third quarter doubled from the second quarter sales levels.\nAnd we have more than doubled the number of active projects in the quarter and are conducting several trials on large-scale projects.\nOn the digital front, we continue to invest across several initiatives with a focus on speed and cost benefits for our customers.\nOne such initiative is project Works, which is our digital design and pre-construction service.\nThis service automates the design process from concept to builder materials, drastically increasing the speed of design while allowing design iterations along the way in minutes or in hours versus days.\nIn addition, once the design is complete, we can provide an accurate builder materials that makes the lives of contractors much easier.\nThis is a service that is deepening our collaboration with architects, designers, and contractors in a mutually beneficial way.\nIt's helping us secure additional specifications and ultimately to sell more products into more commercial spaces.\nWe are excited about the number of projects being processed by project Works and how it's strengthening Armstrong's leadership position in the commercial construction industry.\nIn summary, our advancement of digital and product innovation, despite the ongoing challenges of the evolving COVID pandemic is a testament to the power of focus we have as an America's-only ceiling and specialty walls company.\nThis power and focus has been critical throughout the pandemic as we kept all of our plants in operation and made no cuts to our sales and marketing efforts.\nOur unique and powerful focus has also helped us manage through the challenges of inflation and supply chain disruptions to maintain our long track record of achieving price over inflation and maintaining our best-in-class service levels.\nThroughout this uncertain period, we have not slowed our efforts to execute on our company strategy.\nOur customer relationships are stronger now than ever and our ongoing product in digital innovation is providing important top-line growth opportunities.\nAs our markets continue to recover, we are in an excellent position to capitalize on this recovery and to deliver increased levels of value creation for our shareholders.\n", "role": "user" }, { "content": "compname reports q3 adjusted earnings per share $1.17.\nqtrly adjusted earnings per share $1.17.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Before we get into Armstrong's fourth quarter and full year 2020 financials, I want to take a moment to recognize what we've all been through, on a personal level, these last 12 months.\nOur 2,700 Armstrong employees, our communities, our partners, suppliers, our customers and our shareholders have, no doubt, been impacted by the multiple crisis we've all faced.\nAnd I want to share my admiration for the creativity and the teamwork and many acts of selflessness that I have witnessed within our own organization and in our communities.\nIt's been an extraordinary year.\nAnd I wish us all a healthy and prosperous 2021.\nI have a lot to cover today.\nI'll begin by reviewing our financial results with some commentary on fourth quarter market conditions.\nAnd then I'll recap our 2020 accomplishments, and there are many, including launching new products in response to the threats posed by COVID-19, AirAssure and VidaShield.\nAnd then I will discuss the increasing importance of Healthy Spaces before turning the call over to Brian to provide a detailed review of our financial performance for both the quarter and the year.\nWith regard to the marketplace, in the fourth quarter, we saw sequential improvement, pretty much as we expected.\nThe various end markets and channel activity continued to be mixed by territory and vertical.\nNew Orleans, for example, exhibited quarter-over-quarter strength related to hurricane damage and the Pacific Northwest continued to improve.\nMeanwhile, the Upper Midwest and Southern California moderated.\nThe number of healthcare projects bid during the quarter picked up nicely but was offset by slower activity in education.\nSo although we saw overall sequential improvement, underlying conditions remain choppy and drive near-term uncertainty as building owners seek to determine the best path forward to adapt their facilities to enable the safe return of occupants.\nFor the full year, 2020 sales of $937 million were down 10% from 2019.\nAdjusted EBITDA of $330 million was down 18% from 2019, coming in at the high end of our guidance range.\nAdjusted free cash flow for the year was a strong $212 million or 23% of sales, once again demonstrating the strength of Armstrong's best-in-class value creation model even in the face of a pandemic-driven sales declines.\nFull year 2020 results were characterized by a significant drop in sales in the second quarter as the pandemic struck and certain markets were effectively shut down by government mandates.\nSince the second quarter, we have experienced sequential improvements on both a month-to-month and a quarter-to-quarter basis.\nIn the Mineral Fiber business, in addition to significant volume declines, we were faced with two unusual mix headwinds that impacted AUV or average unit value.\nBeginning in the second quarter, we experienced significant negative territory mix as our key seven territories, including the New York metro area, were disproportionately affected by the construction shutdowns.\nThis trend moderated and continued to improve in the fourth quarter.\nA compounding AUV headwind was channel mix, driven by stronger sales to big-box customers as work from home became a reality for many.\nThis was a good result from a volume perspective and reflects the hard work of our teams with these channel partners.\nHowever, price points in this channel are lower than our overall average and drove a headwind on mix fall through, particularly in the most recent quarter.\nWe expect these timing-related trends to normalize beginning in the second quarter of 2021.\nCore product mix, the underlying driver of AUV improvement for the past 10 years has continued to be positive in 2020 as our higher-end solutions, including the Total Acoustics and Sustain families, outperformed the lower price range of our portfolio, reflecting the continued desire of architects and building owners to improve the performance and aesthetics of their spaces.\nThe other component and underlying driver of AUV is like-for-like pricing.\nOnce again in 2020, we delivered positive like-for-like pricing and price greater than input cost inflation.\nOperationally, our plants ran well, adopting new safety protocols.\nAnd we were able to maintain high levels of quality, service and productivity.\nI'm extremely proud of the way our manufacturing teams innovated to find ways to keep our plants operating and servicing customers throughout this year and do it safely.\nArchitectural Specialties experienced similar disruptions as large renovation and new construction projects were delayed at the outset of the pandemic.\nBut as with Mineral Fiber, sales recovered sequentially as markets reopened and contractors adapted to the new safety protocols.\nThe Architectural Specialties business exited 2020 with a record backlog and is well positioned for 2021.\nNow more than any year in my memory, 2020 was about more than just financial results.\nIn a year of a health crisis and a resulting economic crisis and a social crisis on top of that, 2020 was about responding to short-term priorities while preserving the foundation for longer-term opportunity.\nWhen the pandemic first hit, our priorities were protecting the health and safety of our people, adapting our business practices to maintain connectivity and collaboration with our customers and continuing to supply essential products with a special emphasis on serving healthcare projects.\nOnce the immediacy of the crisis passed, we made several strategic decisions based on the belief that the pandemic will end and the innate human desire for connection and community will once again return us all to offices, schools and shops.\nWe made decisions to conserve cash and manage expenses, to retain our talent and preserve organizational capability and capacity that we have worked really hard to build over the past several years.\nWe remain committed to our digital and M&A initiatives.\nAnd we pivoted our new product development efforts to meet the need for Healthy Spaces with an emphasis on improving indoor air quality.\nNow sitting here today, I believe those decisions were the right ones and are delivering on our objective of emerging from this crisis a stronger, more capable and competitive company.\nAs you recall, when the pandemic hit, we suspended our share repurchase program and trimmed capital expenditures prudently to conserve cash.\nWe identified and acted on $40 million of temporary cost savings that would not impact our growth and value creation opportunities.\nWith the return of some stability in the marketplace, we have resumed our share repurchase program, we are returning our capital expenditures to pre-pandemic levels and we are enhancing our investments in our digital and Healthy Space initiatives.\nAs we have reported, we did not furlough our salespeople.\nWe did not lay off resources or slow work on key initiatives.\nIn fact, we launched new digital tools, like Projectworks, to keep our sales teams better connected to customers.\nAnd we added resources to our organization in order to accelerate the work around these and other key strategic initiatives.\nSpecifically, we launched a new digital platform in the fourth quarter that will enable Armstrong to drive Mineral Fiber volume growth.\nI'm going to provide more details on this in a moment.\nBut I believe these actions collectively will further extend Armstrong's leadership position and allow us to accelerate growth as the economy recovers.\nNow looking back on 2020, acquisitions were also a bright spot.\nDespite the challenges presented by COVID, we were opportunistic and pursued and completed three transactions with Turf, Moz and Arktura.\nThese companies each bring unique and exciting capabilities as well as talent that cement Armstrong's leadership in felt products, custom metal capabilities and maybe most importantly bring design and technology capabilities that can be integrated and scaled across our entire company.\nOur M&A pipeline remains active.\nAnd we continue to have the capability to execute additional acquisitions and partnerships.\nIn new product introductions, we also had a strong year.\nWe launched 35 new products in 2020.\nThat's a 50% increase from our normal pace of activity.\nI could not be more proud of our NPD team.\nAnd I know that they are working very hard to develop important, groundbreaking new products and solutions to further contribute to the healthy space demand that we'll all have in 2021 and beyond.\nSeveral of these new products came about from a pivot that we made when it became apparent that the COVID-19 pathogen was largely transmitted through the air as an aerosol.\nEven with enhanced access protocols for our labs and test chambers, our team brought to market at record speed the 24/7 Defend portfolio to address the need for healthier, safer spaces and to specifically improve indoor air quality.\nIn November, we launched the AirAssure family of ceiling tiles.\nAirAssure is a gasketed ceiling solution that forms a tight seal to the grid system.\nIt's designed to reduce air leaks through the ceiling plane by up to four times over standard ceilings.\nReducing air leaks can significantly increase the effectiveness of HVAC systems by forcing more air to flow through return air vents, where it can be filtered and purified, therefore, enabling better air quality.\nIn addition to allowing more filtering and cleaning of air, AirAssure can also reduce the risk of pathogens traveling from space-to-space in a building.\nAnd by doing so, again AirAssure can protect a greater number of people.\nAlso in November, we paired the patented VidaShield ultraviolet air purification system with Armstrong Ceiling panels to provide cleaner, safer air in pretty much any commercial space.\nThis system, concealed in the ceiling plane, draws air into a chamber integrated into the ceiling tile, exposes the air to UV light to neutralize the harmful pathogens and then returns the cleaner air to the room.\nVidaShield can be used with our ceilings as a stand-alone solution.\nOr even better, it can be integrated with AirAssure panels.\nThese two new products are just the beginning of a robust pipeline of Healthy Space solutions, which represents a multiyear renovation opportunity for Armstrong.\nThe big picture of Healthy Spaces is critically important.\nAs you likely know, we spend 90% of our time indoors.\nSo it stands to reason that these spaces where we live our lives ought to be a safe, healthy and sustainable as possible.\nThey should be deliberately and holistically planned, designed and built to be protective, reassuring and comfortable.\nIn my view, this has always been true, but the pandemic has redefined what we mean and what we want in our healthy and well spaces.\nAnd the need for solutions in this area is more pressing than ever.\nThe way we think about the performance of spaces we inhabit has changed and expanded forever.\nAs a CEO, I think a lot about my employees and how they're doing and how this is impacting their lives in a myriad of ways.\nWhen we return to the office, I want them to feel safe and secure so that we can focus on doing our best work.\nI know that we are at our best and most creative when we are together.\nWe're excited that Armstrong can play a crucial part of bringing Healthy Spaces to people.\nTo help us learn more and bring healthier spaces to life faster, we are installing our 24/7 Defend solutions in our own facilities, and we are retrofitting one of the existing buildings on our corporate campus to be a Healthy Spaces living lab.\nThis Healthy Space pilot will showcase what we've learned so far about ceiling systems and will provide a space for us to collaborate, innovate with other leading interior component manufacturers.\nBy working together, we will be able to better design integrated, holistic and effective Healthy Spaces solutions.\nHealthy Spaces remains the dominant topic in the commercial construction conversations today.\n92% of architects and designers surveyed said they are having conversations with their clients on how to make their spaces healthier and safer.\nAs you all know, Armstrong has always had a strong presence in the A&D community.\nAnd its presence is strengthening as we are at the forefront of these conversations on how to create healthy spaces.\nToday, I'll be reviewing our fourth quarter and full year 2020 results and provide guidance for 2021.\nBut before I begin, as a friendly reminder, I'll be referring to the slides available on our website.\nBeginning on slide four for our overall fourth quarter results.\nSales of $239 million were down 3% versus prior year, a continued sequential improvement from the third quarter, when year-over-year sales were down 11%.\nAdjusted EBITDA fell 19% and margins contracted 580 basis points.\nAdjusted diluted earnings per share of $0.77 fell 31% as our 2019 fourth quarter tax rate benefited from stock-based compensation deductions.\nAdjusted free cash flow declined by $3 million versus the prior year.\nOur cash balance at quarter end was $137 million and, coupled with $275 million of availability on our revolving credit facility, positions us with $412 million of available liquidity, down $42 million from last quarter as we completed the Arktura acquisition during this past quarter and down $18 million from the fourth quarter of 2019.\nNet debt of $578 million is $12 million higher than last year as a result of our acquisitions, partially offset by cash earnings.\nAs of the quarter end, our net debt-to-EBITDA ratio is 1.8 times versus 1.5 times last year as calculated under the terms of our credit agreement.\nOur covenant threshold is 3.75 times.\nSo we have considerable headroom in this measure.\nOur balance sheet is in solid shape.\nIn the quarter, we repurchased a 126,523 shares for $10 million for an average price of $79.04 per share.\nSince the inception of our repurchase program, we have bought back 9.7 million shares at a cost of $606 million for an average price of $62.35.\nWe currently have $594 million remaining under our share repurchase program, which expires in December 2023.\nslide five illustrates our Mineral Fiber segment results.\nIn the quarter, sales were down 7% versus prior year but improved sequentially from the third quarter, when year-over-year sales were down 14%.\nCOVID-19-driven volume declines continued at a reduced rate.\nAnd AUV was a headwind as relative strength in the big-box channel and, to a lesser degree, territory mix put pressure on sales and adjusted EBITDA in the quarter.\nPositive like-for-like pricing and favorable product mix continued their year-long positive trend.\nAdjusted EBITDA was down $15 million or 19% as the volume decline in channel-driven AUV weakness fell through to the bottom line.\nThis table also clearly illustrates the quarterly progression of volume trends, which while still negative, have improved sequentially.\nIn the quarter, continued manufacturing productivity, our cost reduction initiatives and lower raw material and energy costs aided profitability.\nSG&A was a headwind as we ramped up investment in growth initiatives that Vic mentioned.\nWAVE equity earnings were down due to lower sales volume.\nMoving to Architectural Specialties or AS segment on slide six.\nSales were up $6 million or 13% as the 2020 acquisitions of Turf, Moz and just recently, Arktura, contributed $11 million in the quarter and offset COVID-driven organic sales decline of 9%.\nAS organic sales also improved sequentially from the third quarter when year-over-year sales were down 14%.\nDespite flat sales, direct margins expanded significantly, driven by the higher margins of Turf, Moz and Arktura acquisitions relative to our base AS business and ongoing productivity in the network, particularly at acquired facilities.\nManufacturing costs and SG&A were up, driven by the cost of Turf, Moz and Arktura and higher overhead allocations.\nOur AS business continues to win significant projects to build a strong pipeline.\nAmong others, in the fourth quarter, we were awarded the Virgin Voyages port of Miami Terminal V project.\nThis job includes metal, glass, reinforced gypsum, wood and mineral fiber products, a comprehensive solution that demonstrates Armstrong's competitive strengths.\nThis multimillion-dollar project is scheduled to begin shipping late this year but will primarily benefit 2022 sales.\nslide seven shows drivers of our consolidated adjusted EBITDA results for the quarter.\nWe've enhanced this page to break out the impact of our 2020 acquisitions.\nSales from our 2020 acquisitions offset organic volume declines.\nMix, organic SG&A investments and WAVE equity earnings were only partially offset by positive like-for-like pricing, deflation and manufacturing productivity.\nOur 2020 acquisitions added a net $3 million adjusted EBITDA benefit and delivered a 27% adjusted EBITDA margin.\nslide eight shows our adjusted free cash flow performance in the quarter versus fourth quarter of 2019.\nCash flow from operations was down $8 million on lower sales and partially offset by lower capital expenditures of $5 million.\nAs referenced in the footnotes and detailed in the appendix, adjusted free cash flow excludes two significant and largely offsetting adjustments.\nFirst, we received $13 million related to environmental insurance recoveries in the quarter.\nSecond, we made a $10 million one-time endowment-level contribution to the Armstrong World Industries Foundation with funds earmarked from a portion of the $22 million of proceeds from the sale of our Qingpu, China facility that we received earlier in the year.\nThese items are excluded from adjusted free cash flow as they are unrelated to our core quarterly performance.\nslide nine shows our full year results.\nVersus prior year, sales were down 10% and adjusted EBITDA was down 18%.\nAdjusted earnings per share was down 24%, driven by a lower 2019 base period tax rate due primarily to deferred state tax adjustments and, to a lesser degree, the stock-based compensation deduction that impacted Q4 in 2019.\nslide 10 is the full year adjusted EBITDA bridge.\nAgain, COVID-related volume declines are the main driver as they impacted EBITDA by $65 million and were partially offset by volume-driven contributions of $14 million from our 2020 acquisitions.\nCOVID volume declines also drove the WAVE results.\nMix headwinds from the territory and channel drivers we have called out impacted the AUV fall-through to adjusted EBITDA.\nAs Vic mentioned, product mix and like-for-like pricing were both positive in 2020.\nInput cost deflation and the savings we are driving in manufacturing and SG&A, despite our acquisitions and growth investments, helped mitigate the sales fall-through to EBITDA.\nslide 11 reflects full year adjusted free cash flow of $212 million.\nAs with the quarter, operating cash flow and dividends from WAVE were lower.\nCapital expenditures reflect the delaying action we took to prioritize and conserve cash in 2020.\nInterest expense is lower as a result of our refinancing in September 2019.\nIn a year significantly impacted by the pandemic, we delivered a 23% adjusted free cash flow margin.\nslide 12 is our guidance for 2021.\nAgainst a backdrop of a recovering economy.\nWe anticipate revenue in the range of $1.03 billion to $1.06 billion, or up 10% to 13% versus prior year.\nDriving this growth is a return to positive mix starting in the second quarter, continuation of like-for-like pricing with the backdrop of rising inflation, which will result in the resumption of our historic 4% to 6% AUV growth rate.\nIn addition, our digital growth initiative, kanopi, that Vic will discuss in a moment, will support Mineral Fiber growth.\nHealthy Spaces product sales will contribute to both volume and mix gains.\nThe Architectural Specialties segment will benefit from the full year impact of our 2020 acquisitions as well as a resumption of organic sales growth.\nWe expect adjusted EBITDA to grow 9% to 13% as the benefits of sales growth falls through and we continue to drive productivity in our plants and benefit from improved results at WAVE.\nWe will continue to invest in our growth initiatives and, as previously communicated, reinstate some of the 2020 temporary cuts in SG&A in 2021.\nAt the midpoint, our EBITDA margin of 35% is slightly down in 2021, driven by the impact of 2020 acquisitions on a full year basis.\nAdjusted free cash flow will be 19% of sales as we resume our historic levels of capital spending and as working capital expands to support sales growth.\nWe expect to return to our greater than 20% historical average in the short term.\npage 13 is not something we typically share as our seasonality across the quarters is usually very consistent year-to-year.\nHowever, given the disruption experienced in 2020, the seasonal pattern of our year-on-year sales will be unusual in 2021.\nSo we've included this page to assist you with your modeling.\nSales in Q1 will still be impacted by the pandemic and one less shipping day but will sequentially improve versus Q4 of 2020.\nWe expect Q2 sales to improve as we wrap the significant decline in Q2 of 2020 in the benefit of our 2020 acquisitions.\nIn conclusion, I'm excited about the outlook of 2021.\nWith an improving health and economic backdrop, an evolving portfolio of Healthy Spaces products and a new digital tools and capabilities, Armstrong is well positioned to advance our value creation model in 2021.\n2020 was a busy and, by any measure, a productive year.\nWe took care of our people first, and we built out our capabilities and capacity for future growth.\nWe took care of our customers.\nWe didn't shut them down.\nWe stayed connected with them digitally and kept them supplied.\nWe launched 35 new products, many industry-leading, to serve today's most pressing needs for improving indoor air quality, including our AirAssure and VidaShield products.\nWe established a dedicated Healthy Spaces team for a holistic approach to lead the industry forward in the new normal.\nWe completed three strategic acquisitions, again a record level of activity for us.\nAnd we advanced our digitalization initiative, just to name a few.\nAnd there's more to come in 2021 with digitalization remaining front and center.\nI mentioned earlier and Brian mentioned our new digital platform, kanopi, which is focused on identifying and cost effectively serving more of the renovation and smaller new construction marketplace.\nI want to provide a little more history here and perspective as to what this is and what opportunities this provides for Armstrong.\nFor the past several years, we have been talking to you about our digital initiatives, and we've shared a number of them with you, initiatives to make our customer experience frictionless, to better enable design collaboration, to improve our service levels, to increase reliability and quality in our manufacturing operations.\nDuring 2020, we took steps to increase the intensity and the pace of these efforts.\nAnd the result is kanopi, a solution we have never discussed publicly before and a critical enhancement to our existing business model.\nkanopi by Armstrong, spelled with a lower case K, is online and I invite you to visit the website at kanopibyarmstrong.com, to explore its capabilities.\nUtilizing artificial intelligence and machine learning, kanopi provides early access and enhanced visibility to a large part of the market opportunity we were previously unable to efficiently track.\nThis technology allows us to influence an Armstrong solution and makes follow-through easier.\nkanopi offers facility owners and managers an end-to-end solution, including diagnostic tools, consulting and precertified installation services.\nOnline, consumer-friendly and fulfilled by our existing best-in-class distribution network, kanopi will tap into pent-up renovation demand in smaller-scale commercial spaces.\nWe are investing in the sales and technical resources to roll kanopi out on a national level throughout 2021.\nThe Projectworks and kanopi represent an unrivaled set of digital platforms in the ceiling space, providing access and solutions to previously inaccessible opportunities.\nWe are using digital capabilities and Healthy Spaces solutions to drive Mineral Fiber volume growth, irrespective of the underlying market.\nAs Brian mentioned, this will help 2021 as the projects ramp up.\nBut I'm really excited about what these initiatives can deliver in the medium and long term.\nAnother area of focus you will see from us in 2021 is around ESG.\nArmstrong has always been a company with a strong sense of community, purpose and responsibility.\nThose of you who have spent time with us know of our commitment to safety, sustainability and ethical behavior.\nWe have a long history of community involvement and support.\nWe strive to be good stewards of the planet.\nWe were the first to develop a closed-loop recycling program for ceiling tiles and to remove Red List chemicals from our ceilings.\nWe've instituted effective wastewater management and minimized carbon emissions from our ovens.\nWe are passionate about developing products that make indoor spaces healthier and more sustainable, higher-performing and more aesthetically appealing, as demonstrated by our recent AirAssure and VidaShield product launches.\nIn the past 18 months, there's been a good deal of effort behind the scenes on ESG-related matters.\nWe've hired experienced professionals, Helen Sahi, as our Director of Sustainability; and Salena Coachman, to lead our diversity and inclusion initiatives.\nWe've appointed Mark Hershey, our General Counsel, to head up this effort from a management perspective, ensuring it has a champion on my leadership team.\nAnd our Board's Nominating and Governance Committee has become the Nominating, Governance and Social Responsibility Committee to demonstrate the complete alignment in these critical areas.\nWe will be launching an enhanced sustainability website this spring and publishing a full sustainability report this summer.\nThis will transparently document our efforts but also publicly challenge us to get better.\nThese disclosures will convey our program goals and our targets, align our reporting to leading standards and frameworks and reflect our commitment across our three pillars of focus: people, planet and products.\nI've always believed that Armstrong is a good corporate citizen.\nAnd that said, I also believe we can improve.\nAnd I want to challenge the organization and make ourselves accountable for getting even better.\nFinally, regarding ESG initiatives, Brian mentioned we recently made a contribution to the Armstrong World Industries Foundation that will ensure that the foundation can increase and sustain its support for the communities, where Armstrong employees live and work for many years to come.\nArmstrong is a clear leader in the commercial construction market.\nAnd we have been for many, many years.\nWe've most recently demonstrated this with AirAssure and VidaShield, two exciting new solutions that demonstrate Armstrong's product leadership.\nWe have strengths on multiple fronts, which will allow a market leader like Armstrong to return to the top and bottom line growth trajectories we've established before the pandemic hit.\nTogether with our industry-leading position, our digitalization investments, our Healthy Spaces platform and our commitment to ESG, Armstrong is well positioned for the near term and the long term.\nThe Healthy Spaces revolution is only just beginning.\nAnd I believe it will be a powerful catalyst driving renovation activity for years to come.\nA catalyst turbocharged by a health crisis and backed by a newfound awareness as to how fundamental our health and the health of the built environment is to the strength of our economies and our communities.\nWe are both ready for and excited about the opportunities ahead.\nThis is all aligned with our commitment to continue to deliver strong results for our shareholders, making a positive difference by creating healthier spaces where we live, work, learn, feel and play.\n", "role": "user" }, { "content": "q4 sales fell 3 percent.\ncontinues to expect sequential improvements in our end markets.\nexpects to grow sales 10% to 13% in 2021.\nsees adjusted ebitda growth of 9% 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: And for purposes of the anchor year on long-term earnings per share growth guidance, the anchor is weather-adjusted 2020 earnings per share of $3.84.\nBefore we move to quarter results, let me speak for a moment about our recent growth news.\nAs you know, a key part of our strategy is to operate in states where we can best serve customers, drive efficiencies and continue to grow our regulated business.\nRecall that earlier in the year, we announced the sale of our Michigan operation.\nAnd as you know, in late 2019, we announced the sale of our New York operation.\nThis slide shows what our new regulated service territory will look like after the announced transactions are completed.\nMoving to Slide 6.\nWe recently announced what will be the largest municipal acquisition in Pennsylvania American Water's history.\nOn April 6, we signed an agreement to acquire the wastewater treatment and collection system for the City of York, Pennsylvania.\nThis agreement will add an equivalent customer connection total of more than 45,000.\nAs part of the agreement, Pennsylvania American Water will also continue to provide contracted wholesale wastewater treatment and disposal for seven surrounding communities of York.\nWe look forward to developing strong relationships that meet the needs of all customers, including those outside the city.\nThis is yet another example of our strategy to grow where we can add value.\nIt was also executed under Act 12 of 2016, which allows municipalities to sell their water and wastewater systems for a price-based on the fair market value of the facilities.\nYork Mayor, Michael Helfrich said, \"This is a new day for York, one filled with an unwavering optimism as our residents and businesses can finally breathe the sign of relief for the first time in decades\".\nTurning to Slide 7.\nNew Jersey American Water announced an agreement during the first quarter to acquire the water and wastewater assets of Egg Harbor City, New Jersey.\nThis municipally owned water and wastewater system serves approximately 3,000 customer connections.\nThe agreement is notable and is the first sale being executed through New Jersey's Water Infrastructure Protection Act, or WIPA.\nThat law facilitates the sale or lease of municipally owned water or wastewater systems that meet certain criteria, such as significant noncompliance.\nEgg Harbor City Major Lisa Jiampetti said, \"This sale will mean better infrastructure, stable water rates and millions in funds for the city\".\nAdditionally, Virginia American Water signed an agreement to acquire the drinking water assets at the town of Waverly.\nThis municipally owned water system serves approximately 900 customer connections and is our first agreement signed under the new fair market value legislation in the Virginia commonwealth.\nTo date this year, we've added approximately 4,500 customer connections through closed acquisitions and organic growth.\nWe have under agreement more than 86,000 customer connections, including the City of York.\nIn total, the acquisitions closed so far this year, and all those under agreement represent approximately $440 million in additional rate base and an estimated $115 million of follow-on additional capital expenditures over the next five years.\nAnd our growth pipeline remains strong with more than 1.2 million customer connection opportunities.\nLastly, I'd like to provide an update on the sale of New York American water.\nIn late March 2021, the New York State Department of Public Service Special Council released the findings of their municipalization study.\nAs expected, the study focused primarily on the need for tax relief for customers, including recommendations to eliminate the special franchise tax.\nThe study also focused on the feasibility of municipalization.\nThese findings were not addressed in the governor's recently released budget.\nOur New York subsidiary continues to work constructively with the New York State Department of Public Service, including through ongoing settlement discussions with all parties.\nAnd we remain confident that the sale will be completed.\nWe're working diligently to close the transaction.\nAssuming progress continues as expected, we believe that the net impact from New York results on 2021 results won't impact our 2021 guidance range.\nFurther, we don't anticipate any impact on the expected timing of our previously discussed future equity needs.\nLet's move to Slide eight and cover our first quarter results.\nOur first quarter 2021 earnings per share of $0.73 were up 7.4% compared to the first quarter of 2020.\nWe invested capital of $342 million in the first quarter as we continue to balance that investment by focusing on operating and capital efficiencies, constructive regulatory outcomes and by leveraging the size and scale of our business.\nAs a reminder, we've challenged ourselves with a new O&M efficiency target of 30.4% by 2025.\nWith this strong start to 2021 and continued execution of our strategies, we're affirming today our 2021 earnings guidance range of $4.18 to $4.28 per share.\nWe are also affirming our long-term earnings per share compound annual growth rate in the 7% to 10% range.\nTurning to Slide 9.\nLet's go through some of the regulatory and legislative highlights in the first quarter of 2021.\nIn February, the Pennsylvania Public Utility Commission unanimously approved a previously filed settlement agreement between Pennsylvania American Water and the PUC Bureau of Investigation and Enforcement.\nThe request was driven by $1.64 billion of investment from 2019 through 2022.\nPennsylvania American Water was authorized additional annualized revenues of $90 million over a 2-year period, excluding an agreed to reduction in revenues for tax savings passed back to customers as a result of the Tax Cuts and Jobs Act of 2017.\nOn April 7, the Missouri Public Service Commission approved an agreement reached by the parties in Missouri American Water request for a rate adjustment.\nThe rate order includes approximately $620 million in water and wastewater system improvements made since the end of 2017.\nRates will be effective on May 28, 2021, and will result in additional annualized water and wastewater revenue of $22 million, excluding the reduction in revenue for tax savings passed back to customers, also a result of TCJA.\nWe also have a pending rate case in Iowa, which is moving on schedule.\nAnd we filed a rate case in West Virginia on April 30.\nAdditionally, as we've reported previously, California American Water filed for new rates in July 2019.\nThe case covers 2021 through 2023.\nIn January 2021, California America Water submitted to the commission a comprehensive settlement with the public advocates office and several interveners.\nIf the global settlement is adopted by the commission without changes, revenues will increase by $33.5 million over three years, with agreed capital investments of $165 million in 2021 and 2022.\nAnd just yesterday, California American Water filed its cost of capital application with the commission.\nAs part of the application, California American Water requested an authorized cost of equity of 10.75%, cost of debt of 4.35% and overall rate of return of 8%, which is sufficient to provide California American Water with the opportunity to earn a reasonable return on its investments.\nThe case covers 2022 through 2024, with the revised cost of capital to be effective January 1, 2022.\nRegarding the Monterey Peninsula Water Supply Project.\nAs a reminder, California American Water refiled its application to the Coastal Commission on November 6, 2020.\nOn December 3, 2020, the Coastal Commission sent a notice requesting additional information needed to consider the application complete.\nIn March 2021, California American Water provided the requested responses.\nAnd once staff deemed the application complete, by statute, the Coastal Commission would have 180 days to process it.\nMoving to state legislation on Slide 10.\nWe continue to see states take action to help address water and wastewater challenges.\nIn Kentucky, the governor signed into law new acquisition adjustment legislation.\nThis law allows systems to be acquired above net book value when certain criteria are met.\nThe law also establishes a time line for a PSC decision on an acquisition, which is within 60 to 150 days of application approval.\nIn Indiana, there are two pieces of legislation that have been signed into law that will benefit our current and future customers.\nAct 1287 creates a mechanism that reduces the required upfront cost to new customers for water and wastewater utility to extend service to underserved areas.\nAnd Act 349 establishes a tax writer for water and wastewater utilities based upon any change in state or federal income tax law.\nOn the national level, we're pleased to see that water and wastewater infrastructure is included in both the administration's build back better plan as well as introduced in state -- or federal legislation.\nThere continues to be a significant need to invest in water and wastewater infrastructure, not just within our system, but broadly across the United States.\nWe think the proposed funding to state revolving funds for drinking water and the possible expansion of a water light-heat program would directly benefit our customers.\nThe administration's plan also includes a tax package, and Susan will talk about that in a moment.\nMoving to Slide 11.\nCustomers remain at the center of every decision we make.\nThis means smart investments balanced by efficient operations and capital deployment.\nFor the 12-month period ending March 31, 2021, our O&M efficiency ratio was 34.1%, a decrease from 34.5% for the 12-month period ended March 31, 2020.\nAs we note each quarter, our adjusted O&M expenses are slightly higher today than they were in 2010.\nSince then, we've added approximately 327,000 customer connections, while expenses only increased at a compound annual growth rate of 1.1%.\nYou may have seen in our 10-Q, a discussion around a matter related to HOS.\nAnd likely, you saw a note from a rating agency commenting on that disclosure.\nAs noted in the 10-Q, I want to remind you that this is a matter that relates to a subpoena received by AWR, an American Water subsidiary that operates a portion of HOS.\nThe subpoena seeks information related only to HOS' metropolitan New York City operations.\nAs we noted in the 10-Q, AWR is cooperating fully with the investigation.\nAnd while it's impossible to predict the outcome at this point, we do not believe it will result in any material impact to our overall operations or financial results.\nAs a final note on the business, I'd like to congratulate Mark McDonough, who was recently named President of New Jersey American Water; and Steve Curtis, who will replace Mark as President of our Military Services Group.\nThese are great examples of how we build and leverage the deep bench strength of American Water.\nBoth Mark and Steve have had increasing roles of responsibility throughout their careers in American Water and are models of our values.\nWe continue to execute our preparedness plans as we look to reintegrate those employees who have been working remotely.\nAs always, safety is our top priority.\nThis past March, we were very pleased that it was our first month in our history where no OSHA recordable incidents occur throughout our entire company.\nOur commitment to 0 injuries and incidents will continue because no injury is ever acceptable to us.\nAnd let's start on Slide 13 with a bit more detail on results.\nAs Walter highlighted, first quarter 2021 earnings were $0.73 per share compared to $0.68 per share in the first quarter of 2020.\nResults for the regulated business segment were $0.74 per share, an increase of $0.06 per share, primarily driven by continued growth from infrastructure investment, acquisitions and organic growth.\nResults for the market-based business were $0.09 per share, a decrease of $0.03 per share as we saw an increase in claims in the homeowner services group due largely to weather-related events.\nCurrent company results improved $0.02 per share in the first quarter of 2021 as compared to the same period in 2020.\nMoving on to Slide 14.\nRegulated results increased $0.06 per share, as I said.\nWe saw a $0.19 per share increase in revenues from new rates in effect as well as earnings from acquisitions.\nO&M expense increased by $0.08 per share and somewhat offsetting with an increase in depreciation of $0.05 per share in support of growth in the business.\nAs previously mentioned, the market-based business results increased -- or decreased $0.03 per share in the first quarter of 2021 as compared to the first quarter of '20.\nThe lower results were due to increased claims expense, which was driven by extreme cold weather, primarily in Texas and Illinois and the continuation of stay-at-home activities, as we saw throughout most of 2020 due to the pandemic.\nThe parent results improved $0.02 per share in the first quarter of 2021 compared to the first quarter of last year.\nThe improved results were largely driven by a number of small items that increased expenses in the first quarter of 2020, offset by higher interest expense to support growth in the regulated business.\nWhile I'm on the subject of results, I'd also like to discuss the company's lower effective income tax rate in the quarter.\nThis was primarily due to an increase in the amortization of excess accumulated deferred income taxes from the settlement of general rate cases in New Jersey and Pennsylvania that approved the timing and method by which the excess deferred taxes are returned to customers.\nThe increased amortization of excess deferred taxes lowers tax expense and is largely offset dollar-for-dollar with lower revenue, resulting in no impact to earnings.\nWe will continue to see this impact and the resulting lower effective tax rate as the amortization continues in these states and others as similar provisions are put in place.\nAnd as a reminder, the excess accumulated deferred income taxes resulted from the federal rate being lowered from 35% to 21% as part of the Tax Cuts and Jobs Act, as Walter mentioned.\nMoving on to Slide 15.\nThe continued successful execution of our regulatory strategy is a key element of our ability to consistently deliver financial results.\nTo date, the regulated businesses have received $123 million in annualized new revenues in 2021.\nThis includes $92 million from the Pennsylvania and the Missouri rate cases discussed earlier, excluding the agreed reduction in revenues for tax savings passed back to customers and $31 million from infrastructure surcharges.\nIn addition, the Pennsylvania rate case includes a second step increase of $20 million effective January 2022.\nWe have also filed requests and are awaiting final orders on three rate cases, totaling an annualized revenue request of $61 million.\nAnd as Walter mentioned, we are also closely following President Biden's tax proposal and evaluating the impact that the current proposal would have on our long-term growth strategy.\nWhile there are many proposed provisions that need further analysis, our early indications are that there will be minimal impact to our plan.\nAnd finally, moving on to Slide 16.\nOn April 28, 2021, our Board of Directors increased the company's quarterly cash dividend payment from $0.55 to $0.6025 per share.\nWe continue to be a top leader in dividend growth.\nWe have grown our dividend at a compound annual growth rate of about 10% over the last five years, significantly outpacing our peers in the Dow Jones utility average and the Philadelphia Utility Index.\nWe expect to continue our dividend growth at the high end of the 7% to 10% range, as we know that, that is very important to many of our shareholders.\nAlso, we continue to target a dividend payout ratio of 50% to 60% of earnings.\nAs this quarter's results demonstrate we continue to consistently deliver on our earnings commitment, regulatory execution, along with the results from our market-based businesses allows us to continue that performance.\nWe believe that delivering on results, combined with our strong earnings growth and superior dividend growth expectation provides excellent value for our shareholders as we continue to outperform our peers.\nThis report highlights the efforts we've undertaken and the strides we've made advancing our commitment to inclusion and diversity.\nTo launch this report internally, we were honored to have Mr. Earvin Magic Johnson joining us virtually for conversation on inclusion, diversity and allyship.\nAdditionally, we had an incredible community healing discussion with our employees to provide a chance for even more open and honest dialogue and inclusion.\nWe believe that a company strength is its people, and the diversity of our workforce makes us even stronger.\n", "role": "user" }, { "content": "q1 earnings per share $0.73.2021 earnings guidance range of $4.18 to $4.28 per share affirmed.\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: Once again, the employees of American Water delivered solid results as we continue to execute on our low-risk profile and predictable growth story.\nLet's move to Slide five to cover the highlights of our second quarter and six-month results.\nOur second quarter 2021 earnings per share increased 17.5% compared to the second quarter of 2020.\nIncluded in the results is a $0.03 per share benefit from weather primarily in the Northeast, where we saw a moderate impact from warmer and drier-than-normal conditions.\nIn the first six months of 2021, we invested $782 million with the majority dedicated to needed infrastructure improvements to better serve our customers.\nWe continue to work hard to minimize the bill impacts of these investments by focusing on capital and operating efficiencies, constructive regulatory outcomes and by leveraging the size and scale of our business.\nAs a reminder, we previously announced an O&M efficiency target of 30.4% by 2025.\nWe also continue our disciplined approach to regulated acquisitions.\nWe've added approximately 11,200 customer connections to date through closed acquisitions and organic growth and look forward to welcoming an additional 86,900 customer connections through pending acquisitions.\nI'll provide more detail on growth in a moment.\nMoving to Slide six.\nThe foundation of our earnings growth continues to be the capital investment we make in our regulated operations.\nWe plan to spend $1.9 billion in 2021 and about $10.4 billion over the next five years.\nThe continued investment is critical to improving and maintaining distribution and treatment infrastructure, including improving water quality, fixing leaks and providing water for fire hydrants.\nThese efforts help our communities remain strong and attractive to residents and businesses.\nWith a strong first half of 2021 and continued execution of our strategies, we're affirming today our 2021 earnings guidance range of $4.18 to $4.28 per share.\nWe're also affirming our long-term earnings per share compound annual growth rate range of 7% to 10%.\nTurning to Slide seven.\nLet's go through some of the regulatory and legislative highlights of the second quarter 2021.\nOn June 28, the Iowa Utilities Board issued an order approving an increase in annual base revenue of $1 million for Iowa American Water.\nThe company's investment of almost $87 million in water system improvements was the primary driver behind the rate adjustment request.\nWe also have pending cases in West Virginia and California.\nWe cover California American Water's general rate case as well as the cost of capital application on the last call and both cases are progressing as expected.\nLet me spend a few minutes on California's drought emergency.\nAs you've likely heard, Governor Newsom expanded the state's drought emergency declaration in 50 out of 58 counties.\nCurrently, our water supplies in California are in good shape, but we're activating mandatory conservation measures for our customers in Sonoma County.\nWe're also conducting extensive outreach to our highest water users and encouraging our customers to voluntarily reduce their water use across our entire service area.\nThe drought once again highlights the need for the Monterey Peninsula Water Supply Project.\nAs we previously discussed, California American Water refiled its application to the Coastal Commission on November 6, 2020.\nOn December 3, 2020, the Coastal Commission sent a notice requesting additional information.\nCalifornia American Water provided the requested responses in March 2021.\nThe Coastal Commission then requested additional information on June 18.\nOur California team is working on this additional request.\nOnce we provide that information and staff deems the application complete, by statute, the Coastal Commission would have 180 days to process it.\nAdditionally, on July 29, The New Jersey Board of Public Utilities issued a final order denying approval of acquisition adjustments and rates associated with the purchase of Shorelands and Haddonfield in 2017 and 2015, respectively.\nThe order is not the outcome we've been working toward, and we continue to evaluate next steps.\nHowever, we had a counter for this possibility and the decision will not have an impact on our financial results.\nMoving to state legislation.\nWe continue to engage with states as they take action to help address water and wastewater challenges.\nIn New Jersey, legislation that strengthens the state's Water Quality Accountability Act has passed both houses unanimously and is awaiting the governor signature.\nThe enhancements include additional enforcement requirements for reporting data, stronger cybersecurity requirements and asset management plans and requirements for the sale of systems with prolonged violations.\nNew Jersey was the first state to pass the Water Quality Accountability Act, and we're pleased to see the act strengthen on behalf of all water customers in New Jersey.\nAlso in New Jersey, the Governor signed a lead service line replacement bill that includes O&M expenses and interest accrued on customer-owned lines as recoverable items.\nAs you know, American Water is long advocated for full service line replacement versus a partial replacement to address lead issues.\nIn Missouri, the governor signed the Water and Sewer Infrastructure Act, which will become effective on August 28, 2021.\nThis act establishes a new statewide infrastructure system replacement surcharge program that broadens the list of eligible projects.\nIt also increases the cap from 10% to 15% of Missouri American Water's revenue requirement for these eligible projects.\nAdditionally, customer-owned lead service line replacements are excluded from the cap.\nFinally, as we mentioned last call, at a national level, we remain supportive of investments in water and wastewater infrastructure.\nThe proposed bipartisan package supported by the administration includes $55 billion for water infrastructure.\nWe believe the proposed additions to state revolving funds for drinking water and the possible expansion of a water LIHEAP type program for all water customers would help improve our nation's water infrastructure.\nMoving to Slide eight.\nCustomers remain at the center of every decision we make.\nThis means smart investments balanced by efficient operations and capital deployment.\nFor the 12-month period ending June 30, 2021, our O&M efficiency ratio was 33.9% compared to 34.3% for the 12-month period ended June 30, 2020.\nAs we note each quarter, our adjusted O&M expenses are just slightly higher today than they were in 2010.\nDuring that period, we've added approximately 333,000 customer connections while expenses only increased at a compound annual growth rate of just over 1%.\nOn the subject of cost, inflationary pressures and scarcities of some supplies in certain sectors of the U.S. economy, let me remind you that our company does have the advantage of volumetric purchases and economies of scale.\nBy leveraging our national size and scale and working closely with our suppliers in the water sector, we've been able to shield ourselves for the most part from these effects.\nAt this time, we've not experienced and do not anticipate any material negative impacts on our supply chain.\nBefore we move to growth, let me provide a quick update on the sale of New York American Water.\nBoth American Water and Liberty remain committed to closing the sale and continue to work through the regulatory process.\nAs noted by 8-K filing on June 29, both parties agreed to extend the closing end date in accordance with the terms of the stock purchase agreement.\nWe remain confident that the sale will be completed.\nAssuming progress continues as expected, we believe that the net impact from New York in 2021 results won't materially impact our 2021 guidance range.\nFurther, we don't anticipate any impact on the expected timing of our previously discussed future equity needs.\nMoving to Slide nine.\nWe've announced multiple acquisitions in the first half of 2021, including our largest acquisition in York, Pennsylvania, which will add an equivalent customer connection total of more than 45,000.\nWe continue to make progress on that acquisition, most recently filing an application with the Public Utility Commission on July 1.\nAs I mentioned earlier, so far in 2021, we've closed on eight acquisitions in four different states, adding approximately 3,000 new customer connections.\nWe've also added approximately 8,200 customer connections to organic growth in the first six months.\nWe look forward to adding another 86,900 customer connections through 37 currently signed agreements in eight states.\nThese new agreements reflect our commitment to provide water and wastewater solutions in communities where we can leverage our scale and expertise.\nWe know that many communities are facing unprecedented challenges, and we're well positioned to provide them solutions.\nOur growth is also a direct result of our commitment to customer service.\nI want to congratulate both our New Jersey and Illinois subsidiaries for earning J.D. Power awards for ranking highest in customer satisfaction among large utilities, large water utilities in the Northeast and Midwest.\nThis is the second year in a row that our Illinois subsidiary, ranked highest.\nWe're proud of our teams and the way they put our customers first every day.\nLet's start on Slide 11 with a review of results.\nSecond quarter 2021 earnings were $1.14 per share compared to $0.97 per share in the second quarter of 2020.\nAs Walter mentioned, included in earnings is an estimated $0.03 per share favorable impact from weather, primarily in the Northeast, where we saw conditions warmer and drier than normal through the quarter.\nResults for the Regulated Business segment were $1.18 per share, an increase of $0.21 per share compared to 2020 earnings.\nResults for the market-based business were $0.11 per share, a decrease of $0.02 per share.\nAnd finally, parent company results decreased $0.02 per share in the second quarter of 2021 as compared to the same period last year.\nOur 2021 earnings through June 30 were $1.87 per share, an increase of $0.22 per share compared to the same period last year.\nResults for the six-month period include the estimated $0.03 per share favorable impact from weather in the second quarter of '21.\nRegulated business results increased $0.27 per share compared to 2020 earnings, and our market-based business results decreased $0.05 per share and parent company results were unchanged year-over-year.\nMoving on to Slide 12.\nLet me provide just a few more details by business.\nAs I noted earlier, regulated results increased $0.21 per share.\nAnd we saw a $0.30 per share increase in revenues from new rates in effect from acquisitions and from the lower demand in the second quarter of 2020 from the COVID-19 pandemic.\nAs a reminder, we saw the 2020 full year impact on demand due to the pandemic to be nearly zero, and we see no real lingering impact on demand in 2021.\nAlso, as I mentioned previously, results reflect an estimated $0.03 per share increase from warmer and drier-than-normal weather, primarily in the Northeast.\nPartially offsetting these results, O&M expense increased by $0.09 per share and depreciation expense increased $0.03 per share in support of growth in the regulated business.\nThe Market-Based Business results decreased $0.02 per share in the second quarter of '21 as compared to the second quarter of 2020.\nThe lower results reflect increased claims in 2021 in the Homeowner Services Group.\nThe parent results decreased $0.02 per share in the second quarter of '21 compared to the second quarter of 2020, largely driven by higher interest expense to support regulated growth.\nWhile on the topic of results, I'd like to also reiterate what we told you last quarter with regard to the company's lower effective income tax rate.\nThis results from an increase in the amortization of excess, accumulated deferred income taxes as agreed to through the regulatory process and is largely offset with lower revenue, resulting in no material impact to earnings, and we will continue to see this impact as that amortization continues.\nMoving on to Slide 13.\nConsolidated results increased $0.22 per share for the year-to-date period compared to the same period last year.\nResults for the regulated operations increased $0.27 per share for the year-to-date period.\nWe saw a $0.50 per share increase from additional revenue -- additional authorized revenue from acquisitions and from the lower demand in the second quarter of '20 attributable to the pandemic.\nYear-to-date results also reflect the estimated $0.03 per share favorable weather benefit.\nOffsetting these increases were increases in O&M expense of $0.18 per share and depreciation of $0.08 per share, all as a result of growth in the business.\nThe Market-Based Businesses results decreased $0.05 per share due to higher claims in 2021 in Homeowner Services Group, including the extreme cold weather across the country during the first quarter of '21, primarily in Texas and Illinois.\nAnd parent results were flat compared to the same period in '20 as higher interest expense to support regulated growth was offset by a number of small items that increased expenses in 2020.\nMoving on to Slide 14.\nThe continued successful execution of our regulatory strategy is a key element of our ability to consistently deliver financial results.\nAnd to date, the regulated business has received $146 million in annualized new revenues in 2021.\nThis includes $100 million from general rate cases and step increases, excluding the agreed reduction in revenue from the amortization of excess accumulated deferred income taxes and $46 million from infrastructure surcharges.\nWe have also filed requests and are awaiting final orders on the two rate cases previously mentioned by Walter and two infrastructure surcharge proceedings for a total annualized revenue request of $71 million.\nI'd also like to add that generally, we have received favorable regulatory decisions addressing our incremental financial impacts of the COVID-19 pandemic.\nWe have received favorable deferral orders in most jurisdictions, including cost recovery orders approved by our regulators in Illinois, Missouri and Iowa.\nIn Pennsylvania, the administrative law judge issued a recommendation that would allow us to defer our incremental, uncollectible expense resulting from the pandemic, but would exclude other financial impacts, such as waive delayed fees and additional interest costs.\nOur Pennsylvania subsidiary has filed exceptions to the ALG recommendation -- recommended decision, highlighting among other things, the favorable decisions we have received in other jurisdictions.\nWe expect a final Pennsylvania deferral order addressing these matters later in the third quarter.\nMoving on to Slide 15.\nI want to provide a few details of the very favorable debt offering we executed in May.\nThe company successfully completed a $1.1 billion debt offering in support of our $10.4 billion five-year capital plan and to refinance approximately $327 million of high coupon debt.\nWe issued $550 million each of 10- and 30-year debt with coupon rates of 2.3% and 3.25%, respectively.\nThese are the lowest rates American Water has ever achieved on a public debt offering and is representative of the company's healthy balance sheet and strong credit profile, and we're pleased to have achieved such favorable rates to the benefit of our customers.\nMoving on to Slide 16.\nI'd like to reiterate Walter's comments earlier because of our strong performance and continued focus on execution, we are affirming our 2021 earnings guidance range of $4.18 to $4.28 per share.\nWe are also affirming our long-term earnings per share, compound annual growth rate of 7% to 10%.\nAs shown on Slide 17, and as our results demonstrate, we continue to deliver on our earnings commitment.\nWe believe that delivering on results, combined with our strong earnings growth and superior dividend growth expectations provides excellent value for our shareholders.\nWe continue to outperform our peers.\nAnd as you can see on this slide, measured currently, we have delivered a total shareholder return of 126% over the last five years, outpacing our peers in the Philadelphia Utility Index as well as the S&P 500 Index.\nWe've been hearing from stakeholders if they'd like to receive more ESG data on an annual basis.\nWe've published two new documents on our website.\nFirst, we made our environmental policy more visible by posting it on our ESG page.\nWe also posted an ESG data summary, which we'll update annually.\nWe also continue to implement best practices and respond to surveys and reports.\nFor example, just last week, we submitted our annual CDP climate change response which highlights American Water's efforts to address greenhouse gas emissions and risks associated with climate variability.\nAs we've discussed previously, since 2007 through year-end 2020, we've reduced our greenhouse gas emissions by approximately 36%.\nThis means we're close to our goal of a 40% reduction by 2025.\nI also want to mention our recent recognition as a top score in the Disability Equality Index for a third year in a row.\nWe firmly believe we're more successful when our workforce reflects the communities that we serve.\nWe're proud to be recognized by DEI and to be an ally to those with different abilities.\nFinally, as a reminder, we'll be publishing and posting our 2019 to 2020 sustainability report this fall.\n", "role": "user" }, { "content": "american water works company q2 earnings per share $1.14.\nq2 earnings per share $1.14.\ncompname says affirms its 2021 earnings per share guidance range of $4.18 to $4.28.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Before we move to questions, I want to provide an update on our York wastewater acquisition.\nOn October 29, we received a formal Pennsylvania Public Utility Commission acceptance of Pennsylvania American Waters application for the acquisition of York Wastewater.\nWe remain on schedule to close in the second quarter of 2022.\nYork is another great example, providing solutions to water and wastewater challenges where we can leverage our scale and drive efficiencies.\nIt should also be the case in Chester, Pennsylvania where as you know, Pennsylvania American Water offered the highest purchase price for that system.\nWe believe our submitted superior offer, which was the highest by $15 million, will provide the most benefit for that community.\nWe eagerly await the receivers decision as we would remain in competition to acquire the system.\nAlso, Cheryl spent some time in our accelerated capital plan as it relates to the resiliency of our systems.\nI just want to highlight that again.\nYou saw the incredible photos of how our flood wall protected our plant, enabling us to continue to provide water service for more than 1 million people in Central New Jersey during Hurricane Ida.\nProper planning and key investments in projects like the flood wall are critical to our business.\nThis is fundamental to our capital planning process and has been for decades.\nTime and time again, we've seen the benefit of our resiliency investments and how they allow us to continue to provide essential services even during significant weather events.\n", "role": "user" }, { "content": "american water affirms 2021 guidance range.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: In this year's first quarter, we achieved consolidated earnings of $0.52 per share versus $0.38 per share during the first quarter of 2020.\nThat's a 37% increase or a 21% increase on an adjusted basis.\nYou can see from this slide that each of our three operating segments contributed to the year-over-year earnings-per-share growth.\nThe results of our regulated utilities were driven by CPUC-approved rate increases, while our contracted services segment performed a higher level of construction work during the quarter compared to last year.\nSteve will discuss this slide in more detail.\nWe continue to execute on our business strategies in the quarter, provide high-quality water, wastewater and electric services to over 1 million people and make timely investment in our systems, all while keeping our unwavering commitment to reliability and safety.\nOur capital investments allow us to replace and upgrade critical infrastructure as well as ensure we can meet our customers' needs for generations to come.\nWe also remain committed to conservation, environmental stewardship, employee safety and well-being, diversity and inclusion and sound governance practices.\nWhile these issues have always been at the core of our company, we created an environmental, social responsibility and governance section, also known as ESG, on our website, to more clearly make our disclosures available in these areas.\nThe website includes our corporate social responsibility report, TCFD and SASB disclosures and other relevant documents.\nWe will continue to focus on our ESG commitments, which benefit our customers, suppliers, employees, broader communities and ultimately, our shareholders.\nIn addition to producing strong first quarter results in all of our business segments, we filed the cost of capital application for the Water segment yesterday and saw new water and electric rates go into effect starting in January, which generate additional gross margin.\nAnd on a longer-term scale, we continue to invest in infrastructure at our regulated utilities and contracted services business to provide quality services to our customers, perform more work on the military bases we serve, compete for new military based contracts and deliver consistent dividend growth to our shareholders.\nI'll touch on these in greater detail later on in the call.\nLet me start with our first quarter financial results on Slide 8.\nI'm pleased to report that the company had a great quarter with consolidated earnings of $0.52 per share as compared to $0.38 per share last year.\nExcluding the $0.05 per share loss on an investment item from the first quarter of last year, earnings for the first quarter of 2021 increased by $0.09 per share or 20.9% as compared to last year.\nFor our water utility subsidiaries, Golden State Water Company, earnings were $0.33 per share as compared to $0.29 per share, as adjusted to exclude the $0.05 per share loss on investments incurred in the first quarter of last year.\nThe increase in earnings were due to a higher water gross margin generated from new rates authorized by the California Public Utilities Commission, partially offset by an increase in depreciation expense and property taxes.\nOur Electric segment's earnings for the first quarter of 2021 were $0.07 per share as compared to $0.06 per share for the first quarter of 2020 due to an increase in electric rate and a decrease in interest expense.\nEarnings from our Contracted Services segment increased $0.04 per share for the quarter.\nThis was due largely to an increase in construction activity as a result of timing differences of when work was performed as compared to the first quarter of last year, as well as lower expenses for legal and other outside services.\nThe timing differences were expected to reverse over the remainder of 2021.\nWe still expect the Contracted Services segment to contribute $0.45 to $0.49 per share for this year.\nOur consolidated revenues for the first quarter increased by $8 million as compared to the same period in 2020.\nWater revenues increased $3.6 million during the quarter, due to third year step increases for 2021 as a result of passing earnings tax.\nThe increase in Electric revenues was largely due to CPUC-approved rate increases effective January 1 this year, as well as an increase in usage as compared to the first quarter of 2020.\nContracted Services revenues for the quarter increased $3.8 million, largely due to an increase in construction activity, resulting from timing differences of when construction activity was performed as compared to the first quarter of last year.\nIn addition, there were increases in management fees due to the successful resolution of various economic price adjustments.\nTurning to Slide 10.\nOur water and electric supply costs were $22.6 million for the quarter, an increase of $1.3 million from the same period last year.\nAny changes in supply costs for both the Water and Electric segments as compared to the adopted supply costs are tracked in balanced income.\nLooking at total operating expenses other than supply costs.\nConsolidated expenses increased $1.7 million as compared to the first quarter of 2020.\nThis was primarily due to an increase in construction costs at ASUS resulting from increased construction activity, partially offset by lower unplanned maintenance costs and the Water segment and an increasing administrative and general expense because of lower legal outside service costs.\nInterest expense, net of interest income and other decreased by $2.5 million due primarily to gains on investments held for retirement benefit plan compared to losses incurred during the first quarter of last year as previously discussed.\nSlide 11 shows the earnings per share bridge comparing the first quarter of 2021 with last year's first quarter.\nTurning to liquidity on Slide 12.\nNet cash provided by operating activity was $24.7 million as compared to $15.7 million in 2020.\nThis was largely due to recent improvement in cash flow from accounts receivable from utility customers, which were negatively impacted by the COVID-19 pandemic throughout 2020.\nThe timing of cash receipts and disbursements related to other working capital items also affected the change in net cash provided by operating activities.\nOur regulated utility invested $35.8 million in company-funded capital projects during the quarter, and we estimate our full year 2021 company-funded capital expenditures to be $120 million to $135 million.\nIn addition, we intended to prepay the entire $28 million of Golden State Water's 9.56% notes issued in 1991 and due in 2021 later this month.\nThe early redemption will include a premium of 3% of par value or $840,000 if redeemed before May 15, 2022.\nGolden State Water recovery redemption premiums in its embedded cost of capital was filed in the cost of capital proceedings, where the cost savings from redeeming high interest rate debt are passed down to customers.\nAt this time, we do not expect American States Water to issue additional equity.\nI'd like to provide an update on our recent regulatory activity.\nAs you may know, the Water segment has an earnings test that must meet before implementing the second and third year step increases in the three-year rate cycle.\nAs we reported in our last call, we have timely invested in our capital projects and achieved capital spending consistent with the amount authorized by the CPUC.\nAs a result, rate increases are expected to generate an additional $11.1 million in the adopted water gross margin for 2021 as compared to the adopted water gross margin for 2020.\nWe continue to make prudent and timely capital investments.\nGolden State Water filed its cost of capital application yesterday.\nWe requested a capital structure of 57% equity and 43% debt, which is our currently adopted capital structure, a return on equity of 10.5% and a return on rate base of 8.18%.\nA final decision on this proceeding is scheduled for the fourth quarter of 2021 with an effective date of January 1, 2022.\nAs we discussed in our prior calls, Golden State Water filed a general rate case application for all its water regions and the general office last July.\nThis general rate case will determine new water rates for the years 2022 through 2024.\nAmong other things, Golden State Water requested capital budgets of approximately $450.6 million for the three-year rate cycle and another $11.4 million of capital projects to be filed for revenue recovery through advice letters when those projects are completed.\nWe are pleased that the administrative law judge assigned to this rate case has clarified that Golden State Water can continue using the water revenue adjustment mechanism or WRAM, and the modified cost balancing account, also known as the MCBA, until our next general rate case application covering the years 2025 through 2027.\nIn February 2021, the CPUC adopted a resolution that extended the existing emergency customer protections previously established by the CPUC through June 30, 2021, including the suspension of service disconnections for nonpayment of electric utility customers in response to the ongoing COVID-19 pandemic.\nFor water utilities, the moratorium on service disconnections was implemented in response to an order by the Governor of California, which we believe would require another action by the governor to cease the moratorium on service disconnections for our water customers.\nIt is expected that the CPUC will work with the governor's office to coordinate the lifting of the moratorium for water utility customers, consistent with the electric customers.\nThe CPUC's February resolution did extend the COVID-19-related memorandum accounts established by Golden State Water and by Bear Valley Electric Service to track incremental costs associated with complying with the resolution.\nIn addition, the resolution required utilities in California to file transition plans to address the eventual discontinuance of the emergency customer protections.\nGolden State Water's memorandum account is being addressed in its pending water general rate case while Bear Valley Electric Service intends to include the memorandum account in its next general rate case application expected to be filed in 2022.\nGolden State Water and Bear Valley Electric filed their transition plans with the PUC on April 1 this year.\nTurning our attention to Slide 16.\nThis slide presents the growth in Golden State Water's rate base as authorized by the CPUC for 2018 through 2021.\nThe weighted average water rate base has grown from $752.2 million in 2018 to $980.4 million in 2021, compound annual growth rate of 9.2%.\nThe rate base amounts for 2021 do not include any rate recovery for advice letter projects.\nLet's move on to ASUS on Slide 17.\nASUS' earnings contribution increased by $0.04 per share versus last year's first quarter to $0.12 per share, due to an overall increase in construction activity resulting from timing differences of when work was performed as compared to the first quarter of last year and lower legal fees and outside services expenses.\nWe reaffirm our projection that ASUS will contribute $0.45 to $0.49 per share for 2021.\nThus far, the COVID-19 pandemic has not had a material impact on ASUS' operations.\nWe continue to work closely with the U.S. government for contract modifications relating to potential capital upgrade work for improvement of the water and wastewater infrastructure at the military bases we serve.\nIn addition, completion of filings for economic price adjustments, requests for equitable adjustment, asset transfers, and contract modifications awarded for new projects provide ASUS with additional revenues and dollar margin.\nThe U.S. government is expected to release additional bases for bidding over the next several years.\nWe're actively involved in various stages of the proposal process at a number of bases currently considering privatization.\nWe continue to have a good relationship with the U.S. government as well as a strong history and experience in managing water and wastewater systems at bases, and believe we're well positioned to compete for these new contracts.\nI'd like to turn our attention to dividends.\nEach quarter, I'd like to remind everyone of our long and consistent history of dividend payments, dating back to 1931, in addition to our unbroken 66 year history of annual dividend increases, which places us in an exclusive group of companies on the New York Stock Exchange.\nIn the past decade, our Board of Directors has raised the dividend at a compound annual growth rate of 9.4%, in line with our dividend policy, providing a compound annual growth rate of more than 7% over the long term.\n", "role": "user" }, { "content": "compname reports q1 earnings per share $0.52.\nq1 earnings per share $0.52.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'll begin with some brief comments on the quarter.\nFor the second quarter, we achieved consolidated earnings of $0.72 per share versus $0.69 last year.\nAfter excluding from both periods, gains on investments held to fund one of the company's retirement plans, earnings per share increased by 7.8% on an adjusted basis.\nThe second quarter contributed to a strong 2021 year-to-date, where we've achieved 12.1% earnings growth over last year on an adjusted earnings per share basis.\nIn addition, we announced a 9% increase in the quarterly dividend last week, marking our 67th consecutive calendar year of dividend increases.\nWhile we await some key decisions from the California Public Utilities Commission, or CPUC, we continue to execute on our business strategies, provide high-quality water, wastewater and electric services to over one million people and make timely investment in our systems, all while keeping our unwavering commitment to reliability and safety.\nOur capital investments allow us to replace and upgrade critical infrastructure, so that we can meet our customers' needs for generations to come.\nWhile our focus remains on strong financial results, excellent customer service and maintaining a strong infrastructure, we remain committed to ESG initiatives, including conservation, environmental stewardship, employee safety and well-being, diversity and inclusion and sound governance practices.\nWe will continue to focus on our ESG commitments, which benefit our customers, the communities we serve, our employees, our suppliers and ultimately, our shareholders.\nLet me start with our second quarter financial results on slide eight.\nExcluding gains earned on investments of $0.03 per share and $0.05 per share from the second quarter of 2021 and 2020, respectively, adjusted earnings for the second quarter increased by $0.05 per share, or 7.8%, as compared to adjusted earnings last year.\nThis slide presents our reported results before adjustments.\nOur water segment's earnings were $0.57 per share as compared to $0.54 per share.\nAdjusting for the gains on investments incurred in both quarters, earnings at water segment increased by $0.05 per share due to a higher water gross margin generated from new rates authorized by the California Public Utilities Commission and a lower effective income tax rate due to certain flow-through and permanent tax items.\nThese increases in earnings were partially offset by increase in water treatment costs, depreciation expense and interest expense.\nOur electric segment's earnings for the quarter were $0.04 per share as compared to $0.03 per share for the same period in 2020 due to an increase in electric gross margins resulting from higher rates as approved by the CPUC.\nEarnings from our contracted services segment decreased $0.01 per share for the quarter due to higher construction costs incurred on certain projects.\nOur consolidated revenue for the quarter increased by $7.1 million as compared to the same period in 2020.\nWater revenues increased $4.5 million due to full third year step increases for 2021 as a result of passing earnings tax.\nThe increase in electric revenues was largely due to CPUC-approved rate increases for 2021 and an increase in usage as compared to the second quarter of 2020.\nContracted services revenue increased $2.2 million, largely due to increases in construction activities and increases in management fees due to the successful resolution of various economic price tests.\nTurning to slide 10.\nOur water and electric supply costs were $28 million for the quarter, an increase of $1.7 million from the same period last year.\nAny changes in supply costs for both the water and electric segments as compared to the adopted supply costs are tracking balance income.\nLooking at total operating expenses other than supply costs, consolidated expenses increased to $3.5 million as compared to the second quarter of 2020.\nThis was primarily due to an increase in construction costs at our contracted services segment resulting from increased construction activity.\nInterest expense, net of interest income and other increased by $2 million due in part to higher interest expense resulting from overall increase in borrowings and lower gains generated on investments held for retirement plans during the second quarter as compared to last year, as previously discussed.\nSlide 11 shows the earnings per share bridge comparing the second quarter of this year with last year's second quarter.\nThis slide reflects our year-to-date earnings per share by segment as reported fully diluted earnings for the six months ended June 30, 2021, were $1.24 as compared to $1.07 for the same period in 2020.\nWhen the $0.04 per share gain on investments held to fund a retirement plan is removed from 2021 year-to-date earnings, this resulted in a 12.1% increase in the adjusted EPS.\nNet cash provided by operating activities was $41.1 million for the first six months of 2021 as compared to $46.3 million in 2020.\nThis decrease was largely due to timing differences of income and payroll tax payments, which were deferred during the second quarter of 2020 as a result of COVID-19 relief legislation effect in 2020, but not for this year.\nThis was partially offset by an improvement in cash from accounts receivable related to nonresidential customers due in part to improved economic conditions as compared to the first six months of 2020 because of the pandemic.\nOur regulated utility invested $75 million in the company-funded capital projects during the first six months.\nWe estimated our full year 2020 company-funded capital expenditures to be $125 million to $135 million.\nAt this time, we do not expect American States Water to issue additional equity for at least the next three years to fund its current businesses.\nI'll now provide updates on the drought in California and on our recent regulatory activity.\nCurrently, the majority of California is considered to be in extreme drought.\nThe Governor of California has proclaimed the state of emergency for 50 of the 58 counties within the state and signed an executive order asking all Californians to voluntarily reduce water usage by 15% as compared to 2020.\nThe CPUC has called on all of California investor-owned water utilities to implement voluntary conservation measures to meet this goal.\nIn response, Golden State Water has increased its communication with customers regarding the need for conservation and intends to implement voluntary conservation efforts in all of its ratemaking areas and has filed with the CPUC to request authority to establish a water conservation memorandum account to track incremental drought-related costs for future recovery.\nRegarding our current rate cycle, the water segment has an earnings test it must meet before implementing the second and third year step increases in the 3-year rate cycle.\nAs we have previously reported, we have tightly invested in our capital projects and achieved capital spending consistent with the amount authorized by the CPUC.\nAs a result, rate increases are expected to generate an additional $11.1 million in the adopted water gross margin for 2021 as compared to the adopted water gross margin in 2020.\nRegarding our cost of capital proceeding, which was filed in May of this year, we requested a capital structure of 57% equity and 43% debt, which is our currently adopted capital structure, a return on equity of 10.5% and a return on rate base of 8.18%.\nA final decision is originally scheduled for the fourth quarter of this year with an effective date of January 1, 2022.\nAs we discussed in our prior calls, Golden State Water filed a general rate case application for all its water regions and the general office during July 2020.\nThis general rate case will determine new water rates for the years 2022 through 2024.\nAmong other things, Golden State Water requested capital budgets of approximately $450.6 million for the 3-year rate cycle and another $11.4 million of capital projects to be filed for revenue recovery through advice letters when those projects are completed.\nWater Revenue Adjustment Mechanism, or WRAM, and the Modified Cost Balancing Account, also known as the MCBA until our next general rate case application covering the years 2025 through 2027.\nAs part of the response to the COVID-19 pandemic, Golden State Water and Bear Valley Electric Service have suspended service disconnections for nonpayment pursuant to CPUC orders.\nOn July 15 of this year, the CPUC issued a final decision on the second phase of the water utility low income affordability rulemaking, which, among other things, extended the existing moratorium on water service disconnections due to nonpayment until further CPUC guidance is issued or February 1, 2022, whichever occurs first.\nOn June 24 of this year, the CPUC issued a final decision to extend the moratorium on electric disconnections until September 30 of this year.\nUnder the terms of the CPUC-adopted payment plans, actual electric service disconnections for nonpayment will not incur until approximately December 1.\nTurning our attention to slide 18.\nThis slide presents the growth in Golden State Water's rate base as authorized by the CPUC for 2018 through 2021.\nThe weighted average water rate base has grown from 752.2 million in 2018 to $980.4 million in 2021, a compound annual growth rate of 9.2%.\nThe rate base amounts for 2021 do not include any rate recovery for advice letter projects.\nLet's move on to ASUS on slide 19.\nASUS' earnings contribution decreased by $0.01 per share to $0.11 during the second quarter of 2021 as compared to the same quarter last year, largely due to higher construction costs incurred on certain projects.\nFor the year-to-date June 30, 2021, and ASUS' earnings contribution is $0.04 per share higher than last year due to an overall increase in construction activity and management fee revenue as well as a decrease in overall operating expenses.\nThe increase in construction activity for the year-to-date was largely due to timing differences of when work was performed as compared to the first six months of 2020.\nWe reaffirm our projection that ASUS will contribute $0.45 to $0.49 per share for 2021.\nThus far, the COVID-19 pandemic has not had a material impact on ASUS' operations.\nWe continue to work closely with the U.S. government for contract modifications relating to potential capital upgrade work for improvement of the water and wastewater infrastructure at the military bases we serve.\nIn addition, completion of filings for economic price adjustments, requests for equitable adjustment, asset transfers and contract modifications awarded for new projects, provide ASUS with additional revenues and dollar margin.\nThe U.S. government is expected to release additional bases for bidding over the next several years.\nWe are actively involved in various stages of the proposal process at a number of bases currently considering privatization.\nWe continue to have a good relationship with the U.S. government as well as a strong history and expertise in managing water and wastewater systems on military bases, and we believe we are well positioned to compete for these new contracts.\nI would like to turn our attention to dividends.\nBoard of Directors, last week, approved a 9% increase in the dividend increasing the annual dividend from $1.34 per share to $1.46 per share.\nThis increase is comparable to the compound annual growth rate of 9% achieved by the company in its quarterly dividend over the last five years.\nOur long and consistent history of dividend payments date back to 1931 in addition to an unbroken 67-year history of annual calendar year dividend increases.\nCurrently, our dividend policy is to provide a compound annual growth rate of more than 7% over the long term.\n", "role": "user" }, { "content": "compname posts q2 earnings per share of $0.72.\nq2 earnings per share $0.72.\namerican states water - on july 27, board approved 9% increase in q3 dividend, from $0.335 per share to $0.365 per share on common shares.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'll begin with a few highlights for the quarter.\nThrough these uncertain times the employees of American States Water once again delivered solid results.\nOur consolidated results for the third quarter were $0.72 per share as compared to adjusted earnings of $0.69 per share for the third quarter of 2019, an increase of $0.03 per share or 4.3%.\nThe adjusted earnings for the third quarter of 2019 exclude a $0.07 per share retroactive adjustment booked in that quarter for the August 2019 electric general rate case decision for periods prior to the third quarter of 2019.\nI'm pleased to report that in July of this year, the Company's Board of Directors approved a 9.8% increase in the quarterly cash dividend from $0.305 per share to $0.335 per share.\nThis increase is in addition to dividend increases of 10.9% in 2019 and 7.8% in 2018.\nAlong with providing essential services and assistance to our customers and communities to get through the pandemic, we are working our way through some regulatory processes with the California Public Utilities Commission or CPUC which I'll discuss later on.\nIn addition, we continue to pursue new military base contracts and our service levels remain high for all three of our subsidiaries.\nNow that we're going on month eight of the COVID-19 pandemic, I wanted to reflect on the achievements of our personnel across the United States, both customer facing and those who provide support in a remote working environment.\nSince March, our field personnel have worked tirelessly to keep the water, electricity and wastewater services operating smoothly for over 1 million customers, including 11 military bases.\nThey've embraced more stringent safety protocols as we look to keep our employees and customers healthy, while doing this, we've kept our commitments to strengthen our infrastructure for the short and long-term benefit of our customers.\nFor the nine months ended September 30, 2020, our water and electric utility segments spend $82.3 million in Company-funded capital expenditures.\nOn track to spend $105 million to $120 million for the year, barring any scheduling delays resulting from COVID-19.\nThis would be about 3.5 times our expected annual depreciation expense.\nWhile we hope for a return to normal sooner rather than later, I'm proud of the resiliency that our people have shown.\nLet me start with a more detailed look at our third quarter financial results on slide 7.\nAs Bob mentioned, consolidated earnings for the quarter were $0.72 per share compared to $0.69 per share as adjusted for the same period in 2019.\nEarnings at our water segment increased $0.04 per share for the quarter.\nThere continues to be volatility in the financial markets due at least in part to COVID-19 pandemic.\nThis volatility resulted in an increase in gains on investments held to fund one of Golden State Water's retirement plan contributing a $0.02 per share increase in the water segment's earnings for the quarter.\nThe remaining increase in the water segment's earnings for the third quarter of 2020 was due to a higher water gross margins from new water rates partially offset by increase in operating expenses, interest expense and the effective income tax rate as well as lower interest income earned on regulatory assets.\nExcluding the $0.07 per share retroactive impact front August 2019 CPUC decisions, our electric segment's earnings for the third quarter was $0.04 per share as compared to $0.03 per share as adjusted for the third quarter of 2019 largely due to an increase in the electric gross margins, resulting from new rates authorized by the CPUC partially offset by increases in legal and other outside service costs.\nThe final August 2019 decision also approved a recovery of previously incurred incremental tree trimming costs totaling $302,000 which resulted in a reduction in maintenance expense that was recorded in the third quarter of last year.\nIt was no equivalent item in 2020.\nEarnings from our contracted services segment were $0.10 per share for the third quarter of 2020 as compared to $0.12 per share for the same period in 2019.\nThere was an overall decrease in construction activity resulting from weather delays and slowdowns in permitting for construction projects and government funding for new capital upgrades caused in part by the impact of COVID-19.\nThe Company expect construction activity to pick up during the fourth quarter relative to the first three quarters barring any further delays due to the weather condition.\nThis decrease was partially offset by increase in management fee revenue and lower travel related costs.\nWater revenues increased $3.5 million during the third quarter of 2020 due to full second -- full second year step increases for 2020 as a result of passing earnings test.\nThe decrease in electric revenues were largely due to $3.7 million in retroactive revenues recorded in the third quarter of 2019 for periods prior to that.\nContracted services revenue for the quarter decreased to $500,000 for the reasons previously discussed.\nThe decrease was partially offset by increases in management fee due to the successful resolution of various economic price adjustments.\nLooking at slide 9, our water electric supply costs were $32.3 million for the third quarter of 2020 as compared to $31.8 million for the third quarter of 2019.\nAny changes in the supply cost as compared to the adopted supply costs are tracked in balancing account for both the water and electric segments.\nTotal operating expenses excluding supply costs increased $1.5 million versus the third quarter of 2019.\nThere was an increase in construction costs at our contracted services business, American States Utility Services or ASUS due to higher cost incurred on certain projects as well as increases in depreciation expense and property and other taxes as a result of additions of utility plant and fixed assets at all of our business segments.\nThere was also a $302,000 reduction to maintenance costs to reflect the CPUC's approval in August of 2019 for recovery of previously incurred tree trimming as previously mentioned.\nThere was no similar reductions in 2020.\nInterest expense, net of interest income and other including investments held in a trust to fund the retirement benefit plan decreased $1.1 million due to higher gain because of the recent market condition.\nThis was partially offset by lower interest income on regulatory assets and lower interest income earned on certain as ASUS construction projects.\nSlide 10 shows the earnings per share bridge, comparing the third quarter of 2020 with the same quarter of 2019.\nThe slide reflect our year-to-date earnings per share by segments.\nFully diluted earnings for the first nine months of 2020 or $1.79 per share as compared to $1.79 per share as adjusted for the same period of 2019.\nThe 2019 adjusted earnings exclude a $0.04 per share retroactive impact, book the last year, resulting from the August 2019 electric TRC decision for the full year of 2018, which is shown on a separate line in the table on this slide.\nIn terms of the Company's liquidity, net cash provided by operating activities for the first nine months of 2020 was $87.8 million as compared to $84.3 million for the same periods in 2019.\nThe increase was largely due to a $7.2 million refund to the water customers in 2019 related to the 2017, tax law changes.\nPartially offset by a decrease in cash flow from higher accounts receivable from utility customers due to the economic impact of COVID-19 and the suspension of service disconnections of customers for non-payment.\nOur regulated utilities invested $82.3 million in Company-funded capital projects during the first nine months of 2020, while the utilities capital program has been somewhat affected by COVID-19 resulting in certain project delays.\nHowever, our regulated utility is still trying to spend $105 million and $520 million in Company-funded capital expenditures for the year, further delays due to the pandemic.\nAs we mentioned in the last quarter, Golden State Water issued unsecured private placement notes totaling $160 million in July and repaid a large portion of its intercompany note issued to AWR parent.\nCurrently American States Water has a credit facility of $200 million to support water and contracted services operations.\nWe also put in place a separate three year $35 million revolving credit facility for the electric segment that is not guaranteed by the parent.\nAt this time, we do not expect American States Water to issue additional equity.\nI'd like to provide an update on our recent regulatory activity.\nIn July, Golden State Water filed a general rate case application for all of its water regions and the general office.\nThis general rate case will determine new water rates for the years 2022, 2023 and 2024.\nAmong other things, Golden State Water requested capital budgets in this application of approximately $450.6 million for the three-year rate cycle and another $11.4 million of capital projects to be filed for revenue recovery through advice letters when those projects are completed.\nA decision in the water general rate case is scheduled for the fourth quarter of 2021 with new rates to become effective January 1, 2022.\nOn August 27, 2020, the CPUC issued a final decision in the first phase of the CPUC's order instituting rule making evaluating the low income payer assistance and affordability objectives contained in the CPUC's 2010 Water Action Plan which also addressed other issues, including matters associated with the continued use of the water revenue adjustment mechanism or RAM by California water utilities.\nThe final decision also eliminates the modified supply cost balancing account or MCBA which is a full cost balancing account used to track the difference between the adopted and actual water supply costs including the effects of changes in both rates and volume.\nBased on the language in the final decision, any general rate case application filed by Golden State Water and the other California water utilities after the August 27, 2020 effective date of the decision may not include a proposal to continue the use of the RAM or MCBA but may instead include a proposal to use a limited price adjustment mechanism called the Monterey style Ram and an incremental supply cost balancing account.\nThis decision will not have any impact on Golden State Water's RAM or MCBA balances during the current rate cycle, which runs from 2019 through 2021.\nIn addition, the language in the decision supports Golden State Water's position that it does not apply to its general rate case application filed in July of this year, which will set new rates for the years 2022 through 2024.\nAt this time, we cannot predict the potential impact of this decision, if any, on the pending water general rate case.\nOn or prior to October 5, 2020 Golden State Water, three other California water utilities and the California Water Association filed separate applications for rehearing on the decision in the low income proceeding.\nAs you know there are water utilities in the state that have been under the Monterey-Style RAM and incremental supply cost balancing account since 2008 and they seem to be able to successfully manage the effects of these mechanisms.\nWhile we are disappointed by this PUC decision, we believe we are well positioned to strategize and adapt to the new requirements.\nAs you'll see from this slide, the weighted average water rate base as adopted by the CPUC has grown from $717 million in 2017 to $916 million in 2020 which is a compound annual growth rate of 8.5%.\nThe rate base amounts for 2020 do not include the $20.4 million of advice letter projects approved in Golden State Waters last general rate case.\nLet's move on to ASUS on slide 17.\nASUS' earnings contribution for the quarter was $0.10 per share versus $0.12 per share in the year prior.\nThe decrease was mainly due to a reduction in construction activity due to weather delays as well as slowdowns in permitting for construction projects and in government funding for new capital upgrades that has occurred throughout 2020.\nCompany expects construction activity to be stronger in the fourth quarter relative to the first three quarters barring any further delays due to weather conditions, but because of the previous delays, we now estimate ASUS' 2020 earnings contribution to be at the low end of the $0.46 to $0.50 per share range we have previously provided.\nIn light of continued uncertainty associated with the effects of COVID-19, we project ASUS to contribute $0.45 to $0.49 per share for 2021.\nWe are still involved in various stages of the proposal process at a number of military bases considering privatization of their water and wastewater systems.\nThe US government is expected to release additional bases for bidding over the next several years.\nWhile we are disappointed that ASUS was not awarded with the most recent military base water and wastewater privatization contract, we are confident that we will win a fair share of the future awards.\nI would like to turn our attention to dividends outlined on slide 18.\nWe believe achieving strong and consistent financial results along with providing a growing dividend allows the Company to continue to attract capital to make necessary investments in the utility infrastructure for the communities and military bases that we serve and return value to our shareholders.\nAmerican States Water has paid dividends to shareholders every year since 1931, increasing the dividends received by shareholders each calendar year for 66 consecutive years, which places it in an exclusive group of companies on the New York Stock Exchange that have achieved that result.\nCompany's current dividend policy is to achieve a compound annual growth rate in the dividend of more than 7% over the long term.\n", "role": "user" }, { "content": "q3 earnings per share $0.72.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'll begin with some brief comments on the quarter and some highlights for the year.\nI would like to start by commenting on our fourth quarter performance.\nWe had a strong quarter with consolidated earnings of $0.54 per share versus $0.45 per share earned during the fourth quarter of 2019, a 20% increase.\nYou can see from this slide that each of our three operating segments contributed to the substantially improved performance.\nEva will discuss this slide in more detail in a few minutes.\nNow, let's turn our attention to highlights for the full year, where we also had strong financial results in addition to providing essential uninterrupted services to our customers.\nFor the year, we reported diluted earnings per share of $2.33 as compared to $2.28 reported for 2019 or $2.24 per share after excluding the $0.04 per share retroactive impact of the electric general rate case decision from 2019 related to the full year of 2018.\nIn 2020, American States Water achieved a consolidated return on equity of 13.9%.\nDuring the year, we also filed a new Golden State Water Company general rate case for the years 2022 through 2024, continued our capital improvement work at our regulated utilities, continued to improve water and wastewater systems on the military bases we serve, raised the dividend by nearly 10% and reached 66 consecutive years of annual dividend increases.\nThis was a unique and challenging year as a result of the COVID-19 pandemic.\nFirst and foremost, we are proud that we were able to maintain essential, safe, and reliable services for our regulated customers and military service personnel across the country.\nIn order to do this, starting in March of last year, we made adjustments for our field workers to keep them safe and instructed or office staff to telecommute.\nAt the local level, we worked closely to manage changes in delays in construction schedules, balancing the needs of keeping the water, wastewater, and electric systems running well, with the uncertainty and needed flexibility that the pandemic has brought to communities.\nIn addition, the California Public Utilities Commission, or CPUC, has issued orders on service shut-off due to non-payment, helping those households who are unable to keep up with water or electric bills during this unprecedented time.\nRecently, the CPUC extended the suspension of service shut-offs due to non-payment through June 30 of this year.\nWe continue to invest in the reliability of our systems, spending $123.4 million in company-funded infrastructure at our regulated utilities during the year.\nAt ASUS, we continue to perform necessary construction work on the military bases we serve and are well-positioned to win more contracts in the coming years.\nWe remain committed to our communities.\nGolder State Water continue to spend with diverse business enterprises, achieving results that were well above the CPUC's requirements for the eighth consecutive year.\nIn addition, ASUS continue to exceed the U.S. government's requirements to hire small businesses to perform work on the bases it serves.\nIn addition to these fiscal 2020 highlights, we have received positive news at our water segment to start 2021 related to the continued use of the Water Revenue Adjustment Mechanism, or WRAM, as well as third-year rate increases, both of which I'll discuss later on during the call.\nWe at American States Water Company continue our steadfast commitment to our customers, broader communities, military personnel, shareholders, employees, and suppliers.\nOur financial results are just one part of our efforts and success.\nLet me start with an overview of our fourth quarter financial results on Slide 9.\nAs Bob mentioned, consolidated diluted earnings for the quarter were $0.54 per share compared to $0.45 per share.\nAgain, a 20% increase over the same period last year.\nEarnings at our water segment increased $0.04 per share for the quarter.\nThe increase in the water segment's earnings were largely due to a higher water gross margin from new water rates.\nIn addition, a decrease in interest expense and an increase in gains earned on investments held to fund a retirement plan were partially offset by the impact of a higher effective income tax rate.\nOverall, operating expenses other than supply costs were relatively flat for the water segment.\nEarnings from the electric segment for the fourth quarter of 2020 were $0.07 per share as compared to $0.05 per share recorded for same period in 2019.\nThe increase was due to rate increases authorized by the CPUC, as well as lower overall operating and interest expenses.\nEarnings from the contracted services segment were $0.17 per share as compared to $0.12 per share for the fourth quarter of '19.\nThis was largely due to an increase in construction activity as well as an overall decrease in operating expenses.\nConsolidated revenue for the three months ended December 31, 2020, increased by approximately $11.2 million as compared to the same period in 2019.\nThe decreases were due to rate increases at both of our water and electric utilities and an increase in construction work at our contracted services business.\nTurning to Slide 11, our water and electric supply costs were $24.1 million for the quarter, an increase of $900,000 from the same period last year.\nAny changes in supply costs for both the water and electric segments as compared to the adopted supply costs are tracked in balancing accounts.\nLooking at total operating expenses excluding supply costs, consolidated expenses increased approximately $5.8 million versus the fourth quarter of 2019, mostly due to an increase in construction costs at ASUS as a result of the higher construction activity and property and other taxes, partially offset by lower maintenance expenses resulting from timing differences and a decrease in outside service costs.\nOther income and expense for the fourth quarter of 2020 was a net expense of $2.1 million, which was $1.8 million lower in the same period of last year due to lower interest rate, as well as an increase in gains generated on investments held in the trust to fund a retirement benefit plan.\nSlide 12 shows the earnings per share bridge comparing the fourth quarter of 2020 with the same quarter of 2019.\nThe slide shows the full-year results.\nConsolidated earnings for 2020 were $2.33 per share as compared to $2.28 per share for 2019.\nThe 2019 CPUC final decision on the electric general rate case was retroactive to January 2018.\nAnd as a result, the cumulative retroactive earnings impact related to 2018 of $0.04 per share was recorded as part of 2019's results.\nExcluding this retroactive impact, consolidated earnings for 2020 increased $0.09 per share as compared to $2.24 per share for 2019 as adjusted.\nEarnings from the water segment increased by $0.05 per share as compared to 2019, mostly due to new water rates as result of the full second-year step increase effective January 1, 2020, which added $10.4 million in water gross margins for 2020.\nThe increase in earnings from the higher gross margin was partially offset by an increase in operating expenses and a higher effective income tax rate due to changes in flow-through adjustments.\nMoving on to the electric segment, earnings were $0.05 per share higher than in 2019 after excluding the retroactive impact for 2018 from the 2019 CPUC final decision.\nThe higher electric earnings were due to new rates authorized in the final decision as well as lower interest expense and a lower effective income tax rate due to changes in certain flow-through taxes as compared to the year before.\nThese increases to earnings were partially offset by an overall increase in operating expenses.\nFor both 2020 and 2019, diluted earnings from contracted services were $0.47 per share, excluding a retroactive price adjustment of $0.01 per share recorded in 2019 related to period prior to 2019.\nEarnings from the contracted services segment for 2020 increased by $0.01 per share, largely due to an increase in management fee and construction revenue and also overall lower operating expenses, partially offset by higher construction costs.\nAWR parent's earnings decreased $0.01 per share compared to 2019 due to higher state unitary taxes recorded at the parent level.\nNet cash provided by operating activities were $122.2 million as compared to $116.9 million in 2019.\nThe increase was primarily due to the refunding of $7.2 million to customers in 2019 related to the Tax Cuts and Jobs Act with no similar refund in 2020 and an increase in water customer usage.\nThese increases were partially offset by decreases in cash flows from accounts receivable from utility customers, due to the economic impact of the COVID-19 pandemic, and the CPUC-mandated suspension of service disconnections, and from the timing of billing of and cash receipt for construction work at military bases.\nAs Bob mentioned, our regulated utility invested $123.4 million in company-funded capital projects in 2020.\nWe expect to invest $120 million to $135 million in 2021.\nAt this time, we do not expect American States Water to issue additional equity.\nI'd like to provide an update on our recent regulatory activity.\nAs you may know, the water segment has an earnings test it must meet before implementing the second and third-year step increases in the third-year rate cycle.\nI'm pleased to report that we have timely invested our capital projects and achieved capital spending consistent with the amount authorized by the CPUC.\nAs a result, substantially all of the third-year step increases have been authorized and effective January 1, 2021.\nThese new rates are expected to generate an additional $11.1 million of water gross margin.\nWe continue to make prudent and timely capital investments.\nIn July 2020, Golden State Water filed a general rate case application for all of its water [Technical Issues] for new water rates for the years 2022, 2023, and 2024.\nGolden State Water requested capital budgets in this application of approximately $450.6 million for the three-year rate cycle and another $11.4 million of capital projects to be filed for revenue recovery through advice letters when those projects are completed.\nA decision in the water general rate case is scheduled for the fourth quarter of 2021 with new rates to become effective January 01, 2022.\nIn a procedural hearing held earlier this month on this pending general rate case, the assigned administrative law judge confirmed that Golden State Water is authorized to continue using the Water Revenue Adjustment Mechanism, or WRAM, and the Modified Cost Balancing Account, also known as the MCBA, until its next general rate case application covering the years 2025 through 2027.\nIf you recall, the CPUC issued a final decision in the first phase of its order instituting rulemaking, evaluating the low-income ratepayer assistance and affordability objectives contained in the PUC's 2010 Water Action Plan.\nThis final decision, among other things, removes the continued use of the WRAM and MCBA by California water utilities in any general rate case application filed after the August 27, 2020, effective date of this decision.\nGolden State Water's pending water rate case application was filed in July 2020, prior to this effective date.\nAs a result of this procedural hearing, we will continue using the WRAM and MCBA mechanisms through the year 2024.\nIn January 2021, Golden State Water along with the three other large California water utilities requested a one-year deferral of the date by which each of them must file their next cost of capital application.\nGolden State Water will file its cost of capital application by May 1 of this year with an effective date of January 1, 2022.\nTurning our attention to Slide 17, this slide presents the growth in Golden State Water's rate base as authorized by the CPUC for 2018 through 2021.\nThe weighted average water rate base has grown from $752.2 million in 2018 to $980.4 million in 2021, a compound annual growth rate of 9.2%.\nThe rate base amounts for 2021 do not include any rate recovery for advice letter projects.\nLet's move on to ASUS on Slide 18.\nAfter adjusting the 2019 financial results for the $0.01 per share retroactive earnings impact related to periods prior to 2019 that Eva discussed earlier, ASUS's earnings contribution for 2020 increased by $0.01 per share as compared to 2019.\nThis was accomplished despite weather delays and slowdowns in permitting for construction projects and government funding for new capital projects experienced throughout 2020.\nWe continue to work closely with the U.S. government for contract modifications relating to potential capital upgrade work for improvement of the water and wastewater infrastructure at the military bases we serve.\nDuring 2020, the U.S. government awarded ASUS $15.5 million in new construction projects for completion in 2020 and 2021.\nCompletion of filings for economic price adjustments, request for equitable adjustment, asset transfers, and contract modifications awarded for new projects provide ASUS with additional revenues and dollar margin.\nWe are actively involved in various stages of the proposal process at a number of other bases considering privatization.\nThe U.S. government is expected to release additional bases for bidding over the next several years.\nDue to our strong relationship with the U.S. government as well as our expertise and experience in managing bases, we are well-positioned to compete for these new contracts.\nIn light of our continued uncertainty associated with the effects of COVID-19, we reaffirm our projection that ASUS will contribute $0.45 to $0.49 per share for 2021.\nI would like to turn our attention to dividends outlined on Slide 19.\nIn 2020, we increased the annual dividend by 9.8% to $1.34 per share.\nAmerican States Water Company has paid dividends to shareholders every year since 1931, increasing the dividends received by shareholders each calendar year for 66 consecutive years, which places it in an exclusive group of companies on the New York Stock Exchange that have achieved that result.\nOn February 02, our Board of Directors approved a quarterly dividend of $0.335 per share.\nAs a reminder, our dividend policy is to achieve a compound annual growth rate in the dividend of more than 7% over the long term.\nOur strength and attractiveness to customers and shareholders alike is our ability to execute on our business strategies, stability, continued timely investment in our systems and customer service, our regulated operations in a constructive regulatory environment in California, our growing contracted service business with strong market share and an unwavering commitment to reliability and safety.\nOur capital investment includes replacing and upgrading critical infrastructure as well as ensuring we can meet our customers' needs for generations to come, all while driving operational efficiency and delivering outstanding customer service.\n", "role": "user" }, { "content": "compname reports q4 earnings per share of $0.54.\nq4 earnings per share $0.54.\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 access this announcement on the Investor Relations page of our website, www.\naam.com, and through the PR newswire services.\nYou can also find supplemental slides for this conference call on the Investor page of our website as well.\nFor additional information, we ask that you refer to our filings with the Securities and Exchange Commission.\nInformation regarding these non-GAAP measures as well as a reconciliation of these non-GAAP measures to GAAP financial information is available on our website.\nWith that, let me turn things over to AAM's Chairman and CEO, David Dauch.\nJoining me on the call today are Mike Simonte, AAM's President; and Chris May, AAM's Vice President and Chief Financial Officer.\nTo begin my comments today, I'll review the highlights of our third quarter 2021 results.\nI'll then touch on some exciting business development news, including electrification announcements with REE and our largest customer, General Motors.\nAnd lastly, we'll discuss the ongoing supply chain challenges and our financial outlook.\nAfter Chris covers the details of our financial results, we will then open up the call for any questions that you may have.\nAAM delivered solid operating performance in the third quarter of 2021 despite unprecedented supply chain challenges that impacted industry production in the third quarter.\nWhen we reported second quarter earnings, our expectation was that the worst of the shortage was behind us.\nThis turned out not to be the case.\nProduction volatility stemming from the semiconduct -- chip shortage took another leg down, which eventually forced OEMs to idle production at many facilities, including their full-size truck plants that were largely protected previously.\nHowever, the AAM team did a great job in managing these obstacles and factors under our control, resulting in solid financial performance.\nAAM sales for the third quarter of 2021 were $1.21 billion, down approximately 14% compared to $1.41 billion in the third quarter of 2020.\nThe decrease in our revenues on a year-over-year basis primarily reflects the impact of the semiconductor supply chain disruptions of nearly $245 million.\nNorth American industry production was down approximately 25% according to third-party estimates.\nLight truck production was down 20% year-over-year and volumes on our core platforms decreased significantly from a year ago.\nThe industry is at a point where a lack of inventory has begun to impact retail sales.\nDays supply on key products that we support were at or below 30 days with certain platforms in single digits and large SUVs closer to 20 days.\nOnce the supply chain issues are resolved, which will take some time, we foresee an extended recovery to meet customer demand and replenish dealer inventories.\nAAM is in a great position to benefit from the strong demand in light trucks, especially pickups and SUVs and the replenishment of crossover vehicles.\nAAM's adjusted EBITDA in the third quarter of 2021 was $183 million or 15.1% of sales.\nThis compares to $297 million last year.\nExcluding the impact of metal markets and currency, our EBITDA margins would have approximated 19%.\nThis is a testament to our optimization efforts and our strong cost control, yielding strong EBITDA conversion.\nAAM's adjusted earnings per share in the third quarter of 2021 was $0.15 per share compared to $1.15 in the third quarter of 2020.\nAs for cash flow, we continue to generate positive free cash flow in the third quarter.\nAAM's adjusted free cash flow was approximately $69 million.\nEarlier this year, we announced a development agreement with REE.\nWe are pleased to share that we have secured an initial platform business award with our partner, and AAM plans to supply REE with high-performance electric drive units for its highly modular and disruptive REEcorner technology that enables full flat EV chassis for multiple applications.\nThis is a great electrification opportunity for AAM and its validation of our innovative industry-leading advanced electric drive technology, and we're excited to build upon this win with REE going forward.\nInvestors and other interested parties may have an opportunity to see our will and drive units and other EDU portfolio on display at trade shows beginning in January of 2022.\nIn addition, AAM announced today that we will be supplying track right differentials for the new GMC Hummer EV.\nThese differential subassemblies distribute power generated by the electric drive motor to the left and right wheels.\nThis enhances the experience for drivers looking for exceptional vehicle performance, both on and off road.\nWe are very happy to support GM on this great product, and we look forward to spy GM for their future electric driveline needs.\nOur strategy and approach to the market continues to take hold.\nOur opportunity to succeed in full electric drive units, subassemblies and components are well displayed with these two announcements.\nAs we all know, electrification is coming fast, and it's a great growth opportunity for AAM.\nWe have a strong product portfolio in EDUs and e-beam axles, gearboxes, subassemblies and components.\nAs such, our technology is guarding interest around the globe from new and established OEMs from small cars to light commercial vehicles.\nWe are in numerous discussions with manufacturers, and our business prospects look very positive.\nBecause of our deep driveline experience, we believe we have an edge among the competition, especially when it comes to systems integration and NVH.\nBefore I transition to Chris, I want to talk about the industry supply chain challenges and our financial guidance.\nWhat the industry has and continues to experience is unprecedented.\nA lack of semiconductor availability continues to drive high production volatility with very minimal warning.\nAdditionally, rising commodity costs, labor shortages, logistical challenges and port delays continue to stress the value chain.\nWe are hoping to see semiconductor stabilization over the next successive quarters, but it's difficult to ascertain when the industry will return to normal as global demand for chips remain strong and new capacity will take time to come online.\nWe expect this issue will continue well into 2022 and possibly into 2023.\nThat said, our priority at AAM is to execute our game plan, which means to produce high-quality products, deliver on time and be cost-efficient to support our customers and protect the continuity of supply regardless of the operating conditions, and we're doing just that.\nOne of the management's top priority is to diligently optimize the cost structure and improve efficiency, and we are doing that.\nNow let's discuss our financial guidance.\nOperating uncertainty continues in the fourth quarter, especially with the availability of semiconductors and rising commodity prices.\nAnd as such, we have updated our guidance.\nFor the full year, we now target revenue in the range of $5.15 to $5.25 billion, adjusted EBITDA in the range of $830 million to $850 million and adjusted free cash flow of approximately $400 million.\nIn conclusion, we had a good and solid operating quarter.\nWe did what we do best, that is we delivered operational excellence.\nThe team delivered positive adjusted earnings and adjusted free cash flow under a very difficult operating environment.\nWe are confident that our strong operating fundamentals should support solid financial performance, especially as volumes recover over time.\nIn the meantime, we continue to secure our core truck, SUV and crossover business and generate strong cash flow to fund our electrification future.\nIn addition, we will continue to invest in advancing our electrification platform technology and our overall EV portfolio to serve multiple vehicle segments.\nOur goal is to be the electrification supplier of choice for the broader OEM community, and we are making primary index-related inputs to metal materials that we purchase.\nYou may recall, we hedged this risk with our customers by passing through the majority, but not all of these index-related changes.\nThe metal portion of this column reflects these elevated pass-throughs on a year-over-year basis.\nFor the first three quarters of 2021, metal markets in a foreign currency have increased our revenues by approximately $212 million, and we expect this to be well over $300 million for the full year.\nNow let's move on to profitability.\nGross profit was $165.6 million, or 13.7%, of sales in the third quarter of 2021 compared to $249.8 million in the third quarter of 2020.\nAdjusted EBITDA was $183.2 million in the third quarter of 2021 or 15.1% of sales.\nThis compares to $297.1 million in the third quarter of 2020.\nYou can see a year-over-year walk down of adjusted EBITDA on Slide 8.\nThe return of COVID volumes added approximately $16 million, but was more than offset by the negative impact from the production volatility stemming from the semiconductor disruptions in the amount of $83 million.\nLast year, we also had a $22 million benefit from an ED&D recovery and a customer settlement that did not recur in 2021.\nBut even through all these disruptions in the quarter, AAM still delivered $17 million of net performance.\nAs I just mentioned in our sales highlights, we are facing significant year-over-year increases in commodity metal markets.\nThe retained portion impacting this quarter plus foreign currency was $31 million.\nYou can see on our EBITDA walk, the dynamic this has on our margin calculations.\nIf you exclude the impact of this pass-through dynamic, our margins would have been significantly higher, as noted on our walk.\nLet me now cover SG&A.\nSG&A expense, including R&D, in the third quarter of 2021 was $90.5 million, or 7.5% of sales.\nThis compares to 4.7% of sales in the third quarter of 2020.\nThe AAM's R&D spending in the third quarter of 2021 was $34.7 million compared to $18 million in the third quarter of 2020.\nRecall, we received significant engineering and development recovery last year of approximately $15 million.\nThe third quarter of 2021 incurred a sequential quarterly increase in R&D, in line with our expectations.\nWe will continue to focus on controlling our SG&A costs, while at the same time, investing in technologies and innovations to achieve our pivot to electrification.\nWe do expect R&D spend to increase in the coming quarters as we launch new programs and continue to pursue meaningful opportunities in the electric vehicle business as we experienced significant customer interest in our new products and technology.\nNow let's move on to interest and taxes.\nNet interest expense was $47 million in the third quarter of 2021 compared to $50.5 million in the third quarter of 2020.\nWe expect this favorable trend to continue as we benefit from continued debt reductions.\nIn the third quarter, we redeemed $100 million of our 6.25% notes due 2025 and refinanced the remaining $600 million balance.\nIn the third quarter of 2021, we reported an income tax benefit of $13.6 million compared to a benefit of $22.5 million in the third quarter of 2020.\nAs we near the end of 2021, we expect our effective tax rate to be approximately 10% to 15%.\nWe would also expect our cash taxes to be in the $25 million to $30 million range.\nTaking all these sales and cost drivers into account, our GAAP net loss was $2.4 million, or $0.02 per share, in the third quarter of 2021 compared to an income of $117.2 million, or $0.99 per share, in the third quarter of 2020.\nLet's now move on to cash flow and the balance sheet.\nNet cash provided by operating activities for the third quarter of 2021 was $89.8 million compared to $249.5 million last year.\nCapital expenditures net of proceeds from the sale of property, plant and equipment for the third quarter of 2021 was $33.2 million.\nCash payments for restructuring and acquisition-related activity for the third quarter of 2021 were $9 million.\nThe net cash outflow related to the recovery from the Malvern fire we experienced in September of 2020 was $3.5 million in the quarter.\nHowever, we anticipate the Malvern fire to have a neutral cash impact for the full year as timing of cash expenditures and cash insurance proceeds aligned over time.\nIn total, we would expect $55 million to $65 million in cash payments for restructuring and acquisition costs in 2021.\nReflecting the impact of this activity, AAM generated adjusted free cash flow of $69.1 million in the third quarter of 2021.\nFrom a debt leverage perspective, we ended the quarter with net debt of $2.6 billion and LTM adjusted EBITDA of $930.2 million, calculating a net leverage ratio of 2.8 times at September 30.\nWe are focused on improving the balance sheet and delivering on our goal to improve our leverage this year.\nWe have made meaningful progress in reducing our gross debt outstanding and reducing our leverage ratio by more than a full turn as of the end of the third quarter.\nBefore we move on to the Q&A portion of the call, let me close out my comments with some thoughts on our 2021 financial outlook.\nWe expect adjusted EBITDA to be in the range of $830 million to $850 million.\nJust as a reminder, investors need to consider the impact of the metal market pass-throughs as it relates to our margin calculations when comparing from period to period.\nIn periods and environment such as this, it is meaningful.\nWe expect to generate approximately $400 million of adjusted free cash flow in 2021, or nearly 50% adjusted free cash flow to adjusted EBITDA conversion.\nWe expect our capital expenditures at less than 4% of sales as our capital reuse and optimization efforts continue to deliver results.\nOur updated outlook is based on the latest and best information we have regarding customer production schedules.\nWe continue to assume our customers will prioritize building full-size pickup trucks and SUVs through the end of the year with minimal disruptions.\nHowever, the operating environment remains choppy with multiple factors posing a risk to the supply chain.\nAs volumes begin to normalize, we should be in a great position to leverage that environment to generate profits and cash flow.\nThis in turn will be used to support our highly advanced research and development initiatives in electrification and solidly position us for future profitable growth aligned with our capital allocation priorities.\nWe have reserved some time to take questions.\nSo at this time, please feel free to proceed with any questions you may have.\n", "role": "user" }, { "content": "q3 adjusted earnings per share $0.15.\nq3 loss per share $0.02.\nq3 sales $1.21 billion.\nfor fy 2021 targeting sales in range of $5.15 billion - $5.25 billion.\nfor fy 2021 targeting adjusted ebitda in range of $830 million - $850 million.\nadjusted ebitda in q3 unfavorably impacted by lower sales as result of semiconductor shortage by about $83 million.\nsales for q3 of 2021 were unfavorably impacted by semiconductor chip shortage by approximately $245 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: You can access this announcement on the Investor Relations page of our website, www.\naam.com, and through the PR Newswire services.\nYou can also find supplemental slides for this conference call on the Investor page of our website as well.\nFor additional information, we ask that you refer to our filings with the Securities and Exchange Commission.\nInformation regarding these non-GAAP measures, as well as a reconciliation of these non-GAAP measures to GAAP financial information is available on our website.\nWith that, let me turn things over to AAM's Chairman and CEO, David Dauch.\nJoining me on the call today are Mike Simonte, AAM's President; and Chris May, AAM's Vice President and Chief Financial Officer.\nTo begin my comments today, I'll review the highlights of our fourth quarter and full year 2020 financial performance.\nNext, I'll cover some highlights from 2020, including some updates on the technology and innovation front.\nAnd lastly, I'll review our 2021 financial outlook and our three-year new business backlog before turning things over to Chris.\nAfter Chris covers the details of our financial results, we will open up the call for any questions that you may have.\nAAM delivered solid operating financial results and cash flow performance in the fourth quarter and full year of 2020, as global production continue to recover, resulting in a strong EBITDA conversion.\nAAM's fourth quarter 2020 sales were $1.44 billion compared to $1.43 billion in the fourth quarter of 2019.\nRecall, last year, we were impacted by the GM work stoppage and we sold our US casting business.\nFor the full year 2020, AAM's sales were $4.7 billion.\nDuring the year, we experienced slower sales coming from a decline in global production due to the COVID-19 and the sale of our US casting business.\nFrom a profitability perspective, AAM's adjusted EBITDA in the fourth quarter of 2020 was $261.5 million or 18.2% of sales, a fourth quarter record for AAM.\nAAM concluded a strong second half of 2020 with a solid fourth quarter financial performance, which I'm very, very pleased about.\nFor the full year 2020, AAM's adjusted EBITDA was $720 million or 15.3% of sales.\nFor the full year, we were impacted by COVID-19 production shutdowns and lower volumes.\nHowever, we also managed through a difficult operating environment, delivering strong EBITDA margins in the second half, as production rebounded and our cost structure initiatives took hold.\nAAM's adjusted earnings per share in the fourth quarter of 2020 was $0.51 per share.\nAnd for the full year 2020, AAM's adjusted earnings per share was $0.14 per share.\nAAM continued to deliver strong free cash flow performance in 2020.\nAAM's adjusted free cash flow in the fourth quarter 2020 was $173 million.\nAnd for the full year 2020, AAM's adjusted free cash flow was $311 million.\nThis is a fantastic result, considering the challenges that we faced during the year.\nWe also reduced our gross debt by nearly $200 million in 2020, paying down approximately $100 million just in the fourth quarter alone.\nFurthermore, we are committed to reducing our debt and strengthening our balance sheet in 2021.\nChris will provide additional information regarding the details of our financial results in just a few minutes.\nLet me wrap up 2020 with a look back on some of the key highlights, which you can see highlighted on Slide 4 of our slide deck.\nThe automotive industry faced significant challenges, but AAM worked through it with the dedication of our associates.\nOperationally, we completed 17 program launches.\nWe received 13 customer quality awards and multiple Supplier of the Year awards from customers such as General Motors and Hyundai.\nWe flexed our cost structure in quick response to pandemic and generated robust EBITDA results throughout the year.\nAnd generating significant free cash flow has strengthened our financial profile through gross debt paydowns.\nFrom a technology perspective, we have benefited from a growing and expanding relationship with Inovance Automotive, a leading provider of automotive power electronics and powertrain systems in China.\nBack in the second quarter of 2020, we won our first eDrive award with them for a new Chinese OEM.\nAlready this year, we announced three additional OEM programs with Inovance.\nOur alliance with them has created significant value for us by enhancing customer relationships within the swiftly growing Chinese electrification Market.\nIn addition, and even more exciting, we've recently signed a technology agreement with Inovance to accelerate the development and delivery of scalable next-generation three-in-one integrated electric drive systems, which integrates the inverter, the electric motor and the gearbox.\nBy leveraging the partner's complementary expertise in electric propulsion technology, this collaboration will seek to enhance the power density, efficiency and cost-effectiveness of the electric driveline technology offered in the global electrification market.\nOur cooperation with Inovance Automotive will add an exciting new offering to AAM's fast growing portfolio of scalable three-in-one electric drive systems and accelerate our ability to bring new cost-competitive technologies to the market.\nWe are excited to join forces with such a highly accomplished and innovative provider of power electronics technology.\nAt AAM, our goal is to be at the forefront of electrification technology.\nWe're also working together with REE Automotive, a leader in electric platform technology.\nThe company's core innovation includes integrating traditional vehicle components into the wheel, allowing for a flat and modular platform.\nWe have a small financial investment in REE, and we look forward to further opportunities to drive value from this partnership, utilizing our technology leadership and our operational excellence.\nIn addition to these exciting partnerships, we continue to make great progress in innovation -- in innovative electric driveline solutions.\nAs we mentioned earlier, we were awarded not only the Automotive News PACE Award for electric drive technology in the Jaguar I-Pace, but also a second award for our outstanding collaboration with JLR.\nThese awards further validate not only our technology, but also our commitment to our customers.\nIn addition, we have several important electrification launches in 2021, including our high-performance eDrive unit for a premium European OEM that we can't wait to tell you more about, as well as multiple electric powertrain component launches, including one for electric pickup trucks and also one for a commercial truck.\nWe are excited about our prospects in electrification as the industry has begun to pivot in that direction.\nAAM is ready to support our customers with cutting-edge electrification products, and we look forward to keeping you up to date with our new developments.\nOn a separate note and ICE-related, we are also pleased to share that we have secured the next-generation Ram heavy-duty pickup truck business with Stellantis into the next decade.\nStellantis has been a great partner to AAM over the years, and we look forward to extending our mutually beneficial relationship.\nThis award, coupled with the current business that we enjoy today with Stellantis, exceeds several [Phonetic] billion dollars in sales and is a key foundational program for AAM.\nThis program, along with other customer next-generation program awards, will support solid cash flow performance for many years to come for AAM.\nThese are all key developments as we leverage our strong core business to support our electrification technologies as we work to bring the future faster.\nI'm also very proud to share that AAM was named on Newsweek's List of America's Most Responsible Companies and to the annual Forbes list of the World's Best Employers for 2020.\nWe look forward to sustaining this positive momentum in 2021 to support our sustainability priority topics and diversity, equity and inclusion initiatives.\nAAM expects our gross new business backlog, covering the three-year period of 2021 through 2023, to be approximately $600 million.\nWe expect the launch cadence of this backlog to be $200 million in 2021, $150 million in 2022, and $250 million in 2023.\nAnd this also factors in the impact of updated customer launch timing and the latest customer volume expectations that we've received from our customers.\nYou can also see the breakdown of our backlog on Slide 7.\nAbout 70% of this new business backlog relates to global light trucks, including crossover vehicles, and another 15% relates to hybrid electric powertrains.\nNearly half of this will be realized outside of North America, continuing our trend of diversifying geographically on an organic basis.\nI'd like to turn to AAM's 2021 financial outlook, which can be seen on Slide 8, and is as follows.\nAAM is targeting full year sales between $5.3 billion and $5.5 billion in 2021.\nAAM is targeting adjusted EBITDA of approximately $850 million to $925 million in 2021.\nAnd AAM is targeting adjusted free cash flow in 2021 of approximately $300 million to $400 million, which contemplates capital spending of approximately 4.5% of sales.\nWhile launch activity decreases in 2021, there are still some key new programs we will be focused on during the year, including launching a number of our new electrified products that I mentioned to you earlier.\nFrom an end market perspective, we see production at approximately 15.5 million to 16 million units for our primary North American market.\nAs it relates to our specific North American programs, we continue to expect favorable mix weighted toward pickup trucks, SUVs and crossover vehicles.\nLight trucks made up 74% of the production in North America in 2020, and we see no signs of that changing or slowing down in 2021.\nClearly, 2020 was an unprecedented year, laid with numerous challenges and obstacles.\nHowever, I am extremely proud of the AAM team in managing through these speed bumps and instituting protocols to keep our associates safe and healthy, while effectively supporting our customers throughout the year.\nAs we turn our focus on 2021 and beyond, our core business is solidly intact and well protected for years to come, yielding significant free cash flow generation, which will allow us to strengthen our balance sheet and invest in advanced propulsion technologies to drive profitable growth.\nNeedless to say, I'm very, very excited about the about the future for AAM.\nI will cover the financial details of our fourth quarter and full year 2020 results with you today.\nI will also refer to the earnings slide deck as part of my prepared comments.\nSo, let's go ahead and get started with sales.\nIn the fourth quarter of 2020, AAM sales were $1.44 billion, compared to $1.43 billion in the fourth quarter of 2019.\nSlide 11 shows a walk down of fourth quarter 2019 sales to fourth quarter 2020 sales.\nFirst, we stepped cut down our fourth quarter 2019 sales by $119 million to reflect the sale of the US casting business unit that was completed in December of 2019.\nNext, we add back the impact of the GM work stoppage from the fourth quarter of last year.\nThen we account for the unfavorable impact of COVID-19 on our fourth quarter of 2020 sales, which we estimate to be approximately $40 million.\nAt this point, our estimated sales impact from COVID is only for our India and Brazil locations, which have not recovered to pre-COVID levels for us.\nOn a year-over-year basis, we are also impacted by GM's exit of its Thailand operations by approximately $10 million.\nAnd the transition from a rear beam axle to a new lightweight and highly efficient independent rear drive axle for GM's new full-size SUV impacted sales by about $35 million in the quarter.\nWe will have one more quarter of the year-over-year impact for this transition in the first quarter of 2021.\nOther volume and mix was positive by $38 million, mainly driven by strong light truck mix in North America.\nPricing came in at $19 million on year-over-year impact.\nAnd metal market pass-throughs and foreign currency accounted for increase in sales of about $7 million year-over-year.\nFor the full year of 2020, AAM sales were $4.71 billion as compared to $6.53 billion in the full year of 2019.\nThe impact of COVID-19 and the sale of the US casting business was the primary drivers of this year-over-year decrease.\nNow, let's move on to profitability.\nGross profit was $236.5 million or 16.4% of sales in the fourth quarter of 2020 compared to $183.4 million or 12.8% of sales in the fourth quarter of 2019.\nAdjusted EBITDA was $261.5 million in the fourth quarter of 2020 or 18.2% of sales.\nThis compares to $193.5 million in the fourth quarter of 2019 or 13.5% of sales.\nAs David mentioned, this was AAM's best fourth quarter adjusted EBITDA margin in our company's history.\nYou can see a year-over-year walk down of adjusted EBITDA on Slide 12.\nWe benefited from higher sales and from our strong cost reduction actions we implemented this year.\nFor the full year of 2020, AAM's adjusted EBITDA was $720 million and adjusted EBITDA margin was 15.3% of sales.\nLet me now cover SG&A.\nSG&A expense, including R&D, in the fourth quarter of 2020 was $83 million or 5.8% of sales.\nThis compares to $90 million in the fourth quarter of 2019 or 6.3% of sales.\nAAM's R&D spending in the fourth quarter of 2020 was $31.1 million compared to $39.8 million in the fourth quarter of 2019.\nFor the year, SG&A expense was down about $50 million, due mainly to our cost reduction actions, both temporary and structural.\nAs we head into 2021, we will continue to focus on controlling our SG&A costs.\nEqually important, we will further our investment in key technologies and innovations with an emphasis on electrification, including shifting resources from traditional product support to new technology development in a cost-effective manner.\nLet's move on to interest and taxes.\nNet interest expense was $52.3 million in the fourth quarter of 2020 compared to $53.4 million in the fourth quarter of 2019.\nWe expect this favorable trend to continue in 2021, as we benefit from continued debt reduction.\nIn the fourth quarter of 2020, we recorded income tax expense of $13.9 million compared to a benefit of $11.5 million in the fourth quarter of 2019.\nAs we head into 2021, we expect our effective tax rate to be approximately 20%.\nTaking all of these sales and cost drivers into account, our GAAP net income was $36 million or $0.30 per share in the fourth quarter of 2020 compared to a loss of $454.4 million or a loss of $4.04 per share in the fourth quarter of 2019.\nAdjusted earnings per share for the fourth quarter of 2020 was $0.51 per share versus $0.13 per share in the fourth quarter of 2019.\nLet's now move to cash flow and the balance sheet.\nNet cash provided by operating activities in the fourth quarter of 2020 was $208 million.\nCapital expenditures, net of proceeds from the sale of property, plant and equipment, for the fourth quarter was $69 million.\nCash payments for restructuring and acquisition-related activity in the fourth quarter of 2020 were $33.6 million.\nReflecting the impact of this activity, AAM generated adjusted free cash flow of $172.7 million in the fourth quarter of 2020.\nFor the full year of 2020, AAM generated adjusted free cash flow of $311.4 million compared to $207.8 million in the full year 2019.\nAAM was able to offset the impact of lower EBITDA through lower capital expenditures, lower tax payments and working capital benefits, including leveraging the AAM Operating System to reduce inventory levels.\nFrom a debt leverage perspective, we ended the year with net debt of $2.9 billion and [Indecipherable] adjusted EBITDA of $720 million, calculating a net leverage ratio of 4 times at December 31.\nIn the fourth quarter of 2020, we prepaid over $100 million of our term loans.\nWe were pleased to utilize the free cash flow generating power of AAM to strengthen the balance sheet by reducing our debt and lowering our future interest payments.\nWe expect to continue this trend in 2021.\nAAM ended 2020 with total available liquidity of $1.5 billion, consisting of available cash and borrowing capacity on AAM's global credit facilities.\nWe continue to maintain a strong liquidity position and debt maturity profile.\nBefore we move to the Q&A, let me close out my comments with some thoughts on our 2021 financial outlook.\nIn our earnings slide deck, we've included walks from 2020 actual results to our 2021 financial targets.\nYou can see those starting on Slide 14.\nAs for sales, we are targeting a range of $5.3 billion to $5.5 billion for 2021.\nThis sales target is based upon a North American production of 15.5 million to 16 million units, a new business backlog of $200 million and attrition of approximately $100 million.\nWe have begun to experience some limited downtime in the first quarter due to supply constraints attributable to the semiconductor chip shortage.\nWe have contemplated what we know today in our guidance, and our target range allows for some variability.\nFrom an EBITDA perspective, we are expecting adjusted EBITDA in the range of $850 million to $925 million.\nAt the midpoint, this performance would represent EBITDA margin growth of over 100 basis points versus last year.\nAs you can see on the walk-down on Page 15, we expect volume and mix to positively contribute as well as continued productivity benefits.\nAs we stated previously, some of our 2020 cost initiatives were temporary in nature, but our focus has been to replace those with more structural savings.\nWe also expect approximately $40 million in pricing and $15 million in higher R&D spending, as we continue to invest in electric propulsion.\nFrom an adjusted free cash flow perspective, we are targeting approximately $300 million to $400 million in 2021, and the year-over-year walk is very simple.\nThe main factors driving our cash flow change is higher EBITDA, a return to more normalized income tax payments and a higher working capital associated with revenue growth.\nAnd while on a dollar basis, capex is slightly higher than 2020, we are targeting capex as a percent of sales of approximately 4.5%.\nYou can clearly see AAM's ability to deliver free cash flow on full display, not only in 2020 actual results but ahead for 2021.\nThe strong free cash flow number for 2021 is a reflection of the benefits we are realizing from our restructuring and cost reduction actions.\nWe are experiencing year-over-year margin growth and continued cost optimization, capex as a percent of sales at the lowest levels in AAM's history, and inventory optimization delivering significant cash flow benefits.\nWe expect to use this free cash flow as well as our enhanced EBITDA to fund our R&D and new product expansion, and at the same time, reduce leverage this year by a full turn or more.\nOur resilience in restructuring activities in 2020 is fueling our 2021 performance, and we are very excited to continue to strengthen our financial profile and focus on the growing of the business.\nThat said, we are well positioned for 2021 and beyond.\nWe have and will continue to optimize our business to generate meaningful cash flow and invest in our future product development.\nThis position is driving growth opportunities in electrification and other areas of our business.\nYou can see this in the third year of our backlog and it is the strongest heading into the mid-decade timeframe.\nWe are being awarded next generation of key products that will position our businesses to drive cash flow for many years to come.\nIn the near and mid-term, we see customers adding production facilities for products we support.\nThis is allowing us to leverage our light truck franchise to contribute to strong cash flow generation capabilities and thus invest and grow our electrification product portfolio.\nAnd lastly, our cost optimization is focused on driving future margin growth opportunities.\nSo, couple all that with our flexible operations, variable cost structure and ample liquidity and solid debt maturity profile, and you have a good framework for long-term success.\nAs for now, we expect 2021 to be about operational excellence, margin expansion, free cash flow generation and propulsion innovation.\nWe are looking forward to a great year for AAM.\n", "role": "user" }, { "content": "q4 adjusted earnings per share $0.51.\nq4 diluted earnings per share $0.30.\nqtrly sales of $1.44 billion.\nq4 sales $1.44 billion versus refinitiv ibes estimate of $1.36 billion.\naam is targeting sales in range of $5.3 - $5.5 billion for full year 2021.\nexpects launch cadence of 3-year backlog to be about $200 million in 2021, $150 million in 2022 and $250 million in 2023.\naam is targeting adjusted ebitda in range of $850 - $925 million for full year 2021.\naam is targeting adjusted free cash flow in range $300 - $400 million for full year 2021.\nsees 2021 north american light vehicle production in range of 15.5 - 16 million units.\nsees 2021 european light vehicle production of approximately 19 million units.\ngross new, incremental business backlog launching from 2021 - 2023 estimated at about $600 million in future annual sales.\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 access this announcement on the Investor Relations page of our website, www.\naam.com, and through the PR Newswire services.\nYou can also find supplemental slides for this conference call on the Investor page of our website as well.\nFor additional information, we ask that you refer to our filings with the Securities and Exchange Commission.\nInformation regarding these non-GAAP measures as well as a reconciliation of these non-GAAP measures to GAAP financial information is available on our website.\nWith that, let me turn things over to AAM's chairman and CEO, David Dauch.\nJoining me on the call today are Mike Simonte, AAM's president; and Chris May, AAM's vice president and chief financial officer.\nBegin my comments today, I'll review the highlights of our fourth quarter and full year 2021 financial performance.\nNext, I'll cover how we are pivoting to electrification while securing our core business.\nLastly, I'll discuss our 2022 financial outlook and our three-year new business backlog before turning things over to Chris.\nAfter Chris covered the details of our financial results, we will open up the call for any questions that you may have.\nAAM delivered solid operating results and cash flow performance in the fourth quarter and full year 2021 despite market dynamics and continuing challenges with the global supply chain.\nFortunately, our team did an outstanding job managing the areas under their control.\nAAM's fourth quarter 2021 sales were $1.24 billion, and for the full year 2021, AAM's sales were approximately $5.2 billion.\nIn 2021, we experienced volume recovery from the impact of the 2020 global pandemic, but semiconductor supply chip shortages impacted AAM by over $600 million.\nFrom a profitability perspective, AAM's adjusted EBITDA in the fourth quarter of 2021 was $164.6 million, or 13.3% of sales.\nFor the full year 2021, AAM's adjusted EBITDA was $833.3 million, or 16.2% of sales.\nIn 2021, we were negatively impacted by supply chain disruptions, namely semiconductors, and we received very little forewarning to changes in production schedules, which disrupted our operations and cost structure.\nHowever, I'm proud to say the AAM team managed through these obstacles and delivered strong EBITDA margins and conversion for the full year.\nAAM's adjusted earnings per share in the fourth quarter 2021 was a loss of $0.09 per share.\nFor the full year 2021, AAM's adjusted earnings per share was $0.93 per share, compared to $0.14 per share in 2020.\nAAM continued to deliver strong free cash flow generation in 2021.\nAAM's adjusted free cash for the fourth quarter of 2021 was $43.6 million.\nAnd for the full year of 2021, AAM's adjusted free cash flow was $423 million.\nThis is a record adjusted free cash flow performance for AAM and I'm extremely proud of my team.\nOur goal has been to strengthen the balance sheet, and last year we delivered.\nWe reduced our gross debt by approximately $350 million and a turn of leverage.\nWe will continue to work to improve our balance sheet strength going forward.\nChris will provide additional information regarding the details of our financial results in just a few minutes.\nLet me talk about some key highlights for 2021 and the start of 2022, which you can see on Slides 4 and 5 of our slide deck.\nWe secured an agreement with REE on electric drive units.\nWe were named the sole supplier front and rear pickup axles for GM's Oshawa truck plant.\nWe won two new pace awards for our partnership and innovation for our electric drive line technology.\nWe secured Neo differential business for their electric vehicles.\nWe were selected to supply track rate differentials for the new GM Hummer EV program.\nWe were supplying PTUs for the all-new Ford Bronco Sport and Maverick programs.\nWe secured a traditional core axle business to fund our electrification future.\nAnd we were selected as a GM Overdrive award winner and received multiple other customer awards for our performance, and we advanced our environmental sustainability and DEI initiatives.\nAnd just most recently here in the beginning of the year, AAM was recognized as one of America's best large employers and top five in the automotive category.\nNow let's talk about the first pillar of our two-pronged strategy, which is securing the core, which is fundamental to the transformation -- to our transformation to electrocution.\nAnd earlier today, we announced that AAM has secured multiple next-generation full-sized truck axle programs with global OEM customers with lifetime sales valued at greater than $10 billion.\nThese replacement business awards are key developments as we leverage the cash flow generation to bring the future faster with our electrification technologies.\nAnd on the electrification front, we continue to make significant progress with our three-in-one electric drive technology.\nRecently, we displayed electric drive technology at CES.\nThe power, density, and compactness of our proprietary design was very well received.\nThe technology platform can accommodate the electric propulsion needs across all light-vehicle segments, from small cars to light commercial applications.\nThe flexibility and modularity provide legacy and start-up OEMs with many options from components, gearboxes, motors, power electronics to full systems, and EBM axles.\nOur design was recently given the Altair Enlighten Award, the automotive industry's only award dedicated to lightweighting and sustainability.\nAgain, something we're very proud of.\nThat said, 2022 is an exciting year with multiple expectation launches on top of us, including our high performance e-Drive system for a premium luxury European OEM.\nThis system will be applied across multiple vehicle variants, proof that our technology is not only state-of-the-art but meet the high standards of this iconic manufacturer.\nWe will also be launching multiple electric propulsion components with several globally -- global OEMs this year.\nIn addition, we recently announced our investment in Autotech Ventures, which is an early stage venture capital firm.\nThis firm invests globally in mobility start-ups, and AAM is leveraging the relationship with Autotech to identify new opportunities with companies aimed at electrification and mobility.\nThe pivot to electrification is well underway, and we embrace this change to make the environment more sustainable.\nOur engineering teams continue to develop game-changing electric mobility solutions and AAM is well positioned to support our customers with cutting-edge technology and a strong value proposition.\nAnd on the ESG front, I'm also very happy to share that AAM was named to Newsweek's list of America's Most Responsible Companies.\nWe look forward to building on the positive momentum in 2022 as we advance our environmental sustainability and DEI initiatives.\nBe on the lookout for our new sustainability report in April of this year.\nAt AAM, we believe in a strong ESG foundation and commitment are critical to running the business for long-term success.\nAAM expects our gross new business backlog covering three-year period of 2022 through 2024 to be approximately $700 million.\nWe expect the launch case of this backlog to be $175 million in 2022, $325 million in 2023, and $200 million in 2024.\nAnd as usual, our backlog factors in the impact of updated customer launch timing and our latest customer volume expectations and does not include the replacement business, only new and incremental business.\nYou can also see the backlog breakdown on Slide 6, with about 55% of this new business backlog related to global light trucks, including crossover vehicles, and most importantly, 35% stems from electrification.\nThis is more than double the 15% last year that we had.\nOur approach to electrification from selling components and subsystems to full electric drive units is gaining traction in our book of business.\nCurrently, AAM is quoted on approximately $1.5 billion of revenue, but two-thirds of the quotes coming from electrification-based programs.\nNow, let me turn to our financial outlook, which you can see on Slide 7.\nAnd AAM is targeting sales in the range of $5.6 billion to $5.9 billion, adjusted EBITDA of approximately $800 million to $875 million, adjusted free cash flow approximately $300 million to $375 million.\nAnd that assumes our capital spending in the range of 3.5% to 4% of sales.\nAnd from a launch standpoint, we have 25 launches here in 2022, which should drive growth over the next several years.\nAnd from an end market perspective, we forecast production at approximately 14.8 million to 15.2 million units for our primary North American market.\nThis represents about a 14% to 17% increase over last year's performance.\nGoing forward, an improving production environment stemming from strong demand and inventory replenishment will set up AAM nicely for the future.\nIn summary, 2021 was an unprecedented year filled with numerous challenges, but AAM delivered solid financial results.\nIn 2022 and beyond, we will continue to focus on securing our core business, generating strong free cash flow, strengthening our balance sheet, advancing our electrification portfolio, and position AAM for profitable growth.\nI'm very excited about what lies ahead for AAM.\nThat concludes my remarks.\nI will cover the financial details of our fourth quarter and full year 2021 results with you today.\nI will also refer to the earnings slide deck as part of my prepared comments.\nBefore I begin to discuss the specific details, let me provide a macro overview of our fourth quarter.\nOn the surface, you will note our sales were down nearly $200 million on a year over year basis.\nHowever, understanding the factors driving this change is crucial.\nAAM's product sales were down more than $300 million on a year over year basis due to semiconductor shortages and overall market dynamics.\nPartially offsetting the drop in product sales is a $100 million increase in an index-related metal market costs that we passed through to our customers at no margin.\nAs we talk through the details today, keep in mind that metal market pass-through has a significant adverse impact on the calculation of our margins.\nHowever, when it's all said and done, you'll take away three key points about our fourth quarter results.\nFirst, AAM sales and profits were impacted by lower industry volumes.\nTwo, AAM's margins were impacted not just by lower sales, but also by rising metal market pass-through recoveries.\nAnd three, and most importantly, we continue to perform and optimize our business despite macro level headwinds.\nSo let's go ahead and get started with sales.\nOn Slide 10, it shows a walkdown of the fourth quarter 2020 sales to the fourth quarter of 2021 sales.\nIn the fourth quarter of 2021, AAM sales were $1.24 billion, compared to $1.44 billion in the fourth quarter of 2020.\nWe estimate that AAM was unfavorably impacted by the industrywide semiconductor shortage by approximately $137 million in the fourth quarter of 2021.\nWe note that high production volatility experienced in the third quarter continued well into October.\nAlthough volatility improved some in November and December on a month-over-month basis, we still experienced shortly time production changes from our customers and reduced output.\nOther volume and mix in pricing was negative by $200 million.\nOverall, we experienced some lowered global light-truck volumes and lower overall component sales in several markets as customer schedules fluctuated and they rebalanced inventories versus a very different environment than we experienced in the prior year.\nThis brings us to the fourth quarter 2021 sales subtotal, which excludes recoveries for index-related metal market costs and foreign currency impacts.\nWe hedged this risk with our customers by passing through the majority, but not all of these index-related changes.\nThe middle portion of this column reflects these elevated pass-throughs on a year over year basis.\nMetal markets and foreign currency accounted for an increase of approximately $94 million to our total sales in the quarter.\nFor the full year of 2021, AAM sales were $5.16 billion as compared to the $4.71 billion for the full year of 2020.\nThe primary drivers of the increase was a return of COVID-related volumes, an increase of over $300 million in index-related metal pass-throughs and foreign currency, partially offset by volumes lost due to semiconductor chip shortages that exceeded $600 million for 2021.\nNow, let's move on to profitability.\nGross profit was $140 million, or 11.3% of sales in the fourth quarter of 2021, compared to $237 million, or 16.4% of sales in the fourth quarter of 2020.\nAdjusted EBIDTA was $165 million in the fourth quarter of 2021 or 13.3% of sales.\nThis compares to $262 million in the fourth quarter of 2020, or 18.2% of sales.\nYou can see a year-over-year walkdown of adjusted EBITDA on Slide 11.\nDuring the quarter, semiconductor sales disruptions and other volumes and mix had a negative impact of $39 million and $59 dollars, respectively.\nThis was partially offset by the benefits of AAM's continued productivity and restructuring programs and successful recoveries of some of the D&D costs.\nAs I just mentioned earlier in our sales discussion, we're facing year-over-year increases in index-related metal market costs.\nThe retained portion impacting this quarter plus FX was approximately $30 million.\nYou can see on our EBITDA walk the dynamic this has on our EBITDA margin calculations.\nIf you exclude this impact, our margins would have been meaningfully higher as noted on our walk.\nFor the full year of 2021, AAM's adjusted EBITDA was $833 million and adjusted EBITDA margin of 16.2% of sales.\nNot I'll cover SG&A.\nSG&A expense, including R&D in the fourth quarter of 2021, was $78 million, or 16.3% of sales.\nThis compares to $83 million in the fourth quarter of 2020, or 5.8% of sales.\nAAM's R&D spending in the fourth quarter of 2021 was approximately $20 million, compared to $31 million in the fourth quarter of 2020.\nThe fourth quarter of 2021 includes higher ED&D recoveries as we prepare to launch multiple key new programs.\nThis activity drove a significant portion of the net year-over-year reduction in R&D.\nAs we head into 2022, we will continue to focus on controlling our SG&A costs while also capitalizing on the growing number of electrification opportunities that are before us.\nAnd we would expect R&D to increase in 2022 by approximately $45 million to support these new multiple new opportunities.\nThis is in line with our previous R&D spend trajectory commentary.\nLet's move on to interest, taxes, and pension.\nNet interest expense was $42 million in the quarter of 2021, compared to $50 million in the fourth quarter of 2020.\nWe expect this favorable trend to continue in 2022 as we benefit from our debt reduction and refinancing actions.\nIn the fourth quarter of 2021, we recorded an income tax benefit of $2.3 million, compared to an expense of $13.9 million in the fourth quarter of 2020.\nAs we head into 2022, we expect our adjusted effective tax rate to be approximately 15% to 20%.\nAnd lastly, during the fourth quarter, AAM completed the transfer of nearly $100 million of pension obligations to an insurance company.\nThis transaction was paid entirely through pension plan assets and continues our journey to strengthen AMM's balance sheet in this area.\nAs a result of this transaction, AAM recorded a non-cash pre-tax pension settlement charge of $42 million.\nTaking all these aforementioned items into account, including the pension settlement charge, our GAAP net loss was $46 million or $0.41 per share in the fourth quarter of 2021, compared to an income of $36 million or $0.30 per share in the fourth quarter of 2020.\nAdjusted lost per share for the fourth quarter of 2021 was $0.09, compared to $0.51 earnings per share in the fourth quarter of 2020.\nFor the full year of 2021, AAM earned adjusted earnings per share of $0.93 versus $0.14 in 2020.\nLet's now move on to cash flow and the balance sheet.\nNet cash provided by operating activities for the fourth quarter of 2021 was $102 million.\nCapital expenditures, net of proceeds from the sale of property plant equipment in the fourth quarter, was $65 million.\nAnd cash payments for restructuring and acquisition-related activity for the fourth quarter of 2021 were $9.8 million.\nReflecting the impact of these activities, AAM generated adjusted free cash flow of $44 million in the fourth quarter of 2021.\nFor the full year of 2021, AAM generated adjusted free cash flow of $423 million, compared to $311 million in the full year of 2020.\nAs David mentioned, this is a record for AAM.\nAs a team, we've been focused on free cash flow conversion, including tightly managing capex, and reducing restructuring charges.\nOur results demonstrate success in these areas.\nFrom a debt lover's perspective, we ended the year with net debt of $2.6 billion and LTM adjusted EBITDA of $833 million, calculating a net leverage ratio 3.1 times on December 31st.\nThis is a reduction in nearly a full term loan in 2021.\nIn 2021, we prepaid over $350 million of gross debt.\nWe utilized the free cash flow generating power of AAM, strengthened the balance sheet by reducing our debt and lowering our future interest payments.\nAAM ended 2021 with total available liquidity of approximately $1.5 billion, consisting of available cash and borrowing capacity on AAM's global credit facilities.\nAnd we continue to maintain a strong liquidity position and debt maturity profile.\nBefore we move into the Q&A, let me close my comments with some thoughts on our 2022 financial outlook.\nIn our earnings slide desk, we have included walks from 2021 actual results to our 2022 financial targets.\nYou can see those starting on Slide 13.\nAs for sales, we are targeting the range of $5.6 billion to $5.9 billion for 2022.\nThis sales target is based upon North American production estimates of 14.8 million to 15.2 million units, new business backlog launches of $175 million and attrition of approximately $100 million.\nGiven the market volatility, our sales guidance assumes a range of semiconductor recovery of approximately one-third at the low end and two-thirds at the high end versus what we experienced in 2021.\nWe continue to experience this issue in January and February of this year.\nHowever, we do expect improvements throughout the year.\nIn addition, on a year over year basis, we expect a continued increase in index-related metal markets pass-throughs and foreign currency.\nAs noted on our fourth quarter walks, the 2021 exit rate on a year over year basis is the highest for the year.\nFrom an EBITDA perspective, we're expecting adjusted EBITDA in the range of $800 million to $875 million.\nAs I would expect, you may have some questions in this area.\nLet me provide some very direct comments on the key elements of our year-over-year EBITDA walk.\nFirst, yes, we expect to convert our year-over-year product sales increases and expected contribution margins of approximately 25% to 30%, as shown on our year-over-year walk.\nTwo, yes, we intend to invest in our future through more in R&D as we continue to have growth opportunities with a variety of customers and products.\nAnd yes, we are experiencing inflation.\nBy way of perspective, this net amount reflected on our walk represents only slightly more than 1% of our annual purchase component buy.\nAnd yes, lastly, we expect AAM to continue to deliver operational productivity to mitigate some of these costs, as well as offset core cost pressures we are experiencing inside of our own operations.\nYou can see continued year-over-year performance on our walk of nearly $35 million.\nFrom an adjusted free cash flow perspective, we are targeting approximately $300 million to $375 million in 2022.\nAnd the main factors driving our cash flow change are as follows: we have slightly higher capital expenditures as we are coming upon some key launches.\nHowever, our capex to sales ratio is still very low by our historical measures as we are targeting capex as a percent of sales of approximately 3.5% to 4%.\nWe also expect higher taxes and we would expect working capital outflows as our sales and related activity are increasing year over year.\nAnd lastly, we estimate our restructuring payments to be in the range of $20 million to $30 million for 2022.\nThis is a year-over-year reduction by nearly half of our cash restructuring payments from the prior year.\nWe expect to use free cash flow generated in 2022 to continue to reduce leverage and further solidify our positional expectation and take advantage of select market opportunities to support growth.\nSo in conclusion, the tenets of our business approach are already yielding results.\nAs David mentioned, we've secured significant new awards with our legacy business with strong free cash flow potential.\nOur new three-in-one electric drive platform and components are driving global interest, and as such, our backlog of electrification is now at 35%.\nAnd we generated strong free cash flow, a company best in 2021.\nAnd we look to generate solid free cash flow in 2022 while ramping up new business launches to drive growth.\nWe're looking forward to a great year for AAM and building value for all our stakeholders.\n", "role": "user" }, { "content": "compname reports q4 adjusted loss per share $0.09.\nq4 adjusted loss per share $0.09.\nq4 loss per share $0.41.\nq4 sales $1.24 billion.\nfor 2022 targeting adjusted ebitda in range of $800 - $875 million.\nfor 2022 targeting sales in range of $5.6 - $5.9 billion.\nfor 2022 north american light vehicle production of approximately 14.8 - 15.2 million units.\ntargeting adjusted ebitda in range of $800 million - $875 million for 2022.\namerican axle & manufacturing - gross new & incremental business backlog launching from 2022 - 2024 estimated at about $700 million in future annual sales.\nexpects launch cadence of three-year backlog to be approximately $175 million in 2022.\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 discussion today also contains non-GAAP financial measures.\nThe comparable GAAP financial measures are included in this quarter's earnings materials, as well as earnings materials for the prior periods we discussed.\nAll of these are posted on our website at ir.\nWe will begin today with Steve Squeri, chairman and CEO, who will start with some remarks about the company's progress and results.\nAnd then Jeff Campbell, chief financial officer, will provide a more detailed review of our financial performance.\nAfter that, we will move to a Q&A session on the results with both Steve and Jeff.\nWe also provided revenue and earnings per share guidance for 2022, and we announced a new growth plan that resets our longer-term aspirations for revenue and earnings per share growth to levels that are higher than what we were delivering in the years before the pandemic.\nI want to spend my time today talking about why these results and our progress over the last few years has me excited about the future and our aspiration to deliver higher levels of sustainable profitable growth.\nAs we've seen in our results for Q4 and the full year, the capabilities we've built over the past few years by investing in our customers, our brand, and our talent are helping us drive share, scale, and relevance that leads to profitable growth.\nAnd we believe that will continue as the global economy continues to improve.\nOur strong performance across a number of key business metrics helped deliver revenue growth of 30% in the fourth quarter and 17% for the full year.\nDiluted earnings per share for the quarter was $2.18 and $10.02 for the full year.\nIn the near term, we expect full-year revenue growth to remain at elevated levels, reaching 18% to 20% in 2022, driven by the execution of our growth plan and the recovery tailwinds we anticipate from continued improvement in the macroeconomic environment.\nWe expect earnings per share of between $9.25 and $9.65 in 2022.\nAs we think about 2023, the continuation of the recovery tailwinds could drive revenue growth in the mid-teens, which, in turn, should provide a platform for mid-teens earnings per share growth.\nLooking further out, as we return to a more steady-state economic environment, we aspire to achieve revenue growth in excess of 10% and earnings per share growth in the mid-teens under our new growth plan for 2024 and beyond.\nWe've learned a lot over the past few years that we believe will help us achieve our growth plan aspirations.\nThe business imperatives and strategies we focused on pre-pandemic, the decisions we made when COVID-19 first hit to protect our customers and colleagues, and our pivot early in the recovery cycle to ramp up investments in a number of key areas all proved to be the right moves that have been good for our business.\nMost importantly, our experience through this period has reinforced our conviction that investing strategically in our customers' brand and talent is absolutely critical to driving high levels of growth.\nWe've seen that play out in the results we delivered throughout 2021.\nOur fourth-quarter performance continued the trends we saw all year in a number of areas that are core to our growth over the long term.\nSpending growth reached a record quarterly high, driven by continued increases in goods and services spending, which was 24% above pre-pandemic levels.\nGlobal Consumer goods and services spending in the quarter grew 26% versus 2019.\nAnd we saw continued robust growth in small business B2B spending, which increased 25% over Q4 2019 levels.\nOverall, T&E spending also continued to improve, reaching 82% of pre-pandemic levels, driven by stronger consumer travel spending.\nCustomer retention and satisfaction continue to be very strong and remained above pre-pandemic levels.\nFor example, retention rates in Global Consumer are above 98%.\nPower's annual credit card satisfaction study of U.S. consumers.\nCredit performance also continued to be outstanding, with key metrics near historical lows.\nAnd our Card Members are building loan balances at a modest pace.\nCustomer engagement with our products, services, and capabilities continued at high levels in the quarter.\nThe strong engagement, which is fueled by our ongoing investments in value propositions, marketing, and new digital services, is helping to drive the results I just spoke about in billings and loan growth, as well as customer retention and satisfaction levels.\nAdditionally, our customer-focused innovation strategy, which has driven increases in customer engagement, has continued to attract large numbers of new customers.\nNew card acquisitions reached 2.7 million in Q4, driven by strong demand for our premium fee-based products, where we saw acquisitions nearly double year over year.\nIn Consumer, millennials and Gen Z customers are driving the growth in acquisitions, representing around 60% of the new accounts we acquired globally in 2021.\nIn Commercial, Q4 closed out as one of the best years we've ever seen for U.S. SME new account acquisition.\nThe momentum we generated throughout 2021 further strengthens our resolve to continue our focus on the strategic imperatives we laid out back in 2018: expanding our leadership position in the premium consumer space by providing a differentiated and ever-expanding range of services and lifestyle-focused value propositions, building on our strong leadership position in commercial payments by being the key provider of payments and working capital solutions for small and medium-sized businesses, expanding our merchant network globally to give our cardmembers more places to use their cards and staying on the leading edge of technology and digital payment solutions to make American Express an essential part of our customers' digital lives.\nWe are entering 2022 in a position of strength.\nAnd based on the momentum with which we exited 2021 and the opportunities we see ahead, we feel very good about the future.\nWe believe that continuing our strategy of investing at high levels in our customers' brand and talent as we implement our growth plan will position us well as we seek to achieve our growth aspirations in 2024 and beyond.\nIt's great to be here to talk about our fourth quarter and full year 2021 results, the ambitious new growth plan that Steve just talked about, and what it all means for 2022 and beyond.\nYou see the growth momentum that Steve just discussed in our summary financials on Slide 2, with fourth-quarter revenues of $12.1 billion, up 31%, and full-year revenues of $42.4 billion, up 17%, both on an FX-adjusted basis.\nIn understanding our full-year net income of $8.1 billion and earnings per share $10.02, I would point out that we had around $3.5 billion of significant impacts from items that we do not expect to repeat in the same magnitude going forward, including a $2.5 billion credit reserve release benefit in provision, as well as a few sizable net gains on equity investments.\nGetting into a more detailed look at our results, let's start with volumes.\nYou'll notice in the several views of volumes on Slides 3 through 9 that we continued to show 2021 volume trends on both a year-over-year basis and relative to 2019.\nThere are a few key insights that I would highlight across these slides that strengthen our conviction in the investment strategy we have been focused on to deliver our new growth plan.\nTo start, we saw record levels of spending on our network in both the fourth quarter and full year 2021, with total network volumes and Billed business volumes both up more than 10% relative to 2019 on an FX-adjusted basis in the fourth quarter, as you can see on Slide 3.\nThis growth in Billed business, as shown on Slides 4 and 5, is being driven by continued momentum in spending on goods and services, which strengthened sequentially and grew 24% versus 2019 in Q4.\nThis momentum is from the strong growth in online and card-not-present spending that continued throughout 2021, even as offline spending fully recovered and resumed growth, demonstrating the lasting effect of the behavioral changes we've seen during the pandemic.\nImportantly, this 24% growth versus 2019 in Q4 represents a cumulative growth rate over the past two years that is well above the growth rate we were seeing pre-pandemic.\nIn our Consumer business, our focus on attracting and engaging younger cohorts of Card Members through expanding our value propositions and digital capabilities is fueling the 50% growth in spending from our millennial and Gen Z customers you see on Slide 6.\nAnd spending from all other age cohorts also showed steady improvement throughout 2021 and exceeded pre-pandemic levels in Q4.\nOur strategic focus on helping our small and medium-sized enterprise clients run their businesses by expanding the range of products and capabilities that meet their B2B payments and working capital needs is driving the strong SME spending trends you see on Slide 7.\nGlobal SME spending, particularly B2B spending on goods and services, has been driving the growth of our Commercial Billed business throughout 2021 and reached 25% above pre-pandemic levels in Q4.\nNow, turning to T&E spending.\nYou can see on Slide 8 that it continues to recover in line with our expectations, with overall T&E spending reaching 82% of 2019 levels in the fourth quarter.\nWe did see some modest impacts from the Omicron variant and T&E spending as the pace of recovery slowed a bit in December.\nBut even with that modest slowdown, U.S. Consumer T&E was not only fully recovered in the fourth quarter but actually grew 8% above 2019 levels.\nOn balance, the T&E trends we have seen throughout 2021 reinforce our view that travel and entertainment spending will eventually fully recover, but at varying paces across customer types and geographies.\nAnd we remain focused on maintaining our leadership position in offering differentiated travel and lifestyle benefits to our Consumer and Commercial customers as they return to travel.\nFinally, on Slide 9, you see that our Billed business momentum continues to be led by the U.S., where spending improved sequentially throughout 2021 and grew 16% above 2019 levels in the fourth quarter.\nInternational Billed business has also shown continued steady, though smaller, improvements, with spending almost fully recovered in Q4.\nImportantly, though, growth in goods and services spending continues to be strong, both in the U.S. and outside of the U.S. So, what do all of these takeaways mean for 2022 and beyond?\nMost importantly, we expect the strong momentum in goods and services spending to continue, given the investments we've made in premium Card Member engagement; prospect acquisition; value propositions that particularly appeal to our millennial, Gen Z, and SME customers; growing our coverage; and expanding relationships with key partners.\nThe recovery will be slower for the international and cross-border components of the spend.\nWe've also long said that large and global corporate T&E spending would be the last to recover across our customer types.\nSo, these spending types may represent a steady tailwind in both '22 and 2023 as they gradually recover.\nMoving on to receivable and loan balances on Slide 10.\nWe are seeing good sequential growth in our lending balances, but it is led by spending.\nAnd so, the portion of our lending balances that are revolving is recovering more slowly.\nBecause our balances are spend-driven, we do expect to continue to see a strong rebound, with loan balances surpassing 2019 levels in 2022.\nBut we expect it to take more time for the interest-bearing portion of these balances to rebuild as paydown rates continue to remain elevated due to the liquidity and strength among our customer base.\nTurning next to credit and provision on Slides 11 through 13.\nAs you flip through these slides, there are a few key points I'd like you to take away.\nMost importantly, we continue to see extremely strong credit performance, with Card Member loans and receivables write-off and delinquency rates remaining around historical lows.\nAs loan balances begin to rebuild more meaningfully, we do expect delinquency and loss rates to slowly move up over time, but we expect them to remain below pre-pandemic levels in 2022.\nThe strong credit performance, combined with continued improvement in the macroeconomic outlook throughout 2021, drove a $1.4 billion provision expense benefit for the full year as the low write-offs were fully offset by the reserve releases, as shown on Slide 12.\nAs you see on Slide 13, we ended 2021 with $3.4 billion of reserves, representing 3.7% of our loan balances, and 0.1% of our Card Member receivable balances, respectively.\nThis is well below the reserve levels we had pre-pandemic given the strong credit performance we've seen.\nIn 2022, we will be growing over the $2.5 billion reserve release benefit we saw in 2021 since I would not expect to see reserve releases of the same magnitude going forward.\nIn fact, depending on credit trends and the pace at which our balance sheet grows, it's possible we may need to build some modest level of reserves.\nMoving next to revenues on Slide 14.\nTotal revenues were up 30% year over year in the fourth quarter, up 17% for the full year.\nThis is well above our original expectations for the year, driven by the successful execution of our investment strategy, and it is part of what emboldens us to launch our new growth plan.\nBefore I get into more details about our largest revenue drivers in the next few slides, I would note that other fees and commissions and other revenue were both up year over year in the fourth quarter and for the full year, primarily driven by the uptick in travel-related revenues we began to see in the second half of 2021.\nThese travel-related revenues still remain well below 2019 levels, however, and their complete recovery will likely lag and be a tailwind into 2023, along with international and cross-border travel.\nTurning to our largest revenue line, discount revenue, on Slide 15.\nYou see it grew 36% year over year in Q4 and 25% for the full year on an FX-adjusted basis.\nThis growth is primarily driven by the momentum in goods and services spending we saw throughout 2021.\nNet card fee revenues have grown consistently throughout the pandemic and, for the full year of 2021, were up 10% year over year and up 28% versus 2019, as you can see on Slide 16.\nThe resiliency of these subscription-like revenues demonstrates the impact of the investments we've made in our premium value propositions and the continued attractiveness of those value propositions to both prospects and existing customers.\nAs a result, I expect net card fee growth to accelerate from these already high growth rates in 2022.\nTurning to net interest income on Slide 17.\nYou can see that it was up 11% year over year in the fourth quarter.\nThis is the second consecutive quarter of year-over-year growth as we clearly hit an inflection point in the second half of 2021.\nThe growth in net interest income is slower than the growth in lending AR due to the strong liquidity demonstrated by our customers that I spoke about earlier, which is leading to both our historically low credit costs and to high paydown rates that are driving lower net interest yields and a slower recovery in revolving loan balances.\nLooking ahead, we expect net interest income to be a tailwind to our revenue growth in 2022 and likely 2023 due to the slower recovery in revolving loan balances.\nSo, to sum up on revenues, the successful execution of our investment strategy has driven the revenue recovery momentum you see on Slide 18.\nLooking forward into 2022, we expect to see revenue growth of 18% to 20%, driven by the continued strong growth in spend and card fee revenues and the lingering recovery tailwinds from net interest income and travel-related revenues.\nThe revenue momentum we saw in 2021 was clearly accelerated by the investments we made in marketing, value propositions, technology, and people.\nAnd those investments show up across the expense lines you see on Slide 19.\nStarting with variable customer engagement expenses at the top of Slide 19, there are a few things to think about.\nMost importantly, the investments we are making in our premium value propositions are resonating with our customers and this, of course, is driving growth in these expense lines.\nIn addition, over the course of the pandemic, we added some temporary incremental benefits to many of our premium products in an effort we refer to as value injection because our customers were not able to take advantage of many of the travel-related aspects of our value propositions.\nThe cost of this value injection effort generally showed up in the marketing expense line.\nThroughout 2021, we gradually wound down the value injection offers as our customers were again engaging more with the travel aspects of our value propositions, as well as with the new rewards and benefits we introduced through recent product refreshes.\nThis is all a good thing in terms of our long-term customer retention and growth prospects.\nIt does, however, mean you see more year-over-year growth in these variable customer engagement costs.\nPutting all these dynamics together, I'd expect variable customer engagement costs overall to run at around 42% of total revenues in 2022.\nMoving to the bottom of the slide.\nOperating expenses were just over $11 billion for full year 2021 and in line with 2020.\nUnderstanding our opex results, however, it's important to point out that we benefited from $767 million in net mark-to-market gains in our Amex Ventures strategic investment portfolio in 2021 and that these gains are reported in the opex line.\nWe also increased investments in the critical areas of technology and our talented colleague base in 2021 and expect to continue to grow our investments in these areas this year.\nFor 2022, we expect our operating expenses to be a bit over $12 billion, and we see these costs as a key source of leverage relative to our much higher level of revenue growth.\nLast, our effective tax rate for 2021 was around 25%.\nAnd I'd expect a similar effective tax rate in 2022, absent any legislative changes.\nTurning next to our marketing investments we are making to build growth momentum.\nYou can see on Slide 20 that we invested around $1.6 billion in marketing in the fourth quarter and $5.3 billion for the full year as we continue to ramp up new card acquisitions while winding down our value injection efforts.\nWe acquired 2.7 million new cards, up 54% year over year.\nSteve emphasized the critical point, however, that, in particular, we see great demand for our premium fee-based products, with new accounts acquired on these products almost doubling year over year and representing 67% of the new accounts acquired in the quarter.\nAcquisitions of new U.S. consumer and small business Platinum Card members were at all-time highest this year, with Q4 being a record quarter of new account acquisitions from both of these refreshed products.\nMuch more importantly, though, than just the total number of cards, we focus internally on the overall level of spend and fee revenue growth we bring on from these new acquisitions.\nWe are pleased to see that the revenues from 2021's acquisitions are trending significantly stronger than what we saw pre-pandemic.\nLooking forward, we expect to spend around $5 billion in marketing in 2022.\nTurning next to capital on Slide 21.\nWe returned $9 billion of capital to our shareholders in 2021, including common stock repurchases of $7.6 billion and $1.4 billion in common stock dividends on the back of a starting excess capital position and strong earnings generation.\nAs a result, we ended the year with our CET1 ratio back within our target range, 10% to 11%.\nIn Q1 2022 and another sign of our growing confidence in our growth prospects, we expect to increase our dividend by around 20% to $0.52 and to continue to return to shareholders the excess capital we generate while supporting our balance sheet growth.\nThe combination of our pre-pandemic strategies, our learnings from the pandemic, and the strong momentum we have achieved have all come together to embolden us to announce our new growth plan.\nWhat does that mean financially?\nIn the near term, we expect our revenue growth to be significantly higher than our long-term aspiration due to the range of pandemic recovery tailwinds that I've talked about throughout my remarks, which is why we have given 2022 guidance of 18% to 20% revenue growth.\nWe've also given earnings per share guidance for 2022 of $9.25 to $9.65.\nOur 2022 guidance does assume an economy that will continue to improve and reflects what we know today about the regulatory and competitive environment.\nIt also assumes that, based on current exchange rates, we would not see a significant impact from FX in our reported revenue growth in 2022.\nIn 2023, we expect our revenue growth to remain above our long-term aspirational targets due to the lingering recovery tailwinds, which should create a platform for producing mid-teens earnings per share growth.\nLonger term, as we get to a more steady-state macro environment, we have an aspiration of delivering revenue growth in excess of 10% and mid-teens earnings per share growth on a sustainable basis in 2024 and beyond.\nIn closing, we are committed to executing against our new growth plan, and we'll be running the company with a focus on achieving our accelerated growth aspirations.\nBefore we open up the lines for Q&A, I will ask those in the queue to please limit yourself to just one question.\n", "role": "user" }, { "content": "compname reports q4 earnings per share $2.18.\nqtrly earnings per share $2.18.\nreached record levels of card member spending in quarter.\nexpect to generate elevated levels of revenue growth in 2022 in range of 18% - 20% and earnings per share of $9.25 to $9.65.\nlonger term, co expects to achieve revenue growth in excess of 10% and earnings per share growth in the mid-teens.\nplans to increase regular qtrly dividend by about 20%, to 52 cents per share beginning with q1 2022.\ncompname posts q4 earnings per share $2.18.\namerican express fourth-quarter revenue increases 30% to $12.1 billion, driven by record card member spending.\nq4 earnings per share $2.18.\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: If you'd like copies, please visit the investor information section of our website, axiscapital.com.\nThis was a strong quarter for AXIS in a year where we demonstrated meaningful progress in strengthening all aspects of our business and in enhancing the value proposition that we deliver to our customers.\nI'm grateful to my access colleagues for their tenacity and commitment in serving our brokers and clients as well as supporting one another, as we collectively navigated to a dynamic environment that included another tough cat year, continued curve balls thrown at us by the COVID pandemic, and rising inflation.\nTo the credit of our team in 2021, AXIS advanced its efforts to reposition the portfolio, manage down volatility, and drive profitable growth while capitalizing on a favorable market.\nWe began 2022 as a stronger company than we were just a year ago, committed to further increasing the value that we deliver to all of our stakeholders, and we're confident that we'll continue to build on our progress in the year ahead.\nIn a few minutes, people will walk us through the fourth quarter results, but I'd like to take a moment to step back and put our annual results in the context of a multiyear transformation.\nLet me get to some of the specifics of the evident progress in our performance.\nComparing our results in 2017, we've taken our attritional ratio down by nine points to 55.1 this year and brought our current year ex-cat combined ratio by 10 points to 88.7, the best since 2007.\nAll the while, we reduced our PML by over 50% across the curve.\nThe improvement in our performance is attributable to more proactive reshaping of the portfolio, reduction of limits, and modification of attachment points, in addition to good growth in selected lines once they reached rate adequacy.\nIn 2021, industry cat losses are up about 40%, and but our cat loss ratio stayed flat at nine and a half.\nThis is still higher than we target, even in a $100 billion-plus cat year, and we're actively continuing our disciplined actions to reduce our cat exposure and deliver more consistent earnings.\nImportantly, we continue to build a very successful specialty insurance franchise, which produced $4.9 billion of gross premium in 2021, making up 63% of our writings, up from 50% in 2017.\nWe expect that number to approach 70% this year as we capitalize on our already well-established presence in some of the most attractive P&C markets today.\nOur insurance business is producing excellent results, growing production by 20%, generating record new business and total premiums, while at the same time, strengthening the overall portfolio.\nOur insurance segment delivered a combined ratio of 91.6 this year, the best since 2010 and a parent year ex-cat combined ratio of 85.9, the lowest since 2006.\nWe're confident that the business is on pace to establish its place among the top carriers in the specialty insurance sector.\nWe continue to be focused on actively growing this business by enhancing the customer experience, and investing in capabilities and services that will increase the value that we deliver to our customers and the greater specialty sector.\nOur reinsurance business also delivered improved performance and it's an encouraging sign of progress that in a very high cat year for the industry, it produced a combined ratio below 100.\nIn addition, the current year ex-cat combined ratio of 86.3 was the best since 2012.\nThis progress demonstrates the work our team has done to improve the quality and resilience of our reinsurance portfolio.\nAnd as I noted earlier, we're fully committed to driving even more progress.\nIndeed, during the recent January 1 renewals, where we write more than 50% of our reinsurance business, we advanced our corporate objectives to reduce volatility, allocate capital rigorously, and produce the most optimized portfolio for the current market.\nAs such, we took decisive action and reduced our reinsurance property and property cat premiums by 45%.\nOur performance over the last few years tells us that our plan is generating tangible results, but we're still not done.\nWe won't be satisfied until we consistently deliver top quintile performance.\nI've said this before, but it repeating, we know exactly what we need to do to sustain this momentum and profitably grow our business.\nWe'll continue to grow a franchise that leverages our broad global capabilities to deliver value-added products and services that meet our customers' needs.\nWe'll continue to intelligently grow our portfolio while reducing exposure to catastrophe events.\nWe're focused on achieving a competitive expense ratio that can support continued investment in long-term profitable growth, and we will continue to invest in our culture, our people, and then making a positive impact in our communities as well as in advancing our ESG objectives.\nWe're excited to begin 2022 and looking to the future with optimism and enthusiasm.\nWe're confident in what we can achieve and believe there's significant runway to further grow the business, deliver consistent profitable results, and enhance the value that we provide to all our stakeholders.\nAnd with that, I'll now pass the floor to Pete, who will walk us through the fourth quarter and year and I'll come back to discuss market trends, and we'll have our Q&A.\nThis was an excellent quarter for AXIS in what was another good year of progress for the company.\nDuring the quarter, we generated net income available to common shareholders of $197 million and an annualized ROE of 16.4%.\nOperating income was 182 million, and annualized operating ROE was 15.1%.\nThe combined ratio for the quarter was 93.1%, with core underwriting results continuing to show improvement.\nThe company produced a consolidated current accident year combined ratio ex-cat and weather of 89.5 points, or 2.3 points better than the prior year quarter.\nThe improvement was attributable to both segments.\nThe consolidated current accident year loss ratio ex-cat and weather was 54.3%, a decrease of more than three points over the prior year quarter.\nThis was driven by improvements in the insurance segment.\nThe quarter's pre-tax cat and weather-related losses net of reinsurance were $54 million or 4.3 points.\nThis compares to 198 million or 18.4 points in 2020.\n2020 did include 125 million or 11.6 points attributable to the COVID-19 pandemic.\nThere was no change in the total net loss estimate of 360 million established in 2020 for the COVID pandemic.\nWe reported net favorable prior year development of $9 million in the quarter, and this compared to 7 million in the fourth quarter of 2020.\nThe consolidated acquisition cost ratio was 20.4%, a decrease of 0.9 point over the prior year quarter, and that was attributable to both segments.\nThe consolidated G&A expense ratio was 14.8%, an increase of 1.7 points compared to the fourth quarter of '20.\nThe G&A ratio was impacted by year-over-year increase in performance-related compensation costs as well as an increase in personnel costs, partially offset by an increase in net premiums earned.\nThe personnel costs were largely associated with increased headcount in our insurance segment.\nWe are really pleased to continue to attract talented individuals to join our team and support the growth.\nespecially considering the favorable market conditions we see in this sector.\nNormalizing the G&A ratio, which was primarily impacted by performance-related compensation.\nThe fourth quarter '21 ratio was 13.5%, and this would compare to a normalized 4Q 2020 of 13.8%.\nWe continue to focus on expense efficiency and expect to achieve a mid-13 G&A ratio going forward.\nAnd lastly, on a consolidated basis, fee income from strategic capital partners was 27 million for the quarter, compared to 13 million in the prior year, largely associated with an increase in our investment manager of performance fees.\nNow we'll discuss the segments.\nI'll start with insurance, where once again, we had continued improvement across the underwriting metrics.\nThe current accident year combined ratio ex-cat and weather decreased by over five points, reflecting the underwriting actions we have taken to strengthen the portfolio.\nGross premiums written increased by 19% to 1.3 billion, making it our highest fourth quarter ever.\nI would also note that the year-to-date gross premiums written of 4.9 billion, was also a record for the insurance segment.\nThe increase in gross premiums written in the quarter, primarily related to new business and favorable rate changes centered in the professional lines, liability, property, and marine.\nThe current accident year loss ratio ex-cat weather decreased by 5.3 points, resulting from not only the impact of favorable rate over trend but also driven by improved loss experience in several lines of business.\nPretax catastrophe and weather-related losses net of reinsurance were 23 million.\nThese were primarily attributable to the Quad-State tornadoes and other weather-related events.\nThe acquisition cost ratio decreased by over a point in the fourth quarter compared to 2020.\nThis was mainly related to an increase in ceding commissions due to growth in professional lines.\nThis is consistent with what we've been discussing throughout the year.\nNow let's move on to the reinsurance segment.\nDuring the quarter, our current accident year combined ratio ex-cat weather decreased by a point due to the repositioning of this portfolio.\nThe reinsurance segment's gross premiums written was essentially flat compared to the prior year quarter.\nI would note that the fourth quarter is the smallest quarter for gross premiums written for reinsurance representing less than 10% of their annual gross premiums.\nIf we look at the full year, gross premiums written increased by a modest half a point as we continue to make changes in the portfolio, to improve balance and profitability of the book.\nThe current accident year loss ratio ex-cat weather increased by 0.2 point, resulting from the change in business mix as we increased writings in accident and health and liability along with a decrease in premiums earned in catastrophe and credit surety businesses.\nThis mix impact was offset by favorable rate over trend in all lines of business.\nPretax catastrophe and weather-related losses net of reinsurance were 32 million.\nThis was primarily attributable to December convective storms, the Quad-State tornadoes and other related events.\nThe acquisition cost ratio decreased by 0.4 points compared to the prior year quarter.\nThis was primarily due to the impact of retrocessional contracts.\nNet investment income was 128 million for the quarter, and this compared to net investment income of 110 million for the fourth quarter of 2020.\nThe increase in net investment income was primarily attributable to positive returns from our alternative assets, principally related to private equity funds as well as a positive return on our privately held investment.\nThis was partially offset by a decrease in income from fixed maturities attributable to lower yields on the portfolio.\nWith respect to yields, at the end of the year, the fixed income portfolio had a book yield of 1.9% and a duration of three years, and our new money yield was 1.7%.\nAs we sit here today, given the movements we've seen in rates, our current new money yield is virtually equivalent with our book yield.\nIt's good to see these two yields coming together so that we can avoid any more headwind to our fixed income portfolio yield going forward.\nDiluted book value per share increased to $55.78.\nThis was principally driven by net income generated, partially offset by a decrease in net unrealized gains related to increased treasury rates, and the widening of credit spreads as well as common share dividends declared.\nOverall, the continued improvement in most operating metrics and positive momentum in our core underwriting book, this was a very strong quarter for AXIS.\nThat summarizes our fourth quarter results.\nMarket conditions remain quite strong.\nWithin our insurance segment, this represents the 17th consecutive quarter of rate increases and the 7th consecutive quarter of double-digit increases.\nThe average rate increase in our insurance book was more than 14% for the fourth quarter.\nFor the full year, rates also averaged up 14%, which was nearly identical to the increases that we saw in 2020.\nAverage rate increases were generally equivalent across both our North American and London International businesses.\nBy class of business, professional lines once again saw the strongest pricing actions with average rate increases of close to 24% for the quarter and nearly 22% for the year.\nContinued rapid pricing escalation in cyber remains the key driver.\nFor the quarter, Cyber increased nearly 80% and averaged 50% for the year.\nExcluding cyber, other professional lines are averaging 13% for the quarter and 14% for the year.\nBreaking it out further, London is averaging more than 18% for the quarter and the year, Canada is averaging more than 30% for the quarter and 24% for the year, while in the U.S., rates are averaging about 9% for the quarter and about 11% for the year.\nLiability, primary casualty, and excess casualty are all averaging increases in the high single digits for the quarter and the low double digits for the year.\nProperty rates increases were close to 10% for both the quarter and the year.\nAmong our other specialty lines, we saw high single-digit to low double-digit increases across the portfolio.\nThis included renewable energy, where we're a global leader at 13% for the quarter and the year.\nWhile in marine and political risks, those increased 11% for the quarter, with an annual average just shy of 8%.\nDuring the quarter, 96% of our insurance portfolio renewed flat to up and about half of the increases were double digit.\nAs mentioned earlier, we're achieving record new business production and we continue to see new business pricing metrics at least as strong, if not better, than renewal pricing.\nIn this market, we have terrific positioning and the ability to add value to our customers and partners and distribution while growing quite profitably.\nThe question on everyone's lips is how long will it last.\nLooking forward, we expect that after many years of unsatisfactory performance, the industry will sustain a rational approach to pricing.\nAnd there are enough uncertainties and pressures on loss costs and profitability as well as higher reinsurance costs to bear, that we expect disciplined pricing through 2022 and potentially into 2023.\nLet's look at our reinsurance segment.\nWe estimate that for the full year 2021, we averaged reinsurance rate increases of about 11%.\nAs Pete just noted, the fourth quarter is a relatively small renewal period for Access REIT.\nMy comparison, just over half of our reinsurance business renews at January 1.\nSo I'll focus my comments on 1/1.\nThere's been a lot of talk already in the industry about 1/1 and there's no doubt that pricing is making further progress.\nAt AXIS, during the January 1 renewals, we saw average rate increases of about 9%.\nOur international book renewed at average increases of more than 10%, while our North American book generated increases of 9%.\nBy and large, professional lines, casualty, and A&H came in, in the high single to low double digits, and other specialty lines, including marine, aviation, and credit and surety in the low to mid-single digits.\nOn property cat pricing, you'll have heard that global rates average in the 10-ish percent range.\nbut pricing was not uniform across the book.\nLower layers of reinsurance towers and aggregate treaties where supply was more constrained, exhibited the strongest pricing increases, especially if they were loss impacted.\nIn those loss impacted treaties, you would have seen increases in the 25% to 50% range.\nAs one moves up the towers to layers that are further removed from frequency and where supply was more plentiful, rate increases were more subdued.\nAs I noted earlier, we took meaningful action to reshape our cat portfolio and reduce our overall earnings volatility.\nThis was evidenced by a 70% reduction in gross premiums for aggregate treaties and a 75% reduction in gross premiums on low-attaching treaties among our various actions, leading to a 45% reduction in property and property cat reinsurance premiums at the 1/1 renewals as compared to the prior year.\nThis is consistent with our commitment to build the portfolio that we believe will drive the economic performance that we target.\nGiven the changes expected to our portfolio to reduce both frequency and severity, our average rate increase on profit was 7%.\nWith the reduction in profit and deposit [Inaudible] [Technical Difficulty] I'm sorry, my line was going down so I'm replacing it.\nSo with reduction to the property and catastrophe exposure, these two lines represented about 17% of our 1/1 renewal premiums, down from 27% in the 1/1 renewal portfolio last year.\nI'm pleased that despite this meaningful shift in business mix and reduction in property cat lines that generally model well.\nWe continue to expect an improvement in overall technical ratios, but with much lower volatility.\nOur general view of the reinsurance market is that while it's still running overall behind primary pricing, the market is heading in the right direction, but must continue to do so to adequately compensate reinsurers for the risk and volatility they assume.\nIn the year ahead, with the outlook that we have for the market, we will push for continued growth of our specialty insurance business.\nWe remain disciplined in our capital allocation to those lines in markets that provide the best balance of both short-term and longer-term opportunity, while working in partnership with our customers and brokers to ensure we maintain transparency on our ongoing support as we help them solve their risk management needs.\nWe see a bright future for AXIS.\nWe have a great team that's fully engaged and committed to building on our progress, generating consistent and sustained profitability, and enhancing the value that we deliver to our customers and shareholders.\n", "role": "user" }, { "content": "compname reports fourth quarter net income available to common shareholders of $197 million.\ncompname reports fourth quarter net income available to common shareholders of $197 million, or $2.31 per diluted common share and operating income of $182 million, or $2.13 per diluted common 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: Such statements involve risks and uncertainty, such that actual results may differ materially.\nAs we transform our company, I'm pleased with our performance in the first quarter of fiscal 2021.\nWe had strong financial results and we made progress on our digital transformation.\nOur team was able to effectively serve our customers through our broad product portfolio and diverse paths to market.\nAt the same time, our gross margins were in line with those in the fourth quarter even on lower sequential sales and we continue to generate a significant amount of free cash flow.\nI'm pleased and grateful for the outstanding way our team has continued to manage through the pandemic.\nWe remain diligent about protecting the health and well-being of our associates and ensuring the continuity of our operations.\nTurning to first quarter highlights.\nWe are committed to making the communities in which we operate better.\nWe published our second annual EarthLIGHT report, highlighting the company's priorities, actions and metrics for environmental, social and governance matters.\nWe continue to wisely deploy capital by repurchasing 2.6 million shares of the company's common stock for $255 million.\nWe successfully reintroduced ourselves to the debt capital markets through the issuance of a $500 million 10-year bond with a coupon of 2.15%.\nProceeds were used largely to repay our existing term loans.\nWe are making strong progress on the execution of our digital transformation.\nSo I'll provide more updates on that progress later in the call.\nFinally, we have added talent to the organization.\nAs we build out our technology organization, we have added outstanding data science, product management and engineering talent.\nAs we further [Technical Issues] team, Candace Steele Flippin joined Acuity in November as our Chief Communications Officer.\nCandace will work with me and our team to define and amplify our company's narrative among our stakeholders.\nI'm very pleased with the quality of people who are joining our team.\nI will add some additional insights to our financial performance for the first quarter of fiscal 2021.\nBy way of context, for the past decade, we have provided our best estimates of the impacts of volume and price mix on net sales.\nOur intent when we began providing this information was to reflect the impact of the conversion of our lighting products to LED.\nToday, our lighting business is fundamentally different.\nFor example, our product life cycles are shorter and our pace of innovation has increased.\nWe frequently and successfully introduced new features and benefits of products rather than just direct product substitutions.\nTherefore, we believe our historical reference to price mix is no longer meaningful and is less descriptive of how we manage our business.\nGoing forward, we believe the change in net sales is better described by the activity in our key sales channels.\nTo help with this transition, I will provide the historical explanation to you this quarter so that you can bridge the gap.\nIn the future, our explanations for changes in net sales will be aligned with our disaggregated revenue disclosure in the 10-Q.\nShould acquisitions have an impact in the future, we will provide that impact if it is meaningful.\nNet sales for the three months ended November 30, 2020, of $792 million decreased 5% compared with the prior-year period, due primarily to an estimated 4% decrease in the change in product prices and mix of products sold, as well as an estimated 1% decrease in sales volume.\nBoth fiscal 2021 first quarter price mix and volume were adversely affected by the negative impacts of the COVID-19 pandemic.\nAlso recall that last year's first quarter benefited from price increases put in place to offset tariffs.\nLooking sequentially from the fourth quarter using the same calculations, price mix decreased 1%.\nDue to the changing dynamics of our product portfolio, it is not possible to precisely quantify or differentiate the individual components on a comparable basis of volume, price and mix.\nAnd as noted previously, we will not be quantifying this in the future.\nNow, I would like to highlight the key changes in our sales channels.\nI'm encouraged with the net sales of $599 million through our independent sales network in which we saw a modest decrease of 3% due to the negative impact of the pandemic.\nTurning to our direct sales network, we continue to experience weakness in large industrial projects that we believe have been postponed due to the pandemic.\nSales in this channel of $76 million were down 9.5% in the quarter.\nOur retail sales channel continues to be a bright spot with net sales up 3% to $55 million, driven largely by higher demand primarily for residential products.\nFinally, a key impact of the pandemic has been and continues to be delayed or canceled projects by large retail customers in our corporate accounts channel.\nNet sales in this channel of $24 million were down 28% as compared to the prior year.\nThese retrofit opportunities were delayed or canceled as these customers were limiting the activity in the stores.\nIn the first quarter of fiscal 2021 and 2020, we had some adjustments to the GAAP results that we find useful to add back in order for the results to be comparable.\nWe believe adjusting for these items and providing these non-GAAP measures provide greater comparability and enhanced visibility into our results of operations.\nWe think you will find this transparency very helpful in your analysis of our performance.\nI would like to highlight that our current quarter's gross profit margin of 42% was consistent with our fourth quarter gross profit margin even on lower sales.\nGross profit margin was $332 million, down approximately $23 million from the year-ago period.\nThis decrease in gross profit was due primarily to the decline in volume and lower price on certain products, as well as the changing mix of products sold, partially offset by our aggressive cost reduction efforts and productivity improvements.\nOur SD&A expenses decreased approximately $19 million compared to the year-ago period.\nThis decrease in SD&A expense was due primarily to decreased employee cost, including lower stock compensation, lower freight and commissions associated with decreased sales and the reduction of cost in response to lower sales.\nReported operating profit was $86 million, compared with $84 million in the year-ago period, while adjusted operating profit for the first quarter of 2021 was $104 million, compared with adjusted operating profit of $119 million in the year-ago period.\nReported operating profit margin was 10.8%, an increase of 80 basis points compared to the prior year.\nAdjusted operating profit margin was 13.2%, a decrease of 110 basis points compared with the margin reported in the prior year.\nThe effective tax rate for the first quarter of fiscal 2021 was 24.7% compared with 22.9% in the prior-year quarter.\nThe increase in the effective tax rate was due primarily to the recognition in the first quarter of fiscal 2021 of unfavorable discrete items related to the deductibility of certain compensation.\nWe currently estimate that our blended effective income tax rate before discrete items will approximate 23% for fiscal 2021.\nOur diluted earnings per share for the first quarter of fiscal 2021 was $1.57, an increase of $0.13 per share or 9%.\nOur adjusted diluted earnings per share this quarter of $2.03 was $0.10 lower than the prior year.\nThe decrease was primarily due to lower pre-tax income and a higher effective tax rate, partially offset by lower diluted shares outstanding.\nI'm pleased with our positive cash flow from operations and the improvement in our working capital days, driven by improvements in accounts receivable and inventory.\nWe generated $124 million of net cash provided by operating activities for the quarter ended November 30, 2020.\nWe invested $11 million or 1.4% of net sales in capital expenditures during the quarter.\nWe currently expect to invest approximately 1.5% of net sales in capital expenditures in fiscal 2021.\nAdditionally, during the first quarter of fiscal 2021, we repurchased 2.6 million shares for approximately $255 million or an average price of $100 per share.\nWe have approximately 5.1 million shares remaining under our current share repurchase board authorization.\nAt November 30, 2020, we had a cash and cash equivalents balance of $507 million.\nWe've demonstrated our ability to generate cash and use that cash to create shareholder value through investments in our business, dividends to shareholders and share repurchases during the quarter.\nOur company is a unique combination of domain expertise in the industries that we serve and in the technology that will change them.\nOur core lighting business is a durable performer in all markets, including the current market.\nAnd we are executing on the transformation of this business.\nWe are in the process of making a better, smarter and faster to transform the service levels to our customers and the vitality of our product portfolio.\nDistech and Atrius are attractive, valuable and strategically impactful technology assets that we believe we can build upon over time.\nWe are demonstrating consistent cash generation, and we have the opportunity to use that cash to grow our current businesses and invest in new businesses, while managing our capital structure, including share repurchases.\nI'll now turn to our Q1 performance.\nAs Karen mentioned, net sales of $791 million were 5% below the prior year.\nI'm particularly pleased with the performance in our retail sales channel, which was up 3% over last year's first quarter and in our independent sales network, which was down 3% as compared to the prior year.\nAs I described last quarter, our broad portfolio enables us to flex where there is opportunity, which this quarter included strength in warehouse and logistics, education and residential verticals.\nThroughout the pandemic, we've seen broad disparity of performance across geographies and that continued in the first quarter.\nWe also manage productivity and cost relative to price to maintain our gross margin at 42%.\nThroughout the pandemic, we've maintained our investment in product development.\nWe are introducing new lighting and controls products, as well as improving and evolving parts of our product and solutions portfolio.\nWe are increasing the impact of software in our product portfolio.\nIn the first quarter, we had a major firmware release for our nLight AIR product.\nThis release is called ABT, Autonomous Bridging Technology and is designed to increase the overall range of the nLight AIR system in networked environments by 300%, taking connectivity more reliable.\nWe've increased our focus on contractors and making their lives easier.\nWe launched the Compact Pro High Bay fixture by Lithonia Lighting during the quarter.\nThis is a new addition to our contractor select portfolio and is the most compact High Bay on the market, making it easier and quicker to install.\nContractors and distributors continue to respond favorably to our contract select portfolio.\nThis portfolio of products has enabled us to respond to discretionary opportunities in the independent sales network and to serve the needs of customers in the retail channel.\nSales growth in these products continue to meaningfully outpace the market.\nWe expanded our capabilities to provide a broad portfolio of leading germicidal UV products.\nIn addition to our relationships with Ushio, PURO and Violet Defense we had an agreement to purchase and resell the UV Angel Clean Air disinfection system, as well as pursue joint development of UV light disinfection products.\nWe now have the ability to serve multiple end use alternatives and are in the market, selling a variety of GUV products.\nWe are uniquely positioned to support customers with our luminaire, controls and building management portfolio.\nWe continue to make progress on our digital transformation that we call better, smarter, faster.\nI'm pleased with the team we are creating to deliver on our platform and how we are enabling more customer-centric sales and operations.\nFor example, we are streamlining and enhancing our product catalog to make the process of finding, configuring and ordering products simpler and faster.\nWe are also increasing our ability to communicate with and update our contractors, distributors and agencies with more detailed status notifications.\nWe were offering them the ability to know in real time the status of the product orders.\nWe will continue our work to increase these service levels.\nWe've successfully recruited talented data scientists to leverage our data and build products powered by machine learning algorithms.\nI'm excited about the progress we've made on our digital transformation to date and look forward to further enhancements for our customers.\nEffectively allocating capital is an important part of how we will create value for our company.\nOur priorities remain to first, grow our current businesses; second, grow our company through acquisitions; third, maintain our dividend; and fourth, create value through repurchasing shares.\nIn the first quarter, we repurchased 2.6 million shares of stock for $255 million.\nSince we restarted our program during the fourth quarter, we have repurchased almost 8% of the company's stock.\nWe also successfully reintroduced ourselves to the debt capital markets during the fourth quarter.\nWe issued a $500 million 10-year bond at 2.15%.\nWe're pleased to lock in this capital for this duration at these rates.\nAs you can see in the first quarter, we continued to demonstrate our ability to generate cash and our ability to deploy that cash for long-term value creation.\nAs we look ahead, while we still see uncertainty in the end markets we serve, we are cautiously optimistic about improvement during calendar year 2021.\nWe are using the breadth of our product portfolio and the strength of our go-to-market teams to deliver solid top line performance.\nAt the same time, we are managing our costs well, while continuing to invest in our business for the future so that we will become a larger, more dynamic company.\nAs we look to grow, we believe that both for business performance, as well as for the understanding of our company, we should more clearly separate our lighting, lighting controls and components business and our intelligent buildings business.\nTo that end, later this fiscal year, we plan to reorganize our business into two units; Acuity Brands Lighting and Intelligent Buildings.\nAcuity Brands Lighting will include our lighting, lighting controls and components businesses and Intelligent Buildings will include Distech and Atrius.\nThis new structure will better position Acuity to meet our customers' needs and strengthen our innovation through better prioritization and alignment within each unit.\nWe also believe this change will provide improved visibility with respect to the operational performance and underlying results of these businesses.\nWe are a company that delivers for our customers, our associates, our communities and our shareholders.\n", "role": "user" }, { "content": "q1 adjusted earnings per share $2.03.\nq1 earnings per share $1.57.\nq1 sales $792 million versus refinitiv ibes estimate of $788.1 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: These beliefs are subject to known and unknown risks and uncertainties.\nMany of which may be beyond our control, including those detailed in our periodic SEC filings.\nPlease note that the company's actual results may differ materially from those anticipated, and we undertake no obligation to update these statements.\nThere will be an opportunity for Q&A at the end of the call.\nI'm proud of our performance in the first quarter of fiscal 2022.\nOur team delivered sales growth of 17%, expanded our operating profit margin by 160 basis points, and increased diluted earnings per share by 57%, despite global supply chain challenges and unpredictable market conditions.\nOur performance demonstrates that by prioritizing customers, we are driving sales growth and turning that into operating income, while continuing to invest in the long-term growth and transformation of the company.\nI want to start today's call by taking a deep dive on the current market conditions.\nAs you are aware, this is a dynamic market with a fair share of paradoxes.\nDemand across our end markets remain strong.\nAt the same time, the availability and cost of key inputs remain challenging.\nIn short, it's the best of times and the most challenging of times.\nBusiness is strong both in ABL and in spaces.\nWithin ABL, demand is strong across all of our channels to market, except retail, which we expect to improve this calendar year.\nIn this dynamic pricing environment, we have been prudent and successful passing on price increases, while at the same time, providing as much consistency as we can to our customers so that they can plan and execute their projects effectively.\nAt the same time, input costs and availability remain unpredictable, and we expect this to continue.\nObviously, everyone is dealing with this.\nOur strategy for managing through this has been consistent: prioritize satisfying customer demand and ensuring the health and well-being of our associates.\nSo now let me spend a minute on what we mean by satisfying our customer demand.\nFirst, we have chosen to honor pricing on all of our placed orders.\nAs I've said before, it is important to me that we are known in the industry for doing what we say.\nThere is a gap in time between when we receive orders and when we fulfill them in normal times, and that is even greater now.\nTherefore, we believe that this position will serve us well in the long term with specific customers and with the industry.\nFrom there, we are also doing everything that we can to fulfill these orders as quickly as we can.\nWhile we don't disclose backlog, what I will say is that it is meaningfully higher than during normal periods.\nThis is the result of higher demand, coupled with changing component availability and the general supply chain and transportation challenges.\nAgain, these are not unique to Acuity.\nTo combat these, we have prioritized three key activities.\nFirst, we have focused and invested in our strategic relationships with manufacturers and suppliers to procure as much of the available component supply as possible.\nWe benefit from being the largest and most consistent in the industry.\nSecond, we have empowered our teams to source components in the spot market, and we have prioritized speed and access over cost.\nThis allows us to maintain higher levels of production at the expense of some higher cost.\nThird, our product, engineering and manufacturing teams have been continuously redesigning and reengineering existing products based on what components are available.\nTo give you an idea of the magnitude of that effort, our Distech engineers spent over half their time in the last quarter dedicated to this type of redesign.\nOur ABL team made the same commitment in addition to changes and improvements in our manufacturing processes to ensure consistent production.\nThese efforts also extend beyond our company into our broader ecosystem.\nWe have been working with suppliers to help them find necessary components and make engineering changes in the products that they supply to us.\nThe overall effort has been herculean, and our teams continue to remain flexible and to adapt to an ever changing environment.\nThe changes that we have implemented over the last two years have enhanced our ability to see across our business, work across our stakeholders and improve our service levels.\nSo where are we on our transformation?\nOne of the points that I stress to our team is that transformation is a process, not a destination.\nIn challenging times, sometimes, the first reaction is to revert to what you know.\nIn our case, we are using these times to redouble our transformation efforts.\nLet me start with the ABL business.\nTrevor and his team are focused on maintaining high product vitality, continuing to elevate industry service levels and continuing to use technology to differentiate us.\nDuring the first quarter, we launched several interesting products to drive our portfolio expansion, products like the STACK PACK and STACK Switch products.\nThese are the next generation of center-element LED lay-in lights for commercial indoor spaces.\nThe STACK has a lower profile and more efficient packaging that saves on transportation costs.\nIt also has an adjustable lumen output that can be reconfigured at any time through the STACK Switch.\nThis means that there is no time wasted on a job site if there need to be changes to the configuration.\nIn controls, we introduced the CLAIRITY link.\nThis is part of our nLight lighting controls platform that offers remote connectivity capability.\nThe remote capabilities reduce the need for in-person visits, offering quick troubleshooting resolutions and a reduction in maintenance cost.\nThis product fundamentally changes the way we service projects and is an important step forward for our customers.\nNow moving to the Intelligent Spaces Group.\nThe mission of ISG is to use technology to solve problems in spaces in order to make them smarter, safer, and greener.\nWe do this in two ways.\nWe collect data through hardware, for example, the Distech controller; and then analyze and take action on the data through software applications powered by Atrius.\nOur ISG group had an eventful quarter.\nAs I mentioned, even though the engineering team at Distech spend over half their time focused on redesigning Distech products for the available components.\nWe continued to roll out several important products and product enhancements.\nThe Distech ECLYPSE APEX was introduced in the first quarter and is the most advanced version of our controller for HVAC and building automation.\nThe APEX introduced artificial intelligence to the edge and increases compute capacity in buildings, which helps customers manage energy usage more effectively.\nWe also further expanded the availability of our Atrius Building Insights service by enabling it for additional languages and local privacy requirements.\nAtrius Building Insights is now available in the U.K., Ireland, France, Germany, Spain, and Norway.\nWe are currently and expect to continue to be operating in unpredictable times.\nInput prices and availability can sometimes feel like a game of whack-a-mole, and we are dealing with omicron, which materialized only a few months ago.\nAs we face these challenges and new challenges we will maintain our focus on satisfying customer demand in ensuring the health and well-being of our associates.\nI remain optimistic about 2022 and our ability to effectively manage in this environment.\nWe have a great team who are executing today while also remaining focused on the long-term growth and transformation of the company.\nAnd then I'll be back for the Q&A and for some closing remarks.\nI continue to be impressed by our team's dedication to our transformational priorities while we continue to navigate the day-to-day performance of the business.\nWe delivered a strong first quarter performance.\nNet sales were $926 million, an increase of 17% compared to the prior year.\nThis performance was driven by our improved service levels, a continued recovery in the end markets of both of our business segments, and the benefits of recent price increases.\nGross profit was $386 million, an increase of $53 million or 16% over the prior year.\nThis improvement was driven by revenue growth and by offsetting the significant increase in material and freight costs through price increases and product and productivity improvements.\nGross profit as a percentage of sales was 41.7%, a decrease of 30 basis points from 42% in the prior year, a significant achievement given the cost environment.\nReported operating profit margin was 12.4% of net sales for the first quarter of fiscal 2022, an increase of 160 basis points over the prior year.\nAdjusted operating profit margin was 14.4% of net sales, an increase of 120 basis points over the prior year.\nThe majority of this was the result of improved operating leverage as we continued to balance cost management and growth investments.\nThe effective tax rate for the first quarter of fiscal 2022 was 19.6%.\nIn the same period of 2021, the rate was 24.7%.\nThe decrease in the effective income tax rate was primarily due to favorable discrete items recognized in the first quarter of fiscal 2022 related to excess tax benefits on share-based payments.\nWe expect our tax rate for the full year of 2022 to normalize to around 23% absent these discrete items.\nFinally, we saw a significant improvement in diluted earnings per share for the quarter of fiscal -- for the first quarter of fiscal 2022.\nDiluted earnings per share of $2.46 increased $0.89 or 57% over the prior year.\nAnd adjusted diluted earnings per share of $2.85 increased $0.82 or 40% over the prior year.\nOur share repurchase program favorably impacted adjusted diluted earnings per share by $0.07 and the tax impact was approximately $0.16.\nMoving on to our segments.\nDuring the quarter, our Lighting and Lighting Control segment saw sales increase 17% to $884 million versus the prior year.\nThis was driven by improvements within our independent sales network, which grew 14%, and the direct sales network, which grew about 12%.\nThese increases were a direct result of our strong go-to-market efforts and an improved demand environment as well as the favorable impact of price increases.\nOur corporate accounts channel saw an increase in sales of approximately 62% compared to the prior year, as large accounts began previously deferred maintenance and renovations.\nThe performance in this channel is dependent upon our customers' renovation cycles and can be uneven quarter to quarter.\nSales in the retail channel declined approximately 16% in the current quarter.\nABL operating profit for the first quarter of fiscal 2022 increased 30% to $128 million versus the prior year, with operating margin improving 160 basis points to 12.4%.\nAdjusted operating profit of $138 million improved 28% versus the prior year, with adjusted operating margin improving 140 basis points to 15.6%.\nNow moving on to the results for our Intelligent Spaces Group.\nFor the first quarter of 2022, sales in spaces increased approximately 14% to $46 million versus the prior year, reflecting continued demand primarily across our building and HVAC controls.\nSpaces' operating profit in the first quarter of 2022 increased approximately $2 million to $2 million versus the prior year.\nAdjusted operating profit of $6 million increased approximately $2 million versus the prior year as a result of the strong sales growth.\nNow turning to cash flow.\nWe continue to generate solid cash flows.\nThe net cash from operating activities for the first three months of fiscal 2022 was $84 million.\nThis was a decrease of $40 million or 32% compared to the prior year and reflects an increased investment in inventory to drive growth.\nAdditionally, cash flow was impacted by the timing of income tax payments and the prior-year deferral of withholding taxes as a result of the CARES Act.\nWe invested $9 million or 1% of net sales in capital expenditures during the first three months of fiscal 2022.\nDuring the quarter, we continued to execute on our capital allocation strategy and repurchased approximately 300,000 shares of common stock for around $53 million at an average price of $176 per share.\nWe have approximately 3.5 million shares remaining under our current board authorization.\nOur capital allocation priorities remain the same.\nWe will continue to prioritize investments for growth in our current businesses, to invest in acquisitions, to maintain our dividend, and to allocate capital to share repurchases when there is an opportunity to create permanent value for our shareholders.\nI would now like to spend a few minutes addressing current topics of note.\nFirst, on the pricing environment.\nAs Neil said, we are managing price aggressively while at the same time balancing the relationships with our customers.\nWe announced another price increase this week effective for orders placed in February.\nWe will continue to be deliberate in our strategic approach to pricing.\nNext, I would like to update you on the OSRAM integration.\nWe have made significant progress in our integration of OSRAM.\nWe bought the OSRAM North American DS business to ensure control over the technology, to expand our OEM channel and for the benefit it brings through the integration into our supply chain.\nThe addition of OSRAM contributed over 300 basis points to our sales growth in this quarter.\nThere was also a relatively small dilutive impact to gross profit margin, but OSRAM was an overall positive contribution to operating profit.\nThe acquisition is delivering on our expectations and we are very excited that the OSRAM team is now part of Acuity.\nWe have included EBITDA and adjusted EBITDA in our tables of reconciliation to enable easier comparisons and to improve the consistency around reported adjustments.\nAs we continue to navigate 2022, we will continue to prioritize our customers to drive sales growth and operating income.\nWe will also continue to allocate capital in a way that drives long-term growth and that creates permanent value for our shareholders.\n", "role": "user" }, { "content": "q1 adjusted earnings per share $2.85.\nq1 earnings per share $2.46.\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: These beliefs are subject to known and unknown risks and uncertainties, many of which may be beyond our control, including those detailed in our periodic SEC filings.\nPlease note that the company's actual results may differ materially from those anticipated, and we undertake no obligation to update these statements.\nHe will provide an update on our strategy and highlights from the last quarter.\nAnd Karen Holcom, senior vice president and chief financial officer, who will walk us through our earnings performance.\nThere will be an opportunity for Q&A at the end of the call.\nFor those participating, please limit your remarks to one question and one follow-up, if necessary.\nOur team delivered another strong performance in the second quarter of fiscal 2022.\nFor the second consecutive quarter, we delivered net sales growth of 17%, and we maintained our gross profit margin at 41.7%, consistent with the first quarter.\nAnd compared to last year, we increased diluted earnings per share by 22%.\nDespite the cost challenges, we were able to convert our sales growth into operating profit and net income by effectively leveraging operating expenses.\nThe world remains complicated.\nAlthough our demand environment is strong, costs continue to be volatile, and we are continuously dealing with the ongoing pressures resulting from the global component shortages.\nIn spite of this, our team continues to execute well, and this is reflected in our performance.\nBoth ABL and Spaces are performing admirably.\nOur decisions to prioritize shipments by investing in electrical components and transportation are resulting in higher sales and operating profits, albeit at slightly lower margins.\nNow, I want to move to talk to our progress at both ABL and Spaces.\nFirst, in ABL, I'm happy to report that some things are returning to the way they used to be.\nIn March, we hosted our first in-person sales conference in three years, NEXT '22.\nIt was great to be back together with our independent sales network, who have performed exceptionally through the ups and downs of the last two years.\nWe have the best agents in the industry, and it was a great opportunity to talk about our strategic vision for Acuity Brands Lighting, share many new products, and engage our agency partners around our EarthLIGHT initiative.\nThis was the first time that many of our associates and agents had seen each other in person since the pandemic started.\nWhile we have been incredibly productive working virtually with our channel, it was great to spend some quality time together in person.\nIt was hard not to be struck by the levels of energy and enthusiasm throughout the event and the consistency of the feedback from our agents.\nThey said, \"Acuity is delivering\".\nOur investments in service have allowed us to prioritize delivering for our customers when others have been unable to.\nAt the same time, our investments in product vitality have allowed us to continue to create compelling new products that are both innovative and market-moving.\nAs I said last quarter, we have done this by focusing on three main areas.\nFirst, by focusing on strategic supplier relationships, the current environment has reminded us all that it really matters who you do business with.\nBecause we are the largest lighting company, we have certain advantages over our direct competitors.\nBut those same components are also used by larger industries.\nConsequently, we are making investments in people, time, and resources.\nWe have recruited a new head of strategic sourcing for ABL.\nWe are working with our key suppliers on effective planning and allocation management, and we are investing in inventory.\nSecond, by empowering our teams to prioritize access and speed over cost on available components, we have been able to ensure continuity of supply across many of our existing product lines, while also supporting our ongoing product vitality efforts across our product portfolio.\nFinally, as I said last quarter, our engineering teams continue their Herculean efforts to redesign products to the available components.\nAt the same time, these teams have also managed to introduce around 220 new, or significantly upgraded, lighting and lighting control products over the last two years.\nWe expect the challenges around access to and costs of components to continue into the foreseeable future.\nOur strategy around product vitality and the dexterity of our engineering teams inflecting to the changing requirements of the component shortages have been a significant part of why we are leading in this market, and we expect to continue these efforts.\nAnother highlight of the NEXT conference was our focus on EarthLIGHT.\nEarthLIGHT is an important part of our strategy.\nOur product vitality efforts are not just about improving the functionality of our products.\nIt is also about redesigning products to reduce customer energy consumption, reducing packaging and waste, and improving transportation efficiency.\nThis quarter, we announced a new initiative that brings together both technology and sustainability to significantly reduce paper use by introducing scannable QR code instructions across our products.\nAt NEXT, we also expanded our community outreach by packing a thousand bags of food for a local Atlanta organization together with our agents.\nIt was one of the highlights of the event.\nNow, moving to the Intelligence Spaces Group, Spaces had another solid quarter of growth.\nIn both Distech and Atrius, we have a strong product roadmap to make Spaces smarter, safer, and greener.\nDistech continues to win in the building controls market against significant competition.\nThrough the ECLYPSE Controller products, Distech is at the forefront of the technology curve with a presence in key markets and recognized leadership built on open-protocol technology.\nIn the last quarter, Distech won projects across North America and Canada and saw significant project wins in key verticals, including in education, commercial infrastructure, and in data centers.\nDistech is now a key supplier to two of the largest cloud providers.\nWe also continue to develop the Atrius platform, including progress on Atrius Building Insights, and we expect to expand the portfolio over time.\nWe continue to add talent to this team.\nFinally, I want to update you on our capital allocation.\nOur capital allocation priorities remain the same.\nWe expect to continue to prioritize investments for growth in our current businesses, to invest in acquisitions, to maintain our dividend, and to allocate capital to share repurchases when there is an opportunity to create permanent value for our shareholders.\nThis quarter, the board of directors authorized additional capacity for share repurchases to increase our remaining authorization from 3 million to 5 million shares.\nSince May of 2020, we have repurchased approximately 13% of our shares outstanding.\nI would also like to announce the appointment of Sachin Sankpal, our senior vice president of growth and transformation.\nSach joins us to manage our technology organization, to deploy our better, smarter, faster company operating system, and to lead the integration efforts for future acquisitions.\nSach comes to us with distinguished experience at leading companies, including Trimble and Honeywell.\nWe're excited to have Sach on our team.\nEach quarter, we are faced with new challenges, and our team continues to deliver.\nOur continued focus on service and product vitality is allowing us to take advantage of the strong demand environment.\nI am so impressed by their flexibility and ability to drive results.\nWe delivered strong performance in the second quarter of 2022.\nWe grew net sales.\nWe managed margins effectively despite a volatile cost environment.\nAnd we leveraged our operating expenses.\nNet sales were $909 million, an increase of 17% compared to the prior year.\nThis performance was driven by our focus on service levels and product vitality, a continued recovery in the end markets of both of our business segments, and the benefits of recent price increases and acquisitions.\nGross profit was $379 million, an increase of $43 million or 13% over the prior year.\nThis improvement was driven by revenue growth and by offsetting the significant increase in input costs through price increases and product and productivity improvements.\nGross profit as a percent of sales was 41.7%, a decrease of 170 basis points from 43.4% in the prior year, but flat sequentially from the first quarter of 2022.\nI will talk more about the current cost environment later on in the call.\nReported operating profit was $102 million, an increase of $11 million or 12% over the prior year.\nReported operating profit margin was 11.3% of net sales for the second quarter of fiscal 2022, a decrease of 40 basis points over the prior year.\nAdjusted operating profit was $123 million, an increase of $14 million or 13% over the prior year.\nAdjusted operating profit margin was 13.5% of net sales, a decrease of 50 basis points against the prior year.\nAdjusted operating profit margin was lower than the prior year, as the decline in gross profit margins was partially offset by leveraging operating expenses.\nFinally, we saw continued improvement in diluted earnings per share for the second quarter of fiscal 2022.\nDiluted earnings per share of $2.13 increased $0.39 or 22% over the prior year.\nAnd adjusted diluted earnings per share of $2.57 increased $0.45 or 21% over the prior year.\nOur share repurchase program favorably impacted adjusted diluted earnings per share by $0.06.\nNow, moving on to our segments.\nDuring the quarter, our Lighting and Lighting Controls segment saw sales increase, 17% to $863 million over the prior year.\nThis was driven by the improvements within our independent sales network, which grew approximately 12%, and an increase of 5% in our direct sales network.\nAdditionally, sales in the corporate account channel increased approximately 105% over the prior year.\nRecall that last year, customers had paused their renovations due to the pandemic.\nThat activity has now restarted as you can see from the growth this quarter.\nWe also had growth in our other channel of 83% over the prior year, due primarily to the acquisition of OSRAM.\nSales in the retail channel declined approximately 2% in the current quarter.\nThis was due to some of our inventory being delayed in transit or held up in the ports, resulting in longer lead times than we anticipated.\nWe should start to see growth in this channel in the upcoming quarters.\nABL's operating profit for the second quarter of 2022 was $117 million, an increase of 14% versus the prior year, with operating margin declining 30 basis points to 13.5%.\nAdjusted operating profit of $127 million improved 13% versus the prior year, with adjusted operating profit margin declining 50 basis points to 14.7%.\nABL has demonstrated the ability to grow sales while leveraging our operating expenses.\nMoving on to the results for our Intelligent Spaces Group.\nFor the second quarter of 2022, sales in Spaces increased approximately 16% to $50 million, reflecting growth in both the Distech and Atrius.\nSpaces operating profit in the second quarter of 2022 increased approximately $400,000 to $1.2 million.\nAdjusted operating profit of $6 million increased approximately $1 million versus the prior year as a result of the strong sales growth and continued investment in the business.\nOur business model continues to be highly productive, generating $127 million of net cash flow from operating activities in the first half of fiscal 2022.\nThis was a decrease of $85 million compared to the prior year due primarily to an increased investment in working capital primarily related to inventory.\nInventory days are up over the end of our fiscal year, with approximately half of the increase due to increased lead times on source finished goods and, to a slightly lesser extent, increased purchases of electronic components.\nWe are managing our inventory levels to support our growth, as well as insulate our production facilities from inconsistent supply availability.\nWe also invested $24 million or 1.3% of net sales and capital expenditures during the first six months of fiscal 2022.\nFinally, we have continued to repurchase shares in the second quarter.\nAs a result, since May of 2020, we have bought back approximately 13% of our company shares at an average price of approximately $120 per share.\nI would now like to spend a few minutes focusing on the remainder of the year.\nAs Neil stated, we expect the current environment to continue for the foreseeable future with strong demand, while access and cost of components will remain a challenge.\nOur focus throughout will continue to be on growing sales and leveraging our operating expenses.\nIn relation to the recent instability in Europe, we have no direct sales exposure either to Russia or Ukraine.\nHowever, the conflict does add to the existing supply chain pressures.\nAdditionally, we are experiencing increases in transportation costs, driven by expected increases in oil prices.\nIn the last 15 months, we have strategically introduced six price increases in addition to driving product and productivity improvements.\nBefore I hand you over to the operator, I want to leave you with our key takeaways.\nWe have continued to demonstrate strong sales growth and effective management of gross margins in a volatile cost environment.\nWe've leveraged our operating expenses.\nAnd finally, we have continued to allocate capital effectively.\n", "role": "user" }, { "content": "q2 earnings per share $2.13.\nq2 adjusted earnings per share $2.57.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: These beliefs are subject to known and unknown risks and uncertainties, many of which may be beyond our control, including those detailed in our periodic SEC filings.\nPlease note that the company's actual results may differ materially from those anticipated and we undertake no obligation to update these statements.\nThere will be an opportunity for Q&A at the end of the call.\nFor those participating, please limit your remarks to one question and one follow-up if necessary.\nI'm pleased with our company's performance in the fourth quarter of fiscal 2021.\nIn a challenging global supply chain environment, we grew sales 11% and expanded our gross profit and operating profit margins.\nOur performance demonstrated our focus on product vitality and customer service.\nWe allocated capital effectively by closing the acquisition of OSRAM's North American digital business and have created permanent value for our shareholders through the repurchase of company shares.\n2021 was a pivotal year for us as we advanced our corporate transformation and I'd like to take a few minutes to recap some of those achievements.\nWe returned the company to growth.\nWe grew sales in the third quarter, the fourth quarter, and the full year and we expect this growth to continue.\nWe expanded gross profit margins for the full year, despite a challenging global environment.\nWe realigned our businesses into ABL, our Acuity Brands Lighting and Lighting Controls business and ISG, our Intelligent Spaces Group.\nThis alignment creates the necessary strategic focus on each business and allows us to develop the leadership teams that will deliver on their potential.\nWe generated strong cash flow and allocated capital in a way that creates permanent value for shareholders.\nWe held our first ever Investor Day.\nWe built a strong and diverse leadership team and are attracting new talent throughout the organization.\nOur continuing improvements around ESG, are central tenants to our strategy.\nWe have made significant progress by reaching carbon neutrality in our operations and by committing to the reduction of 100 million metric tons of carbon from our put in place products and services by 2030.\nWe made progress on diversity, equity, and inclusion and on governance.\nAnd you can read more about all of this in our upcoming 10-K, our Annual Report, our annual EarthLIGHT report and our proxy.\nAnd finally, we have positioned ourselves well for 2022 and beyond.\nI now want to update you on our ongoing transformation in each of our businesses and I will start with ABL.\nWe've had a good year in ABL.\nOur focus on innovation through product vitality and increasing our service levels for the benefit of our customers has delivered strong results.\nAnd we are continuing our efforts to drive our product expansion.\nThe Compact Pro High Bay, which we've discussed before, continues to deliver from both a revenue and margin perspective in the high growth industrial sector.\nOur product vitality efforts include improvements to existing products and the introduction of new ones.\nIn the fourth quarter, we introduced the HomeGuard LED Security flood light.\nIt's an exciting addition to our contractor select portfolio.\nThis new platform offers a technology upgrade, higher efficacy, greater safety options, and ease of installation.\nSales have been strong.\nWe're off to a great start in a category where we currently have low share and strong growth opportunities.\nWe are also continuing to increase our service levels and deliver productivity improvements.\nWe are using better, smarter, faster to improve our processes and our technology for better, more efficient, customer service.\nToday, I'd like to focus on Agile.\nAgile as our commerce platform that is used by our channel for all of the key step that they need to do business in lighting and lighting and controls.\nFrom finding products to creating solutions for large projects, to bidding on those projects, to placing the orders and finally tracking those orders to completion.\nOur team is constantly improving Agile.\nOne of our key areas of focus has been to improve the quality of the product data that we provide.\nThis improvement provides many tangible benefits including ease of use and improved order accuracy.\nAnother area of focus that I have spoken about before is order status.\nI bring this up again because it has been essential during this complicated period.\nWe were able to provide clear information to our channel about their order status, which allows us to better meet their needs in the face of the global supply chain challenges.\nThese examples address significant historical pain points and our foundational, which allow us to improve our service levels today and in the future.\nAs we enter 2022, the priorities for Trevor and the rest of the ABL team remain the same.\nMaintain high product vitality, continue to elevate our service levels, and continue to use technology to differentiate ourselves.\nNow moving to the Intelligent Spaces Group.\nThe mission of ISG is to use technology to solve problems in spaces by making them smarter, safer, and greener.\nWe believe that each of these provides ample opportunities for future growth.\nThis tech controls is a collection of open protocol products necessary to effectively operate spaces.\nAtrius provides applications which use data to deliver value in those spaces.\nWe are having success across Europe and North America with our Distech platform, especially around campuses, data centers, and spaces that require a significant amount of control around the operation of the facilities.\nWe continue to add products to this ISG portfolio.\nDuring the quarter we added the ECLYPSE Connected Thermostat, an open protocol device that reduces installation costs, helps manage energy costs, and improve the comfort of spaces.\nIn the face of a challenging global environment, we have demonstrably improved our company and its performance.\nWe have demonstrated our ability to grow sales through innovation and our ability to service our customers.\nWe've improved our gross profit margins through product and productivity improvements.\nWe have improved our operating profit margin by leveraging our costs, we have allocated capital efficiently through reinvestment in the business, acquisitions and share repurchase.\nWe have the talent and the tools to build upon the operating strength we have developed over the last 18 months.\nAs we look forward, we expect to continue this performance.\nWe are strategically positioned at the intersection of sustainability and technology.\nWe have assembled a world-class team.\nWe have demonstrated the ability to both build and acquire businesses.\nWe have strong organic cash generation and we have demonstrated that we know what to do with it to create value.\nI want to start by recognizing the accomplishments of the team this year.\nWe have made progress on our transformational priorities, improve the financial performance of the business, and continue to thoughtfully allocate capital.\nOur fourth quarter performance was solid.\nNet sales were $192 million, an increase of 11% compared to the prior year.\nThis performance was driven by strong customer demand, improved execution across our go-to-market channels, and the addition of the OSRAM acquisition, which added approximately 200 basis points.\nGross profit margin was 42.2% for the fourth quarter of fiscal 2021, an increase of 10 basis points over the prior year, despite rising costs from raw materials, electrical component supply chain interruptions and a significant escalation of freight costs.\nWe were able to offset the increased costs with higher sales volume, product and productivity improvements and a benefit from price increases.\nI'm extremely pleased with the team's execution around our gross profit margin that led to such a great result in a volatile cost environment.\nReported operating profit margin was 13.4% of net sales for the fourth quarter of fiscal 2021, an increase of 150 basis points over the prior year.\nAdjusted operating profit margin was 15.8% of net sales for the fourth quarter of fiscal 2021, an increase of 110 basis points over the prior year.\nThe majority of this improvement was driven by the higher gross profit margin and leverage of our operating expenses.\nThe effective tax rate for the fourth quarter of fiscal 2021 was 21.9% compared with 24.5% in the prior year due to the impact of several discrete items.\nFinally, we saw significant improvement in diluted earnings per share for the fourth quarter of fiscal 2021.\nDiluted earnings per share of $2.72, increased $0.85 or 46% over the prior year and adjusted diluted earnings per share of $3.27 increased $0.92, or 39% over the prior year.\nOur share repurchase program favorably impacted diluted earnings per share by $0.24 versus the prior year.\nBefore I move on to the segment results, I want to highlight a few numbers in our full year 2021 operating results.\nNet sales were $3.5 billion, an increase of 4% compared to the prior year, driven by improved sales performance in the second half of 2021.\nWe delivered a full year gross profit margin of 42.6%, an increase of 40 basis points over the prior year.\nReported operating profit margin was 12.4% of net sales for fiscal 2021, an increase of 180 basis points over the prior year with adjusted operating profit margin at 14.6% for fiscal 2021, an increase of 90 basis points over the prior year.\nThe effective tax rate for fiscal 2021 was 22.7% compared with 23.5% in the prior year.\nWe expect this rate to be approximately 23% for the full year in fiscal 2022, excluding any unusual or discrete items and assuming no change to the corporate tax rate.\nDiluted earnings per share of $8.38, was 34% increase over the prior year and adjusted diluted earnings per share of $10.17 was a 23% increase over the prior year.\nWe had 36.6 million diluted shares outstanding during fiscal 2021, with our share repurchase program favorably impacting diluted earnings per share by $0.07 versus the prior year.\nMoving onto our segments.\nDuring the quarter, the Lighting and Lighting Controls segment delivered a sales increase of 11% versus the prior year.\nThis was driven by improvements within our independent sales network, which grew approximately 10% and the direct sales network, which grew about 15% in the current quarter as a direct result of our strong go-to-market efforts as well as recovery in the construction market.\nOur corporate accounts channel continued the positive momentum and saw an increase in sales of 16% compared to the prior year, as large retailers move forward with previously deferred renovation spend.\nThe performance in this channel is dependent upon our customers' renovation cycle and can be uneven quarter to quarter.\nSales in the retail channel declined approximately 20% as compared to the prior year and will continue to be impacted through the remainder of the calendar year as a result of a customer inventory rebalancing.\nThe retail channel continues to be an attractive channel for Acuity.\nDuring the quarter, we closed the acquisition of OSRAM's DS business.\nThe acquisition contributed around 200 basis points of growth to ABL revenue and we expect a similar level of impact in 2022.\nNow moving to ABL operating profit for the fourth quarter of 2021, which increased 23% to $149 million versus $122 million in the prior year, with operating profit margin improving 150 basis points to 15.8%.\nAdjusted operating profit for the fourth quarter of 2021 improved 21% versus the prior year with adjusted operating profit margin improving 140 basis points to 16.8%.\n2021 was a year of improvement.\nTo summarize the full year the ABL business saw sales growth of 3% to $3.3 billion versus the prior year and an improvement across profitability metrics.\nOperating profit for the full year increased 12% to $476 million versus the prior year with operating profit margin improving 110 basis points to 14.5%.\nAdjusted operating profit for fiscal 2021 improved 10% to $515 million versus the prior year and adjusted operating profit margin improved 100 basis points to 15.7%.\nNow moving on to the results for our Intelligent Spaces Group.\nFor the fourth quarter of 2021 sales in spaces increased approximately 24% to $51 million, reflecting continued demand with strength across our building and HVAC controls.\nSpaces operating profit for the fourth quarter of 2021 increased $3.6 million to $2 million versus the prior year.\nAdjusted operating profit for the fourth quarter of 2021 of $6 million was $3.9 million greater than the prior year as a result of continued sales growth.\nThe spaces team had a great year.\nWe recruited an incredible leadership team and broke the business out into a stand-alone segment.\nThe team ended fiscal 2021 with sales growth of 21% to $190 million versus the prior year.\nOperating profit increased $13.8 million to $9.9 million versus the prior year and operating profit margin of 5.2% for fiscal 2021 improved 770 basis points versus the prior year, with adjusted operating profit margin improving 400 basis points to 13.5%.\nNow turning to cash flow.\nWe continue to generate solid cash flow.\nThe net cash from operating activities for fiscal 2021 was $409 million.\nThis was a decrease of $96 million or 19% compared to the prior year, largely due to the increase in working capital needed to support the higher level of sales.\nWe invested $44 million or 1.3% of net sales in capital expenditures during fiscal 2021 and we continue to believe that capital expenditures of around 1.5% of net sales is an appropriate annual level as we head into 2022.\nWe continue to allocate capital effectively by prioritizing growth investments, M&A, maintaining our dividend, and creating permanent value for shareholders through share repurchases.\nDuring the year, we repurchased approximately 3.8 million shares of common stock for $435 million at an average price of $114 per share.\nWe have around 3.8 million shares still remaining under our current Board authorization.\nI would now like to spend a few minutes reviewing some of the most important conversations around our company and offer insight into how we are thinking about them.\nThis is a complicated global environment and input costs have been changing frequently, for example, freight costs.\nI'd like to use this as a window into how we are managing these challenges.\nWe balance our long term freight contracts, which are favorable costs with additional capacity at current cost to deliver high levels of service to our customers.\nWe have passed along some of these costs through price increases and we are balancing delivering on our margin expectations and delivering on our most important promise, which is to be the company which our customers can rely upon.\nAs we head into 2022 we are confident in our businesses and in our team.\nWe expect ABL to grow net sales in the high single digits for the full year of 2022.\nWe expect ISG to deliver net sales growth in the mid-teens.\nWe expect 42% plus annualized gross profit margin for the full year of 2022.\nAnd we believe we can continue to leverage our operating costs as we increase net sales.\nFinally, we will continue to allocate capital effectively.\nWe are transforming our business and focusing on our customers, our investors and our associates.\nWe enter 2022 a much stronger company and with clear opportunities.\n", "role": "user" }, { "content": "q4 adjusted earnings per share $3.27.\nq4 earnings per share $2.72.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: It is now my pleasure to turn the floor over to your host, Bill Rhodes, Chairman, President and CEO.\nSir, the floor is yours.\nautozone.com under the Investor Relations link.\nPlease click on Quarterly Earnings Conference Calls to see them.\nAs we begin, we want to continue to stress that our highest priority remains the safety and well being of our customers and AutoZoners.\nEveryone across the organization takes this responsibility very, very seriously, and I am very proud of how our team has responded.\nSince the start of the pandemic, we have reiterated consistently that we could not deliver the kind of results we have without the exceptional efforts of our entire team, especially our store and supply chain AutoZoners.\nAs our sales volumes have remained at historic all time highs, our AutoZoners continue to go the extra mile and surprise and delight our customers by providing WOW Customer Service, regardless of the myriad of challenges that are thrown their way.\nThe Assistance Fund is an independent non-profit whose primary mission is to provide assistance to AutoZoners who find themselves in a very difficult place.\nWe are very fortunate to be able to help our AutoZoners in this way.\nTo me it's yet another example of our organization living consistent with our values.\nWe'll also share how inflation is affecting our cost and retails and how we think they will impact our business for the remainder of the fiscal year.\nOn to our sales results.\nOur domestic same-store sales were an impressive 13.6% this quarter on top of last year's very strong 12.3%.\nOur team once again executed at an extraordinarily high level and delivered amazing results.\nCongratulations again to AutoZoners everywhere.\nOur growth rates for retail and commercial were both strong with domestic commercial growth impressively north of 29%.\nCommercial set a first quarter record with $900 million in sales.\nAnd now we've delivered $900 million in sales in one quarter, an incredible accomplishment.\nOn a trailing four quarter basis, we had over $3.5 billion in annual commercial sales versus $2.8 billion a year ago, up 27%.\nWe also set a record in average weekly sales per store for any quarter, reaching over $14,400 versus $11,500 just last year.\nOn a two year basis, our sales accelerated from last quarter, exceeding 40%.\nMany people want to understand what is driving our tremendous sales growth in commercial.\nIn short, it is not one thing, and I want to repeat that.\nIt is not one thing.\nIt's a host, a whole host of key initiatives we've been working on for several years.\nThose initiatives include improved satellite store availability, massive improvements in hub and mega hub coverage and access, the continuing strength of the Duralast brand, leveraging technology to make us easier to do business with and amplifying our execution strength to improve delivery times, enhancing our sales force effectiveness and engaging our store operations team deeper in the business and ensuring that we live consistent with our pledge by being priced right for the value proposition that we deliver.\nWe continue to execute very well in commercial, and we are extremely proud of our team and their performance.\nWe're also very proud of our organization's performance in domestic DIY.\nWe ran a 9% comp this quarter on top of last year's 12.7%.\nWhile our DIY two year stack comp decelerated slightly from our fourth quarter, it's remarkable to reflect on a more than 20% two year comp in this sector of our business.\nFrom the data we have available to us, we continue to not only retain the enormous 10% share gains we built during the initial stages of the pandemic, but modestly build on those gains.\nOur performance, considering the amount of time from the last stimulus and the ending of the enhanced unemployment benefits, has substantially exceeded our expectations and raises our expectations on how sustainable these sales gains may be long-term.\nNow let's focus on our sales cadence.\nSame-store sales increased sequentially from September through November.\nHowever, this acceleration could be deceiving as last year's comp weakened as the quarter progressed.\nGiven the dynamics of the past 20 months, we like others who benefited from the pandemic, believe it is more instructive to look at two year stacked comps.\nOn this basis, the monthly results were almost identical and very, very stable.\nFor Q1, our two year comp was 25.8% and the four week periods of the quarter increased by 26.3%, 26% and 25.3% respectively.\nRegarding weather, we experienced warmer than usual weather in the Northeastern United States, while the remainder of the country experienced normal trends.\nOverall, we feel weather did not play a material role in our sales results for the quarter.\nAs we look forward to the winter months, we are encouraged to see forecast estimating a slightly colder than usual winter.\nHistorically, extreme weather, be that hot or cold, helps drive parts failure.\nRegarding this quarter's traffic versus ticket growth in retail, our traffic was up 1%, while our ticket was up 7.5%.\nThis low-single-digit transaction count growth continues to be a meaningful acceleration from pre-pandemic levels, although it decelerated versus last year as expected due to the elimination of stimulus, the reduce -- the elimination of enhanced unemployment, stay at home orders and the closure of some big box retail automotive service departments last year.\nIn our commercial business, we saw most of the sales growth come from transaction growth from new and existing customers.\nIt was encouraging for us to see sales trends remain strong.\nAnd we continue to be pleased with the momentum we are seeing in both domestic businesses heading into the winter months.\nDuring the quarter, there were some geographic regions that did better than others, as there always are.\nWhile last quarter we saw roughly 400 basis point gap in comp performance between the Northeast and Midwestern markets versus the remainder of the country, we did not see that gap this quarter.\nIn fact, the Northeastern Midwestern markets slightly outperformed.\nThe market share data suggests that we continue to gain share in most markets across the country.\nNow let's move into more specifics on performance for the quarter.\nOur same-store sales were up 13.6% versus last year's first quarter.\nOur net income was $555 million.\nAnd our earnings per share was $25.69 a share, increasing an impressive 38.1%.\nRegarding our merchandise categories in the retail business, our sales floor and hard parts categories grew at a similar rate this quarter.\nAs Americans get back to driving more, we've seen maintenance and failure-related categories perform well.\nWe've been especially pleased with our growth rates in select failure-related businesses, like batteries, that have successfully lapped very strong performance last year.\nWe believe our hard parts business will continue to strengthen as our customers drive more.\nLet me also address what we are seeing from inflation and pricing.\nThis quarter, we saw our sales impacted positively by about 4% year-over-year from inflation, while our cost of goods was up about 2% on a like-for-like basis.\nWe believe both numbers will be higher in the second quarter as cost increases in many key merchandise categories continue to work their way through the system.\nWe could see mid-single-digit inflation in retails as rising raw material pricing, labor and transportation costs are all impacting us and our suppliers.\nWe have no way to say how long this will last, but our industry has been disciplined about pricing for decades, and we expect that to continue.\nWhile we continue to be encouraged with the current sales environment, it remains difficult to forecast near to mid-term sales.\nWhat I will say is that the past three quarter sales have all been consistent on a two year stack comp basis and both our DIY and commercial businesses have been remarkably resilient.\nWhile it's difficult to predict absolute sales levels, we are excited about our growth initiatives, our execution and the tremendous share gains we have achieved in both sectors and are maintaining and/or continuing to grow those gains.\nCurrently, the macro environment, while more uncertain than normal, is certainly favorable for our industry.\nAnd if these near-term trends fade, we believe that we are in an industry that is positioned for solid growth over the long-term.\nFor FY '22, our sales performance will be led by the continued strength in our commercial business as we continue executing on our differentiating initiatives.\nAs we progress through the year, we will as always be transparent about what we are seeing and provide color on our markets and outlooks as trends emerge.\nAs Bill mentioned, we had a strong second quarter.\nOur growth initiatives continue to deliver strong results.\nAnd the efforts of our AutoZoners in our stores and distribution centers have enabled us to take advantage of robust market conditions.\nFor the quarter, total auto part sales, which includes our domestic, Mexico and Brazil stores, were $3.6 billion, up 16.2%.\nLet me give a little more color on sales and our growth initiatives.\nStarting with our commercial business, for the first quarter, our domestic DIFM sales increased 29.4% to $900 million and were up 41% on a two year stack basis.\nSales to our DIFM customers represented 25% of our total sales.\nAnd our weekly sales per program were $14,400, up 25% as we averaged $75 million in total weekly commercial sales.\nOnce again, our growth was broad-based as national and local accounts both grew over 25% in the quarter.\nOur execution of our commercial acceleration initiatives is delivering exceptional results as we focus on building a faster growing business.\nThe disciplined investments we are making are helping us grow share.\nAnd we're making tremendous progress in growing our business in this highly fragmented portion of the market.\nWe now have our commercial program in approximately 86% of our domestic stores, and we're focused on building our business with national, regional and local accounts.\nThis quarter, we opened 32 net new programs, finishing with 5,211 total programs.\nWe continue to leverage our DIY infrastructure and increase our share of wallet with existing customers.\nAs I said on last quarter's call, in fiscal year '22, commercial growth will lead the way, and our first quarter results reflect this dynamics.\nOur growth strategies continue to work as we continue to grow share.\nWe are confident in our strategies and execution and believe we will continue gaining share.\nDelivering quality parts, particularly with our Duralast brand, improved assortments, competitive pricing and providing exceptional service has enabled us to drive double-digit sales growth for the past six quarters.\nOur core initiatives are accelerating our growth and position us well in the marketplace.\nAnd notably, our mega hub strategy is driving strong performance and position us for an even brighter future in our commercial and retail businesses.\nLet me add a little more color on our progress.\nAs I mentioned last quarter, our mega hub strategy is giving us tremendous momentum, and we're doubling down.\nWe now have 62 mega hub locations and we expect to open approximately 16 more over the remainder of the fiscal year.\nAs a reminder, our mega hubs typically carry roughly 100,000 SKUs and drive tremendous sales lift inside the store box as well as serve as a fulfillment source for other stores.\nThe expansion of coverage and parts availability continues to deliver meaningful sales lift to both our commercial and DIY businesses, and we are testing greater density of mega hubs to drive even stronger sales results.\nBy leveraging sophisticated predictive analytics and machine learning, we are expanding our market reach driving closer proximity to our customers and improving our product availability and delivery times.\nThese assets continue to outperform our expectation, and we would expect to open significantly more than 110 locations we have previously targeted.\nIn commercial, we are building a meaningful competitive advantage and we continue to have confidence in our ability to create a faster growing business.\nOn the retail side of our business, our domestic retail business was up 9% and up 21.4% on a two year stack.\nThe business has been remarkably resilient as we have gained and maintained over three points of market share since the start of the pandemic.\nAs Bill mentioned, we saw an increase in traffic versus the prior year as our initiatives are continuing to drive tremendous sales and share growth along with a relentless focus on execution by our AutoZoners in our stores and distribution centers.\nThese initiatives include improving the customer shopping experience, expanding assortment, leveraging our hub and mega hub network and maintaining competitive pricing.\nThese dynamics along with favorable macro trends and miles driven, a growing car park and a challenging new and used car sales market for our customers have continue to fuel sales momentum in DIY.\nAnd the execution of our AutoZoners who are taking care of our customers gives us a key competitive advantage.\nI'm also very pleased with the competitive position of our DIY business and our outlook going forward.\nOur in-stock positions, while still below where we would like for them to be, are continuing to improve as our supply chain and merchandising teams have made great progress in a challenging supply chain environment.\nWe've been able to navigate supply and logistics constraints and have product available to meet our customers' needs.\nDIY has been a strong contributor to the growth of our company.\nAnd while comps are difficult because of our strong past performance, the fundamentals of our business remained strong.\nNow I'll say a few words regarding our international business.\nWe continue to be pleased with the progress we're making in Mexico and Brazil.\nDuring the quarter, we opened two new stores in Mexico to finish with 666 stores and one new store in Brazil to finish with 53.\nOn a constant currency basis, we saw accelerated sales growth in both countries.\nWe remain committed to our store opening schedules in both markets and expect both to be significant contributors to sales and earnings growth in the future.\nWith approximately 10% of our store base now outside the U.S. and our commitment to continue expansion in a disciplined way, international growth will be an attractive and meaningful contributor to AutoZone's future growth.\nNow let me spend a few minutes on the P&L and gross margins.\nFor the quarter, our gross margin was down 65 basis points, driven primarily by the accelerated growth in our commercial business where the shift in mix coupled with the investments in our initiatives drove margin pressure, but increased our gross profit dollars by 14.9%.\nI mentioned on last quarter's call that we expected to have our gross margin down in a similar range this quarter as we saw in the fourth quarter of last fiscal year where we were down 82 basis points.\nHowever, the team has been focused on driving margin improvements, primarily through pricing actions that offset inflation to drive a better than expected outcome.\nAs Bill mentioned earlier in the call, we are continuing to see cost inflation in certain product categories along with rising transportation and distribution center costs.\nWe continue to take pricing actions to offset inflation, and consistent with prior inflationary cycles, the industry pricing remains rational.\nWe would expect our margins in the second quarter to be down in a similar range as the first quarter.\nAll of the actions we are taking have resulted in us growing our DIY and DIFM businesses at a significantly faster rate than the overall market, and we're committed to capturing our fair share while improving our competitive positioning in a disciplined way.\nWe are laser focused on taking care of our existing customers, driving new customers to AutoZone and over time growing absolute gross profit dollars at a faster than historic rate.\nMoving to operating expenses.\nOur expenses were up 10.4% versus last year's Q1 as SG&A as a percentage of sales leverage of 171 basis points.\nThe leverage was driven primarily by our strong sales results.\nWhile our SG&A dollar growth rate has been higher than historical averages, we've been focused on maintaining high levels of customer service during a period of accelerated growth and taking care of our AutoZoners during these extraordinary high sales growth times.\nWe're also investing in IT to underpin our growth initiatives.\nAnd these investments will pay dividends and user experience, speed and productivity.\nWe will continue to be disciplined on SG&A growth as we move forward and manage expenses in line with sales growth over time.\nMoving to the rest of the P&L.\nEBIT for the quarter was $754 million, up 22.6% versus the prior year's quarter, driven by strong top-line growth.\nInterest expense for the quarter was $43.3 million, down 6.3% from Q1 a year ago as our debt outstanding at the end of the quarter was just under $5.3 billion versus just over $5.5 billion last year.\nWe're planning interest in the $45 million range for the second quarter of fiscal 2022 versus $46 million in last year's second quarter.\nFor the quarter, our tax rate was 21.9% versus 22.2% in last year's first quarter.\nThis quarter's rate benefited 159 basis points from stock options exercised, while last year it benefited 134 basis points.\nFor the second quarter of fiscal 2022, we suggest investors model us at approximately 23.6% before any assumption on credits due to stock option exercises.\nMoving to net income and EPS.\nNet income for the quarter was $555 million, up 25.5% versus last year's first quarter.\nOur diluted share count of 21.6 million was lower by 9.1% from last year's first quarter.\nThe combination of higher earnings and lower share count drove earnings per share for the quarter to $25.69, up 38.1% over the prior year's first quarter.\nNow let me talk about our cash flow.\nFor the first quarter, we generated approximately $800 million of operating cash flow.\nOur operating cash flow results continue to benefit from the strong sales and earnings previously discussed.\nYou should expect us to be an incredibly strong cash flow generator going forward.\nAnd we remain committed to returning meaningful amounts of cash to our shareholders.\nRegarding our balance sheet, we now have nearly $1 billion in cash on the balance sheet and our liquidity position remains strong.\nWe're also managing our inventory well, as our inventory per store was up 10% versus Q1 last year.\nTotal inventory increased 3% over the same period last year, driven by new stores.\nNet inventory, defined as merchandise inventories less accounts payable on a per store basis, was a negative $207,000 versus negative $99,000 last year and negative $203,000 last quarter.\nAs a result, accounts payable as a percent of gross inventory finished the quarter at 129.4% versus last year's Q1 of 114.1%.\nLastly, I'll spend a moment on capital allocation and our share repurchase program.\nWe repurchased $900 million of AutoZone's stock in the quarter.\nAs of the end of the fiscal quarter, we had approximately 20.7 million shares outstanding.\nAt quarter end, we had just over $1 billion remaining under our share buyback authorization and just under $700 million of excess cash.\nThe powerful free cash we've generated this quarter allowed us to buy back approximately 2.5% of the shares outstanding at the beginning of the quarter.\nWe bought back over 90% of the shares outstanding of our stock since our buy back inception in 1998, while investing in our existing assets and growing our business.\nWe remain committed to this disciplined capital allocation approach.\nWe expect to maintain our long-term leverage target in the 2.5 times area and generate powerful free cash flows that will enable us to invest in the business and return meaningful amounts of cash to shareholders.\nTo wrap up, we had another very strong quarter, highlighted by strong comp sales, which drove a 25.5% increase in net income and a 38.1% increase in EPS.\nWe are driving long-term shareholder value by investing in our growth initiatives, driving robust earnings in cash and returning excess cash to our shareholders.\nOur strategy is working.\nAnd I have tremendous confidence in our ability to drive significant and ongoing value for our shareholders.\nFiscal 2022 is off to a stellar start, and we continue to be focused on superior customer service and flawless execution.\nThat and our culture is what defines us.\nFrom July 4, 1979 when our first store opened in Forest City, Arkansas, customer service has been paramount to our success.\nAt the end of the day, it is why customers come back to us.\nWhether they are a seasoned professional or a new DIYer, they trust us.\nThey trust us to help them with their needs.\nWe continue to be bullish on our industry, and in particular, on our own opportunities for the new year.\nWe believe the macro backdrop is in our favor for the foreseeable future.\nOur customers across the Americas want to get out, get out and drive,.\nand we'll be there when they need helpful advice.\nOur team has worked diligently and collaboratively with our suppliers, and together they have done a very good job dealing with the enormous supply chain challenges that exist for all retailers.\nWhile we are not where we'd like to be on our store in-stock levels, we believe we are better than most retailers, and I think our results support that belief.\nFor the remainder of fiscal 2022, we are launching some very exciting initiatives.\nWe are focused on further growing share, but as always, doing so on a very profitable basis.\nWe will be announcing significant expansions to our supply chain to fuel the growth of our domestic and Mexico businesses.\nWe are also targeting to open 16 more new domestic mega hubs in the U.S. that will enhance our availability and support growth in our retail and commercial businesses.\nWe will also be leveraging our hub and mega hub strategy further in Mexico.\nFor the fiscal year, we will open more than 200 new stores throughout the Americas with notable acceleration in our Brazil business.\nThese capacity expansion investments reflect our bullishness on our industry and our growth prospects.\nWe are being disciplined yet aggressive.\nOur company, our customers, our leadership team, and in particular, our AutoZoners have greatly benefited from Mark's 19 years of remarkable service.\nMark spent the majority of his years with AutoZone leading our merchandising team and has played a critical role leading our supply chain and marketing teams in recent years.\nHe leaves our organization much, much better than he founded and leaves us well positioned for accelerated growth.\nI also want to reiterate how proud I am of our team across the board for their commitment to servicing our customers, and doing so in a very safe manner.\nFirst and foremost, our focus will be on keeping our AutoZoners and customers safe, while providing our customers with their automotive needs.\nAnd secondly, we must continuously challenge ourselves during these extraordinary times to position our company for even greater future success.\nWe know that investors will ultimately measure us by what our future cash flows look like three to five years from now.\nI continue to be bullish on our industry, and in particular, on AutoZone.\n", "role": "user" }, { "content": "autozone q1 same store sales increase 13.6%; earnings per share increases to $25.69.\nautozone 1st quarter same store sales increase 13.6%; earnings per share increases to $25.69.\nq1 earnings per share $25.69.\ndomestic same store sales, or sales for stores open at least one year, increased 13.6% for 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: autozone.com under the Investor Relations link.\nPlease click on quarterly earnings conference calls to see them.\nAs I have said previously throughout the pandemic, we could not deliver the kind of results we have without the outstanding performance of our entire team, especially our store and supply chain AutoZoners'.\nAs our sales volumes have remained at historic all time highs, our AutoZoners' continue to enthusiastically meet and embrace the challenge.\nAs we say they are going the extra mile for our customers and we owe them a tremendous debt of gratitude.\nAlso want to reiterate our highest priority remains being committed to keeping all of our customers and AutoZoners safe.\nWe will also share how inflation is affecting our costs and retails and how we think that will impact our business for the remainder of the calendar year.\nOn to our sales results.\nOur domestic same-store sales were an impressive 4.3% this quarter on top of last year's historic 21.8% growth.\nThis time last year, we had no vision, none of delivering a positive comp this quarter, but our team once again performed at an exceptionally high level.\nCongratulations again to AutoZoners everywhere.\nOur growth rates for retail and commercial were both strong with domestic commercial growth north of 21%.\nOur commercial business set a record this quarter with $1.2 billion in sales for the quarter, an incredible accomplishment.\nAdditionally, we reached a new milestone in commercial sales surpassing $3 billion for the year, finishing with over $3.3 billion in annual sales versus $2.7 billion in sales a year ago, an impressive 23% increase.\nWe set new records in annual sales volumes per store reaching $12,600 for the year, up from $10,600 just last year.\nWe continue to execute well in commercial and we couldn't be more proud of our team's recent success.\nI'm also very proud of our organization on our domestic DIY performance.\nWe ran a roughly flat comp this quarter after increasing well over 20% in last year's fourth quarter.\nWhile our DIY two-year stack comp decelerated some from the third quarter, we were expecting substantially more deceleration as we got further and further from the last round of stimulus back in March.\nWe were quite pleased with the stability of our two-year stack same-store sales.\nIn commercial on a two-year basis, our sales were very consistent with last year's performance -- sorry, last quarter's performance.\nNow let's focus on our sales cadence.\nThis quarter stretched from early May to the end of August.\nThe first eight weeks of the quarter, our comp was 3.1%.\nIn the last eight weeks, our comp averaged 5.5%.\nThe strength in the back half of the quarter was attributable to easier comparisons to last year.\nGiven the dynamics of the past 18 months, we like others who benefited from the lumpiness of the pandemic sales, believe it is more insightful to look at a two-year stack comp.\nFor Q4, our two year comp was 26%.\nOn a two-year basis, our cadence for each four week period of the quarter was 26.8%, 28.2%, 25.5% and 24%.\nOur two year comp sales trends were remarkably strong and fairly consistent across the quarter.\nRegarding whether we experience a noticeably warmer summer out West and in previous years, which helped our sales.\nBut we experienced a milder summer in the Midwest and Northeast, which drove our sales to underperform the chain there.\nOverall, weather impacts were neutral on our performance.\nRegarding the quarter's traffic versus ticket growth, our retail traffic was down roughly 4%, while our retail ticket was up 3%.\nThis was expected a stimulus stay at home orders and closures of big box retail automotive service departments that drove outsized traffic last year.\nOur commercial business saw the vast majority of growth come from transaction growth from new and existing customers.\nIt was encouraging for us to see sales trend remains strong this quarter and we like the momentum we are seeing in both domestic businesses heading into fiscal year '22.\nDuring the quarter, there were some geographic regions that did better than others as there always are.\nAcross both our retail and commercial customer basis, we saw the Midwest, Mid-Atlantic and Northeastern markets underperform, roughly 400 basis points in comp versus the remainder of the country.\nThe data suggests that we have actually gained some share in these markets.\nHowever, we believe the milder summer weather was a large contributor to our sales comp results there.\nAnd across the country in retail, our share trends remained strong despite the reopening of big box retailers automotive service departments that were closed this time last year.\nWe have been very pleased that we have retained the roughly 10% market share we gained in our retail sales floor business last year.\nOur number one priority continues to be the health, safety and well-being of our customers and AutoZoners.\nOn Q2's call, we shared that we would provide every AutoZoner with a $100 incentive once they completed their vaccination for COVID-19, that's every AutoZoner including part-timers.\nThis was the logical next step in our efforts to provide a safe working and shopping environment as we have with our ongoing PPP efforts.\nWe spent another $2.7 million in the fourth quarter reimbursing our AutoZoners for the vaccine.\nI continue to be inspired by our Board and management team's commitment to doing what is right, putting safety first, while caring deeply for our AutoZoners.\nWe are strongly encouraging our AutoZoners to get the vaccine as our culture and values of taking care of one another have been on display for the past 18 months.\nNow let's move into more specifics on our performance for the quarter.\nOur same-store sales were up 4.3% versus last year's fourth quarter.\nOur net income was $786 million and our earnings per share was $35.72 a share, 15.5% above last year's fourth quarter.\nOur domestic retail same-store sales were down slightly for the quarter, while our commercial business remains remarkably strong.\nCommercial total sales grew approximately 21%.\nWe averaged $74 million in weekly sales, which was approximately $14,400 in sales per program per week, which was easily an all-time record for us.\nThe initiatives that we have in place are meaningfully helping our commercial business.\nI'll remind you that this is a highly fragmented $75 billion market and we believe our product and service offerings provide us a tremendous opportunity to significantly grow sales and market share over time.\nNext I'll talk about trends across our merchandise categories, particularly in the retail business.\nOur sales floor categories continue to outpace the hard part categories with categories like wipers, fluids and lighting, all showing strength.\nOur hard parts business was in line with our expectations and ran roughly flat with last year.\nWe were especially pleased as last year our hard parts business was very strong, especially in categories like batteries.\nWe believe our hard parts business will continue to strengthen as our customers drive more.\nLet me also address [Technical Issues] we are seeing from inflation and pricing in our space.\nThis quarter we saw our retail sales impacted positively by about 2% year-over-year from inflation, while our cost of goods was basically flat.\nWe believe both numbers will be higher in the first quarter as cost increases in many merchandise categories work their way through the system.\nWe can see low single-digit inflation in retails as rising raw material, labor and transportation costs are impacting us and our suppliers.\nWe have no way to say how long it will last, but our industry has been disciplined about pricing for decades.\nWhile we continue to be encouraged with the current sales environment, it is difficult to forecast near-term sales.\nWhat I will say is, this past quarter sales were better than we expected and we exited the fiscal year with strong fundamentals in our business.\nFor FY '22, our sales performance will be led by the continued strength in our commercial business as we execute on our initiatives.\nBoth DIY and Commercial have gained considerable share that we are maintaining and we believe that we are in an industry that is positioned for solid growth for the long-term.\nWe will earn our fair share, and we hope to exceed expectations.\nIn addition, we continue to believe our products and services will be in high demand during more difficult economic times and this resiliency gives us significant confidence about our future prospects.\nAs we progress through the year, we will as always be transparent about what we are seeing and provide color on our markets and outlook as trends emerge.\nAs Bill mentioned, we had another great quarter.\nOur growth initiatives are continuing to deliver strong results and the efforts of our AutoZoners in our stores and distribution centers have enabled us to maintain strong results.\nFor the quarter, total auto parts sales, which includes our Domestic, Mexico and Brazil stores were $4.8 [Phonetic] billion, up 8%.\nAnd for the total year, our total auto parts sales were $14.4 billion, up 15.9%.\nNow let me give a little more color on sales and our growth initiatives.\nStarting with our commercial business, for the fourth quarter our domestic DIFM sales increased 21% to $1.2 billion and were up 31% on a two year stack basis.\nSales to our DIFM customers represented 24% of our total sales and our weekly sales per program were $14,400, up 18% as we averaged $74 million in total weekly commercial sales.\nOnce again, our growth was broad-based as national and local accounts all grew over 20% in the quarter.\nFor the full-year, our commercial sales grew 22.6% and 29% on a two-year stack basis.\nOur execution of our commercial acceleration initiatives is delivering exceptional results as we focus on building a faster growing business.\nThe disciplined investments we're making are helping us grow share and we're making tremendous progress and growing our business in this highly fragmented portion of the market.\nWe now have our commercial program in over 86% of our domestic stores and we're focused on building our business with national, regional and local accounts.\nThis quarter, we opened 72 net new programs, finishing with 5,179 total programs.\nWe continue to leverage our DIY infrastructure and increased our share of wallet with existing customers.\nIn fiscal year '22, commercial growth will lead the way.\nOur growth strategies continue to work as we continue to grow share.\nWe are confident in our strategies and execution, and believe we will continue to gain share.\nWe remain focused on delivering improvements in the quality of our parts, particularly with our Duralast brand, making improvements in our assortment, maintaining competitive pricing and staying committed to providing exceptional service.\nThese core focus areas have enabled us to drive double-digit sales growth for the past five quarters and positioned us well in the marketplace.\nAs we move forward, we're focused on our core initiatives that we believe will accelerate our sales even further.\nLet me highlight one key initiatives that is driving our performance and positioning us for an even brighter future in our commercial and retail businesses, and that's our mega hub strategy.\nOur mega hub strategy is giving us tremendous momentum and we are doubling down.\nWe now have 58 mega hub locations and we expect to open approximately 20 more over the next 12 months.\nAs a reminder, our mega hubs typically carry roughly 100,000 SKUs and drive tremendous sales lift inside the store box, as well as serve as the fulfillment source for other stores.\nThe expansion of coverage and parts availability continues to deliver a meaningful sales lift to both our commercial and DIY business, and we're testing greater density of mega hubs to drive even better sales results.\nWith this effort, we are leveraging sophisticated analytics to help us expand our market reach, give us closer proximity to our customers and improve our product availability and delivery times.\nI will remind you that our current mega hub strategy envisions our expansion to a total of 100 to 110 mega hubs.\nHowever, as these assets continue to outperform our expectations, we would expect to expand significantly further.\nWe are excited about this work and its ability to further accelerate our commercial growth.\nAll of our efforts are building meaningful competitive advantage and give us tremendous confidence in our ability to create a faster growing business.\nOn the retail side of our business, our domestic retail business was down just 40 basis points, but up 23.4% on a two year stack.\nFor the full-year, the retail business was up 11.2% and 18.7% on a two year stack basis.\nThe business has been remarkably resilient as we have gained and maintained nearly 300 points of market share since the start of the pandemic.\nWe are excited about the initiatives that drove the tremendous sales and share growth and the relentless focus on execution by our AutoZoners in our stores and distribution centers has been remarkable.\nWe are winning in the marketplace and the execution of our AutoZoners, who are taking care of our customers remains a key competitive advantage.\nAs we exit fiscal '21, I'm really pleased with the competitive positioning of our DIY business and our outlook going forward.\nThe work we have done on improving the customer shopping experience, expanding assortment, leveraging our hub and mega hub network and maintaining competitive pricing have led to tremendous results over the last two years.\nDIY has been a strong contributor to the growth of our company and while comps are difficult, because of our strong past performance, the fundamentals of our business have never been stronger.\nOur strategy and execution are delivering solid results.\nNow, I'll say a few words regarding our international business.\nWe continue to be pleased with the progress we're making in Mexico and Brazil.\nDuring the quarter, we opened 29 new stores in Mexico to finish with 664 stores and five new stores in Brazil to finish with 52.\nOn a constant currency basis, we saw accelerated sales growth in both countries.\nMost importantly, as those economies stabilize, we remain committed to our store opening schedules in both markets and expect both to be significant contributors to sales and earnings growth in the future.\nNow let me spend a few minutes on the P&L and gross margins.\nFor the quarter, our gross margin was down 82 basis points, driven primarily by the accelerated growth in our commercial business, where the shift in mix coupled with the investment in our initiatives drove margin pressure, but increased our gross profit dollars by 6.4%.\nI mentioned on last quarter's call that we expected to have our gross margin down in a similar range to our third quarter, where we were down 118 basis points.\nHowever, the team has been focused on driving margin improvements, primarily through pricing actions that offset inflation to drive a better-than-expected outcome.\nAs Bill mentioned earlier in the call, we're beginning to see cost inflation in certain product categories along with rising transportation costs.\nTo be clear, overall we have pricing power and consistent with prior inflationary cycles, we have been successful thus far at passing these higher cross through our retails.\nOverall, the industry pricing remains rational and we're pricing accordingly.\nAll of the actions we are taking have resulting [Phonetic] in us growing our DIY and DIFM businesses at a significantly faster rate than the overall market and we're committed to capturing our fair share, while improving our competitive positioning in a disciplined way.\nWe should expect our margins in the first quarter to be down in a similar range to the fourth quarter.\nWe are however focused on driving new customers to AutoZone and over time growing absolute gross profit dollars at a faster than historic rate in our total auto parts operating segment.\nMoving to operating expenses.\nOur expenses were, up 9.2% versus last year's Q4 as SG&A as a percentage of sales deleveraged 33 basis points.\nThe deleverage was primarily driven by higher payroll expenses to support our sales and customer service initiatives and higher IT investments that underpin our growth initiatives.\nThese dynamics were partially offset by lower pandemic-related expenses in the previous year.\nWhile our SG&A dollar growth rate has been higher than historical averages, we've been focused on maintaining high levels of customer service during a period of accelerated growth and taking care of our AutoZoners' during these difficult times.\nWe will continue to be disciplined on SG&A growth as we move forward and manage expenses in line with sales growth over time.\nMoving to the rest of the P&L, EBIT for the quarter was just over $1 billion, up 2.6% versus prior year's quarter, driven by strong topline growth.\nEBIT for fiscal year '21 was just over $2.9 billion, up 21.8% versus fiscal year '20.\nInterest expense for the quarter was just over $58 million, down 11.5% from Q4 a year ago as our debt outstanding at the end of the quarter was just under $5.3 billion versus just over $5.5 billion last year.\nWe're planning interest in the $46 million to $48 million range for the first quarter of fiscal 2022 versus $46 million in last year's first quarter.\nFor the quarter, our tax rate was 20.3% versus 22.3% in last year's fourth quarter.\nThis quarter's rate benefited 215 basis points from stock options exercised, while last year it benefited 35 basis points.\nFor the first quarter of 2022, we suggest investors model us at approximately 23.6% before any exemptions on credits due to stock option exercises.\nMoving to net income and EPS.\nNet income for the quarter was $786 million, up 6.1% versus last year's fourth quarter.\nOur diluted share count of 22 million was lower by 8.1% from last year's fourth quarter.\nThe combination of higher earnings and lower share count drove earnings per share for the quarter to $35.72, up 15.5% over the prior year's fourth quarter.\nNet income per share for fiscal year '21 was $95.19, up a remarkable 32.3%, reflecting our outstanding topline performance and lower share count.\nNow let me talk about our cash flow.\nFor the fourth quarter, we generated $1.3 billion of operating cash.\nOur operating cash flow results continue to benefit from strong sales and earnings previously discussed.\nYou should expect us to be an incredibly strong cash flow generator going forward, and we remain committed to returning meaningful amounts of cash to our shareholders.\nRegarding our balance sheet, we now have nearly $1.2 billion in cash on the balance sheet and our liquidity position remains strong.\nWe are also managing our inventory well, as our inventory per store growth was up four-tenths of a percent versus Q4 last year.\nTotal inventory increased 3.7% over the same period last year, driven by new stores.\nNet inventory defined as merchandise inventories less accounts payable on a per store basis was a negative $203,000 versus negative $104,000 last year and negative $167,000 last quarter.\nAs a result, accounts payable as a percent of gross inventory finished the quarter at 129.6% versus last year's Q4 of 115.3%.\nLastly, I'll spend a moment on capital allocation and our share repurchase program.\nWe repurchased $900 million of AutoZone stock in the quarter.\nAs of the end of the fiscal quarter, we had approximately 21.1 million shares outstanding.\nAt quarter end, we had just over $418 million remaining under our share buyback authorization and over $900 million of excess cash.\nFor the full-year, we bought back $3.4 billion of stock or approximately 2.6 million shares.\nThe powerful free cash flow we have generated this year combined with excess cash carried over from last year has enabled us to buyback over 11% of our shares outstanding at the beginning of the year.\nWe have bought back nearly 90% of the shares outstanding of our stock since our buyback inception in 1998, while investing in our existing assets and growing our business.\nWe remain committed to this disciplined capital allocation approach where we expect to have powerful free cash flows that will enable us to invest in the business and return meaningful amounts of cash to shareholders.\nSo, to wrap up, we had another very strong quarter highlighted by strong comp sales, which drove a 6.1% increase in net income and a 15.5% increase in EPS.\nWe are driving long-term shareholder value by investing in our growth initiatives driving robust earnings and cash and returning excess cash to our shareholders.\nOur strategy is working and I have tremendous confidence in our ability to drive significant and ongoing value for our shareholder.\nAlso congratulations on your one-year AutoZone anniversary that you celebrated last week.\nAs we start a new fiscal year, I'd like to take a moment to discuss our operating theme for the new year.\nIt is go the extra mile, and we will be hosting our Annual National Sales Meeting here in Memphis next week to formally announce this theme.\nBeing in person for the first time in two years, yes, we are going to host our AutoZoners, who are vaccinated and wearing mask in person, and we are going to celebrate all they have accomplished over the past two years.\nI can't tell you how excited I am about next week.\n2022 will again be focused on superior customer service and flawless execution.\nIn fiscal '22, we are launching some very exciting initiatives.\nWe will be announcing some significant expansions to our supply chain to fuel the growth of our Domestic and Mexico businesses.\nWe are also targeting to open 20 new domestic mega hubs in the US that will enhance our ability and support growth in our retail and commercial businesses.\nWe will open approximately 200 new stores throughout the Americas with notable acceleration in our Brazil business.\nThese capacity expansion investments reflect our bullishness on our industry and our own growth prospects.\nWe are being disciplined, yet we are being aggressive.\nLastly, I want to reiterate how proud I am of our team across the Board, for their commitment to servicing our customers and doing so in a very safe manner.\nAt the start of the pandemic last year, we could never have guessed the positive impact it would had on our sales.\nFirst and foremost, our focus will be on keeping our AutoZoners and customers safe, while providing our customers with their automotive needs.\nAnd secondly, we must continuously challenge ourselves during these extraordinary times to position our company for even greater future success.\nI continue to be bullish on our industry and in particular on AutoZone.\n", "role": "user" }, { "content": "autozone q4 same store sales up 4.3%; q4 earnings per share of $35.72.\nautozone 4th quarter same store sales increase 4.3%.\n4th quarter earnings per share increases to $35.72.\nq4 earnings per share $35.72.\ndomestic same store sales, or sales for stores open at least one year, increased 4.3% for quarter.\nquarter -end inventory increased 3.7% over same period last 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: Joining the call today are Tom Ferguson, Chief Executive Officer; Philip Schlom, Chief Financial Officer; and David Nark, Senior Vice President, Marketing Communications and IR.\nThose risks and uncertainties include, but are not limited to, changes in customer demand and response to products and services offered by the company, including demand by the power generation markets, electrical transmission and distribution markets, the industrial markets and the metal coatings markets; prices and raw material costs, including zinc and natural gas, which are used in the hot-dip galvanizing process; changes in the political stability and economic conditions of the various markets that AZZ serves, foreign and domestic; customer-requested delays of shipments; acquisition opportunities; currency exchange rates; adequate financing and availability of experienced management and employees to implement the company's growth strategies.\nIn addition, AZZ's customers and its operations could potentially be adversely impacted by the ongoing COVID-19 pandemic.\nWe continue to gain momentum in the second quarter and completed our fourth consecutive quarter of solid performance after the disruptions from COVID in the first half of last year.\nTheir perseverance through the past 19 months of COVID-19 turmoil has allowed AZZ to obtain the results we are now reporting.\nOverall sales of $216 million improved 6.4% versus the prior year, or 8% when adjusted for the divestiture of SMS. Metal Coatings turned in another excellent quarter with sales up 10.7%, almost $130 million, and Infrastructure Solutions flat at about $87 million.\nSales were somewhat impacted by labor constraints and COVID-19-related material shortages in some businesses.\nI will get into the details of this as we go along.\nWe are pleased to have completed another strong quarter performance.\nWe continue to generate strong cash flow during the second quarter, while also returning capital to our shareholders.\nWe generated net income of $18.9 million and earnings per share of $0.76 per diluted share, reflecting the resiliency of our businesses and the dedication of our people.\nOur businesses leverage the realignment actions taken last year to improve profitability while maintaining their focus on providing outstanding quality and service to our customers.\nWe also benefited from lower interest expense while incurring a 20.4% tax rate for the quarter.\nIn line with our strategic commitment to value creation, we've repurchased over 290,000 shares for $15 million and distributed $4.2 million in dividends.\nIn Metal Coatings, which represented 60% of our sales in the second quarter, we achieved 24.4% operating margins on sales of $130 million.\nThis resulted in operating income being up over 17% from the previous year.\nThe margin improvement was primarily due to driving operating efficiencies and productivity, while realizing improved pricing in the face of rising zinc, labor and energy costs.\nWhile we have several active acquisition discussions underway, we were slowed somewhat due to the uptick in COVID Delta variant cases that reduced some travel.\nOur Metal Coatings team continues to demonstrate their ability to perform and deliver great results while managing labor shortages and the increasing zinc costs.\nOur Infrastructure Solutions segment demonstrated continued profitability improvement through their seasonally slow second quarter.\nWe were up about 4.3% when considering the impact of the SMS divestiture.\nThe team delivered operating income of $7 million or 130%, up dramatically versus the prior year.\nThe segment benefited from its realignment actions from last year but did face some labor constraints and material delays.\nWe are focused on strategic selling initiatives and are well positioned to deliver a strong fiscal year 2022.\nFor fiscal year 2022, while COVID continues to generate some uncertainty in many sectors, given our strong performance in the first half and due to seeing more opportunities than risk the balance of this year, we are tightening and raising our guidance.\nWe anticipate sales to be in the range of $865 million to $925 million and earnings per share at $2.90 to $3.20.\nThis excludes any acquisitions or divestitures.\nMetal Coatings is continuing focus on sales growth, including leveraging our spin galvanizing operations at several sites, operational execution and customer service as labor and operating expenses increased due to inflation.\nOur Infrastructure Solutions segment has seen more normalized business levels and entered the third quarter with some momentum in bookings activity, particularly in electrical.\nOur WSI business is seeing good results from the expanded Poland facility, although internationally the business continues to experience some intermittent project delays due to COVID outbreaks at certain customer sites.\nThe electrical platform is focused on operational execution and growing its e-house and switchgear businesses.\nWe anticipate continuing to benefit from low interest rates.\nWhile we expect solid performance in the third quarter due to the continued COVID impact on our international markets, we do not anticipate quite as strong of a performance as we experienced in this past first quarter.\nWhile the fall turnaround activity is good, we're seeing several projects that are already likely to stretch into the fourth quarter.\nI will note that we are already seeing a lot of activity lining up for the spring season.\nFor fiscal year 2022, AZZ will continue to execute on our strategic growth objectives to drive shareholder value.\nOur commitment to superior customer service is unwavering.\nOur ability to generate strong cash flow is based on initiatives that drive operational excellence, manage costs, ensure pricing discipline and emphasis on receivables collection within our operating platforms.\nWe are confident that our businesses remain vital to improving and sustaining infrastructure.\nSo we are actively working to position our core businesses to provide sustainable profitability and regardless of whether we see any infrastructure legislation.\nBookings or incoming orders in the second quarter were $231.8 million, a $23.2 million or a 11.1% increase over the second quarter of the prior year.\nOur bookings to sales ratio increased to 107% as we saw improving market conditions across both the Metal Coatings and Infrastructure Solutions segments.\nAs Tom previously mentioned, second quarter fiscal year 2022 sales of $216.4 million were $13.1 million or 6.4% higher than the prior year second quarter sales of $203.4 million.\nWe generated gross profit of $55.1 million compared with gross profit of $46.1 million in the second quarter of the prior year.\nOur gross margin was 25.5% for the quarter, which was a 280-basis-point improvement compared with a gross margin of 22.7% in the second quarter of last year, as business in both segments continues to recover from the pandemic lows witnessed this time last year.\nOperating income for the quarter was $26.5 million compared with $652,000 in the second quarter of the prior year.\nDuring the prior year second quarter, we recorded restructuring and impairment charges of $18.7 million.\nWe believe the difficult decisions and actions management took last year are strongly impacting our financial results in both of our segments this fiscal year.\nWe believe we have established a strong foundation for future growth.\nOur earnings per share of $0.76 was $0.26 higher than last year's second quarter adjusted earnings per share of $0.50 and $0.83 above the reported loss of $0.07.\nThe prior-year second quarter loss was significantly impacted by the impairment and restructuring charges and impacts of the pandemic as previously discussed.\nSecond quarter EBITDA for fiscal year 2022 was $36.6 million compared with adjusted EBITDA reported in the second quarter of fiscal year 2021 of $30.7 million, an increase of $5.9 million or 19.1%.\nYear-to-date sales through the second quarter of fiscal year 2022 were $446.3 million, a 7.1% increase from last year's second quarter year-to-date sales of $416.7 million.\nExcluding the impact of the SMS divestiture, sales would have increased 11% year-over-year.\nFiscal year 2022 year-to-date net income of $41.3 million was $22.8 million or 122.8% above the prior year-to-date adjusted net income of $18.5 million.\nPrior year-to-date net income as reported was $3.8 million.\nYear-to-date earnings per share of $1.64 was 131% higher than the prior year-to-date adjusted earnings per share of $0.71.\nTurning to our liquidity and cash flows.\nWe continue to maintain a strong balance sheet and return capital to our shareholders.\nThe following are our capital allocation highlights: During the quarter, we renegotiated and renewed our five-year credit facility, retaining our facility at $600 million in borrowing capacity, supported by a strong group of banks.\nGross outstanding debt as of the second quarter is $183 million, $4 million above the $179 million in outstanding debt at the end of the second quarter of the prior year, which reflects increased share purchase activity as we have purchased nearly 70 million in outstanding shares during the last year.\nYear-to-date, we have deployed $13.1 million in capital investments and we anticipate to still make capital investments of roughly $35 million this year.\nSupply chain constraints have impacted and delayed to some extent the timing and spending of our planned capital expenditures.\nAs Tom noted, we repurchased $15 million in outstanding stock during the quarter and $21.2 million on a year-to-date basis.\nWe declared and continued our prior history of making quarterly dividend payments.\nFor the first half of the year, cash flow from operations was $37.8 million, up $5.6 million or 17.4% from prior year as a result of strong sales and solid net income generated by the business.\nFree cash flow was $23.2 million, $10.3 million or 79.8% above the $12.9 million realized in the prior year.\nWe continue to execute on several merger and acquisition opportunities and expect to make announcements regarding the same before the end of our fiscal year.\nHere are some key indicators that we are paying particular attention to.\nFor the Metal Coatings segment's galvanizing business, we are carefully tracking fabrication and construction activity, material and labor cost inflation and progress of infrastructure legislation.\nFor the Surface Technologies platform, we are primarily focused on expanding our customer base and benefiting from improved operational performance.\nFor Infrastructure Solutions, domestic turnaround and outage activity has returned to a normal level.\nThe fall season is currently looking to be good albeit somewhat muted as noted earlier, due to international customers being impacted by COVID-related issues.\nThe Electrical platform is benefiting from transmission distribution, utility spending and growing data center and battery energy storage activity.\nIn regards to the strategic review of Infrastructure Solutions, we have further narrowed the number of options we are pursuing and are increasingly confident that AZZ can and will become predominately a focused metal coatings company.\nAs we have noted previously, we are having regular meetings with the Board.\nBut due to the sensitivity of ongoing discussions and confidentiality agreements, we cannot be more specific at this time, but realize we are rapidly approaching one-year anniversary of our announcement.\nWe remain committed to our growth strategy around Metal Coatings and achieving 21% to 23% operating margins with galvanizing performance being quite steady, while we continue to improve Surface Technologies.\nWe will remain acquisitive, particularly in Metal Coatings.\nFor Infrastructure Solutions, we are focused on profitability and cash flow.\nOur AIS business units should benefit from more normalized turnaround and outage seasons and a solid market for T&D, utility and data center, e-houses and switchgear.\nOur corporate office is actively engaged in several merger and acquisition projects, while continuing to maintain tight accounting controls and providing support to the field for acquiring and retaining talent.\nAnd finally, we will soon be issuing our first ESG report.\nSo please stay tuned.\n", "role": "user" }, { "content": "azz inc q2 earnings per share of $0.76.\ncompname reports results for q2 of fiscal year 2022; generates earnings per share of $0.76 and revises guidance.\nq2 sales rose 6.4 percent to $216.4 million.\nazz - sees annual sales to be in the range of $865 million to $925 million.\nsees earnings per share to be in the range of $2.90 to $3.20 per diluted share for fiscal year 2022.\nqtrly sales of $216.4 million, up 6.4%.\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: Joining the call today are Tom Ferguson, Chief Executive Officer; Philip Schlom, Chief Financial Officer; and David Nark, Senior Vice President, Marketing, Communications and IR.\nThose risks and uncertainties include, but are not limited to, changes in customer demand and response to products and services offered by the company, including demand by the power generation markets, electrical transmission and distribution markets, the industrial markets and the metal coatings markets; prices and raw material costs, including zinc and natural gas, which are used in the hot-dip galvanizing process; changes in the political stability and economic conditions of the various markets that AZZ serves, foreign and domestic; customer-requested delays of shipments; acquisition opportunities; currency exchange rates; adequate financing; and availability of experienced management and employees to implement the company's growth strategies.\nIn addition, AZZ's customers and its operations could be potentially adversely impacted by the ongoing COVID-19 pandemic.\nWhile we continue to be impacted by COVID-19, our markets are stabilizing and our businesses have adapted to the new normal way of operating, which encompasses a variety of challenges that we have had to overcome.\nWhile we have had an uptick in COVID cases, all of our plants have remained open with normal production.\nThe collective efforts of our folks generated consolidated sales of $227 million for the third quarter, split almost equally between our Metal Coatings and Infrastructure Solutions segments.\nWe had sequential improvement in operating performance, and we have returned over $44 million of capital to shareholders in the form of cash dividends and share repurchases through the third quarter of this year.\nAlso, we have made good progress on our Board-led strategic review that we announced earlier.\nWhile sales were down 22% from Q3 of last year, our realignment activities and operational performance generated net income of $19.7 million, down about 10% from the same period of the prior year.\nThis resulted in earnings per share of $0.76 per diluted share, or $0.80 on an adjusted basis.\nOur Metal Coatings business continues to execute strongly while navigating the economic uncertainty resulting from COVID.\nHot-dip galvanizing sales were down 8.8% from the same quarter last year, while Surface Technologies was down more due to the nature of their customer base being more impacted by COVID.\nWithin our Infrastructure Solutions segment, third quarter sales results improved sequentially, even with a muted fall refining turnaround season.\nSegment results were below the same quarter of the prior year due to the protracted weak demand for refined oil products, as well as lower international sales, primarily from China.\nAs we previously communicated earlier this year due to shifting industry and customer dynamics and the protracted impact of the COVID-19 pandemic, we began to take aggressive steps to accelerate the strategic restructure of our portfolio of businesses with the goal of becoming predominantly a coatings business.\nOur actions during the quarter included recording a loss on the sale of SMS of $1.9 million and initiating a comprehensive Board-led review of our businesses with the assistance of leading independent financial, legal and tax advisors.\nAs I mentioned, our review of the Infrastructure Solutions businesses and associated assets, and the exploration of other capital allocation opportunities to maximize shareholder value is ongoing and I am pleased with the progress the team has made during the quarter.\nFinally, given the share repurchases currently and attractive use of our capital, we repurchased over 652,000 shares in the quarter, which brings our total for the year to over 850,000 shares.\nWhile our Metal Coatings segment had lower sales in the third quarter of the prior year, they were able to generate higher operating income and improved operating margins to 24.8%.\nSurface Technology sales were still way off at some plants, primarily due to how badly COVID impacted demand for several of their largest customers.\nHowever, during the quarter, Surface Technologies began to reopen powder coating lines in two Texas plants that had previously been idled earlier in the year.\nI am particularly pleased with how the Metal Coatings team continues to drive value through outstanding customer service and operational performance while maintaining market-level pricing as they benefited from lower zinc costs during the quarter.\nWe remain committed to our strategic growth plan for this segment, as evidenced by last week's announcement regarding the acquisition of Acme Galvanizing in Milwaukee, Wisconsin.\nAlthough COVID has slowed our normal pace of acquisitions, I am grateful that the team was able to close this acquisition right after the holidays.\nAs we previously indicated on our second quarter earnings call, the third quarter turned out sequentially stronger, but turnaround activity remained constrained by COVID travel restrictions and continued low demand for refinery products.\nOur Infrastructure Solutions segment's third quarter fiscal 2021 sales decreased by 31.5% to $111 million.\nThis resulted in operating income of $8.7 million as compared to $17.4 million in Q3 a year ago.\nAs I mentioned previously, the decline in sales was a result of muted refinery turnaround activity in the quarter, particularly in the U.S., as well as lower China high-voltage bus shipments and decreased demand for some of our oil patch related products and services.\nWSI's domestic and foreign facilities remained open and working and crews deployed on several smaller projects.\nAll of the electrical platforms operations also remained open throughout the quarter, as they effectively managed the uptick in COVID cases.\nDue to the prolonged uncertainty associated with COVID pandemic on many of our end markets, we will not provide an update to our previously suspended fiscal 2021 earnings and sales guidance range.\nHowever, we believe our fourth quarter will be seasonally lower than the third quarter, but we should generate improved earnings versus the fourth quarter adjusted earnings of last year.\nOur low debt level combined with our consistent ability to generate strong cash flow provides us with the ability to effectively manage our debt and liquidity throughout the remainder of fiscal year 2021 and beyond.\nWe expect to establish guidance for normal cadence for the fiscal 2022, as we wrap up our annual budgeting process and review it at our upcoming Board meetings.\nOur Metal Coatings business is operating at a fairly normal level despite some continued restrictions and disruptions in a few of the cities and states we're operating in.\nWe are confident though that our business remains vital to improving and sustaining infrastructure.\nSo, we will use the remainder of our fiscal year to position our core businesses to emerge stronger and better equipped to provide sustainable profitability growth long into the future.\nFor the third quarter of fiscal year 2021, we reported sales, as Tom had noted, of $226.6 million, a $64.5 million decrease or 22.2% lower than the third quarter of the prior year.\nSales were down primarily as a result of lower sales in the company's Infrastructure, Industrial platform as a result of the pandemic and lost aggregate sales from divested entities over the past year.\nNet income for the third quarter of fiscal '21 was $19.7 million, a decrease of $2.3 million or 10.6% below the prior year third quarter.\nDiluted earnings per share of $0.76 per share declined 9.5% compared to the $0.84 per share in the prior year third quarter.\nDespite the lower sales, third quarter fiscal 2021 gross margin improved 100 basis points to 24.1% on a year-over-year basis and was driven by continued strong margin performance within the Metal Coatings segment.\nOperating margins of 12.3% of sales increased 80 basis points compared to 11.5% of sales in the prior year.\nOperating income for the third quarter of fiscal 2021 decreased 16.6% to $27.9 million from $33.4 million in the prior year third quarter.\nThird quarter EBITDA of $39.6 million decreased 15.4%, compared to $46.8 million in EBITDA in last year's third quarter.\nAs for the year-to-date results, through the third quarter of fiscal '21, we reported year-to-date sales of $643.3 million, 21.2% below the $816.5 million in sales in the same period last year.\nYear-to-date net income for the third quarter was $23.5 million, a decrease of $35.4 million or 60.2% from the same period last year.\nYear-to-date net income, as adjusted for the restructuring and impairment charges primarily incurred earlier in the year was $39 million, which was $19.9 million or 33.8% lower than the comparable prior year results.\nYear-to-date reported diluted earnings per share declined 59.8% to $0.90 a share as compared to $2.24 per share for the same period last year, primarily driven by restructuring and impairment charges, as well as softer markets and travel restrictions resulting from the pandemic, mostly in our Infrastructure Solutions segment.\nOn an adjusted basis, year-to-date 2021 diluted earnings per share was $1.49 per share, a reduction of 33.5% from the prior year.\nOur fiscal year 2021 year-to-date gross margin of 22.2% declined 60 basis points from a gross margin of 22.8% from the prior year.\nYear-to-date reported operating profit of $42.8 million was $43.8 million or 50.5% lower than the $86.6 million reported for the same period last year.\nYear-to-date reported operating margin of 6.7% decreased 390 basis points compared to 10.6% last year.\nOn a year-to-date basis, excluding the impact of the $20.3 million of restructuring and impairment charges, operating margins were 9.8% or 80 basis points below prior year.\nI'll now turn to discussion regarding our liquidity and capital allocation.\nOn a year-to-date basis, our net cash provided by operating activities of $59.4 million declined $12.7 million or 17.6% from the comparable period in the prior year, primarily the impact of lower year-to-date net income.\nDuring the third quarter of fiscal 2021, as Tom had noted, we repurchased 652,000 shares of our common stock at an average price of $37.66.\nOn a year-to-date basis, we have repurchased 852,000 million [phonetic] shares at an average price of $36.31 per share.\nInvestments in capital equipment to support our business were $8.6 million for the third quarter and $27.9 million on a year-to-date basis, which are in line with our expectations of spending roughly $35 million for the year.\nAs of the end of our third quarter of fiscal '21, our existing debt of $182 million is down $20.9 million from the end of the year, as we continue to effectively manage our balance sheet.\nI will close by sharing with you some key indicators that we continue to monitor.\nFor the Metal Coatings segment, fabrication activity will remain solid during the balance of our fourth quarter and we are off to a reasonably good start in December.\nWithin our galvanizing business, we are closely tracking steel fabrication and construction activity.\nZinc costs in our kettles are relatively stable, but we anticipate increases in zinc costs in fiscal 2022 as zinc prices on the LME have been rising for a while now.\nThe Acme Galvanizing team is being quickly integrated into our existing operating network, bringing our total hot-dip galvanizing locations to a market-leading 40 sites in North America, in spite of recently closing two Gulf Coast locations.\nFor Surface Technologies, we are primarily focused on growing sales with both existing and new customers and driving operational process improvements.\nWithin the Industrial platform of the Infrastructure Solutions segment, we continue to carefully monitor the COVID situation in the states with large refining capacities.\nCurrently, we still are experiencing travel restrictions in some countries.\nFor the Electrical platform of the Infrastructure Solutions segment, we are carefully tracking proposal activity and experienced solid bookings in December.\nWe will continue to focus on growing the backlog for many of our business units so that we enter fiscal year 2022 in good shape.\nFinally, for corporate, we have strong cash management processes and have further focused our oversight on cash flow indicators and customer credit.\nCurrently, we have not experienced any slowdown in customer payments.\nPost-COVID crisis, we remain committed to our growth strategy around Metal Coatings and achieving 21% to 23% operating margins, including an increased contribution from Surface Technologies.\nWe believe galvanizing would tend to run to the high end, if not above the 23%, while Surface Technologies is going to have to rebuild this margin profile as customer demand grows.\nFor Infrastructure Solutions, we will continue to focus on improving operating margins while we complete the comprehensive strategic evaluation of this segment.\nWe feel quite confident, in spite of COVID and other disruptions, about the actions we have already taken and the restructuring activities that are now under way.\nWe intend to focus on completing the Board-led review of our businesses and finish this fiscal year well positioned to enter fiscal 2022 with momentum.\nFinally, we will remain active in the area of M&A, primarily in Metal Coatings, and we'll aggressively seek activities that support our strategic growth plan.\nWhile pandemic-related deal travel was still somewhat restricted during the third quarter, we are seeing improved travel conditions and have an active portfolio of opportunities that we will continue to pursue.\n", "role": "user" }, { "content": "compname reports qtrly earnings per share of $0.76.\nazz inc - qtrly earnings per share of $0.76.\nazz inc - qtrly sales of $226.6 million, increased sequentially by 11.4% from q2.\nazz inc - board authorized a new $100 million share repurchase program.\nazz inc - qtrly adjusted earnings per share $0.80.\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 the call today are Tom Ferguson, chief executive officer; Philip Schlom, chief financial officer; and David Nark, senior vice president, marketing, communications, and IR.\nThose risks and uncertainties include, but are not limited, to, changes in customer demand and response to products and services offered by the company, including demand by the power generation markets, electrical transmission and distribution markets, the industrial markets and the metal coatings markets; prices and raw material costs, including zinc and natural gas, which are used in the hot-dip galvanizing process; changes in the political stability and economic conditions of the various markets that AZZ serves, foreign and domestic; customer-requested delays of shipments; acquisition opportunities; currency exchange rates; adequate financing; and availability of experienced management and employees to implement the company's growth strategies.\nIn addition, AZZ customers and its operations could potentially be adversely impacted by the ongoing COVID pandemic.\nWe continue to gain momentum in the third quarter and completed our fifth consecutive quarter of solid performance after the disruption from COVID in the first half of last year.\nTheir perseverance continues to allow us to achieve these kinds of results.\nConsolidated sales of almost $232 million improved 2.3% versus the prior year or 4.1% when adjusted for the divestiture of SMS last year.\nmetal coatings generated another excellent quarter with sales up 15.4% to over $133 million and infrastructure solutions sales down 11% at about $99 million.\nWe are pleased to have completed another strong quarter of performance.\nWe continue to generate solid cash flow and returned capital to our shareholders during the third quarter.\nWe generated net income of over $21 million and earnings per share of $0.85 per diluted share, reflecting the resiliency of our businesses and the dedication of our people.\nOur businesses leverage the realignment actions taken last year to improve profitability while maintaining their focus on providing outstanding quality and service to our customers.\nWe also benefited from lower interest expense and a lower tax rate of 22% for the third quarter.\nIn line with our strategic commitment to value creation, we repurchased over 148,000 shares for $7.6 million and distributed $4.2 million in dividends.\nIn metal coatings we achieved 24.5% in operating margins on sales of $133 million.\nThis resulted in operating income being up over 14% from the previous year.\nThe margin improvement was primarily due to driving operating efficiencies and productivity, while realizing improved pricing in the face of rapidly rising zinc, labor and energy costs.\nIn spite of the ongoing challenges of COVID, our team succeeded in completing the acquisition of Steel Creek Galvanizing in South Carolina.\nThis site was completed in 2019 and includes a lot of automation, making it the newest and most modern in our fleet.\nOur team is excited about the growth opportunity it presents in a region we were not present in.\nOur metal coatings team continues to demonstrate their ability to perform and deliver great results while managing labor shortages and the increasing costs.\nOur infrastructure solutions segment demonstrated continued profitability improvement in the quarter, leveraging the cost reduction actions that they took last year.\nWe were down about 8% when considering the impact of the SMS divestiture.\nThe infrastructure solutions segment delivered operating income of over $9 million, with operating margins improved 140 basis points to 9.3% as compared to the prior year.\nThe segment did face growing labor constraints and delays in materials due to supply chain disruptions resulting from COVID, including components from customers.\nOne WSI international project was significantly impacted by COVID outbreak, which was managed well, that resulted in lower profitability.\nWe remain focused on strategic selling initiatives across both the electrical and industrial platforms and we believe we are well positioned to finish this fiscal year well.\nFor fiscal year 2022, while COVID continues to generate some uncertainty in many sectors given our strong performance in the first three quarters and due to seeing more opportunities than risks the balance of this year, we are tightening our earnings per share guidance.\nWe anticipate annual sales to be in the range of $865 million to $925 million and earnings per share at $3 to $3.20 per diluted share.\nWe do not anticipate any material impact in the fourth quarter from the recently announced acquisition as we're focused on integration these first couple of months.\nMetal coatings is continuing to focus on sales growth, including leveraging our spin galvanizing operations at several sites, operational execution and customer service as labor and operating expenses increase due to inflation.\nOur infrastructure solutions segment is cautiously optimistic as it enters the fourth quarter with some momentum in bookings activity, particularly in the electrical platform.\nOur WSI business is seeing good results from the expanded Poland facility, although internationally, the business continues to experience some intermittent project delays due to COVID outbreaks at some customer sites.\nAs we noted on the last call, some of the fall season projects will now be completed in the fourth quarter.\nWe also have some spring projects that look to kick off a little earlier than normal.\nThe electrical platform is focused on operational execution and growing its e-house and switchgear businesses.\nDue to the project extensions from the third quarter, we expect a better-than-normal performance in the fourth quarter.\nI will note that our outlook for the spring turnaround season is quite good based upon the level of quotations, but we remain cautious due to the ongoing battles with COVID outbreaks at customer sites.\nFor the balance of fiscal year 2022, AZZ will continue to execute on our strategic growth initiatives to drive shareholder value while positioning for a strong start to fiscal 2023.\nOur commitment to superior customer service is unwavering.\nOur ability to generate strong cash flow is based on initiatives that drive operational excellence, tightly manage costs, ensure pricing discipline and emphasis on receivables collection within our operating platforms.\nWe are confident that our businesses remain vital to improving and sustaining infrastructure, so we continue to drive profitable growth and enhance shareholder value.\nBookings or incoming orders in the third quarter were $248 million, a $53.6 million or 28% increase over the third quarter of the prior year.\nOur bookings-to-sale ratio remained consistent with last quarter, 107% and well above the book-to-sales ratio of 0.86 for the same quarter last year.\nAs Tom had alluded to, we have seen consistently strong markets for our metal coatings segment and continue to experience improving markets in our infrastructure solutions segment.\nThird quarter fiscal 2022 sales were $231.7 million, $5.1 million or 2.3% higher than the prior-year third quarter sales of $226.6 million.\nYear over year, for the third quarter, metal coatings segment sales were up $17.8 million and were partially offset by lower sales in the infrastructure solutions segment, mostly in the industrial segment where we took significant actions to restructure the business in the middle of last year.\nThe business generated gross profit of $57 million compared with gross profit of $54.7 million in the third quarter of the prior year.\nOur gross margin was 24.6% for the third quarter compared with gross margin of 24.1% in the third quarter of last year as business in both the segments continue to improve.\nOperating income for the quarter was $30.1 million compared with $27.9 million in the third quarter of the prior year, a $2.2 million or 8% improvement year over year.\nOur earnings per share was $0.85 or $0.09 higher than last year's third quarter reported earnings per share of $0.76 and adjusted earnings per share of $0.80 in the prior-year third quarter.\nThe prior year was impacted by our loss on the divestiture of southern mechanical services or SMS. Third quarter EBITDA of $39.8 million was flat compared with EBITDA in the third quarter of the prior year.\nYear-to-date sales through the third quarter of fiscal 2022 were $678 million, a 5.4% increase from last year's third quarter, year-to-date sales -- from last year's third quarter year-to-date sales of $643 million.\nExcluding the impact of SMS divestitures, sales would have increased 8.6% year over year on a pro forma basis.\nFiscal 2022 year-to-date net income of $62.4 million was $38.9 million or 166% above the prior year-to-date reported net income of $23.5 million and $23.1 million or 58.9% above the adjusted net income from the prior year-to-date period, wherein the company had recorded impairment and restructuring charges net of tax of $15.8 million.\nEPS on a year-to-date diluted share basis is $2.48 compared with $0.90 reported in the prior year and $1.50 on an adjusted basis.\nCurrent year-to-date earnings per share improved $0.98 or 65.3% over the year-to-date 2021 results.\nWhile we continue to return capital to our shareholders through dividends and share repurchases, our balance sheet remains strong.\nThe following are capital allocation highlights for the year.\nOn a gross basis, outstanding debt at the end of the quarter was $192 million, consisting of $150 million on our 7- and 12-year senior notes and $42 million outstanding on our revolving credit facility.\nThis reflects a $13 million increase in borrowings from the end of the last fiscal year.\nBorrowings have increased, primarily as a result of our continued share repurchase activity, higher receivables and higher inventories as the business volumes improve.\nYear to date, we have deployed $19.1 million in capital investments and anticipate capital investments of roughly $32 million this year, slightly below our previous estimate of $35 million.\nSupply chain constraints have continued to impact and delay the timing of spending on our planned capital expenditures.\nWe repurchased 7.6 million in outstanding stock during the quarter and year-to-date have repurchased 712,000 shares or $28.9 million.\nWe declared and continue to make quarterly dividend payments.\nThrough the nine months ended November 30, 2021, cash flows generated from operations was $49.7 million, down $9.7 million or 16.4% from the same period in the prior year.\nOperating cash flows were positively impacted by the higher earnings but were more than offset by higher receivables on increased sales and increased inventories, primarily as a result of higher zinc costs in our metal coatings.\nWe continue to remain active on the merger and acquisition front and completed the acquisition of the galvanizing operation in South Carolina that will expand our Southeast footprint and should be accretive during the first year of operation, as Tom had noted earlier.\nHere are some key indicators that we are paying particular attention to.\nFor the metal coating segment's Galvanizing business, we are carefully tracking fabrication and construction activity and material and labor cost inflation as well as OSHA's COVID vaccine mandate.\nFor the surface technologies platform, we are primarily focused on expanding our customer base and benefiting from improved operational performance.\nFor infrastructure solutions, domestic turnaround and outage activity has returned to a normal level.\nThe spring season is currently looking to be good, although we remain cautious due to COVID, particularly for international customers.\nThe electrical platform is benefiting from transmission distribution and utility spending and growing data center and battery energy storage activity.\nIn regards to the strategic review of infrastructure solutions and stated desire to become predominantly a metal coatings company, we have meaningfully advanced our work on a couple of strategic options that are designed to achieve this commitment.\nUnfortunately, due to related NDAs, we are not able to comment further at this time.\nWe remain committed to our growth strategy around metal coatings and achieving 21% to 23% operating margins with galvanizing performance being quite steady, while we continue to improve Surface Technologies.\nWe will remain acquisitive, particularly in metal coatings and hope to complete one more acquisition before the end of this fiscal year.\nFor infrastructure solutions, we are focused on profitability and cash flow.\nThis segment's business unit should benefit from more normalized turnaround outage seasons and a solid market for renewables, transmission and distribution, utility, battery energy storage, data center e-houses and switchgear.\nWe did issue our first ESG report this past quarter and we'll continue to pursue improvement in these areas.\nAnd finally, our normal cadence would be to issue guidance for fiscal year 2023 later this month, but we will not be doing so.\nWhile we are committed to providing sales and earnings per share guidance, we may not be in a position to do so until our work on the strategic options can be factored in.\n", "role": "user" }, { "content": "compname reports results for third quarter of fiscal year 2022 generates earnings per share of $0.85.\ncompname reports results for third quarter of fiscal year 2022; generates earnings per share of $0.85.\nq3 earnings per share $0.85.\nq3 sales rose 2.3 percent to $231.7 million.\nreaffirms fy earnings per share view $3.00 to $3.20.\nsees fy sales $865 million to $925 million.\ncompname reports results for third quarter of fiscal year 2022; generates earnings per share of $0.85.\nazz inc - qtrly sales of $231.7 million, up 2.3% versus last year.\nazz inc - reaffirming fiscal year 2022 sales guidance and anticipate annual sales to be in the range of $865 million to $925 million.\nazz inc - sees earnings per share to be in the range of $3.00 to $3.20 per diluted share for fiscal year 2022.\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 the call today are Tom Ferguson, Chief Executive Officer; Philip Schlom, Chief Financial Officer; and David Nark, Senior Vice President, Marketing Communications and IR.\nThose risks and uncertainties include, but are not limited to, changes in customer demand and response to products and services offered by the company, including demand by the power generation markets, electrical transmission and distribution markets, the industrial markets and the metal coatings markets; prices and raw material costs, including zinc and natural gas, which are used in the hot-dip galvanizing process; changes in the political stability and economic conditions of the various markets that AZZ serves, foreign and domestic; customer-requested delays of shipments; acquisition opportunities; currency exchange rates; adequate financing; and availability of experienced management and employees to implement the Company's growth strategies.\nIn addition, AZZ's customers and its operations could potentially be adversely impacted by the ongoing COVID-19 pandemic.\nFirst, I need to express my great appreciation for the way our AZZ employees, their families and our partner stepped up during the COVID pandemic and also during the winter storm that impacted a significant portion of our production just two weeks before the end of our fiscal year.\nDue to the concerted and in some cases extraordinary efforts of our employees, we were able to quickly respond and finish out a profitable fourth quarter.\nOverall annual sales declined 21% versus the prior-year record, reaching $839 million, with Metal Coatings down 8% to $458 million and Infrastructure Solutions declining by 32% to $381 million.\nThe lower volumes were driven primarily by the impact on our customers caused by the COVID pandemic as well as the divestitures we made during the year.\nI will get into the details of this as we go along.\nWe're pleased to have completed our 34th consecutive year of profitability and while COVID negatively impacted our results, we were able to take several actions to better position AZZ for the future.\nWe continue to generate strong cash flow during the year with $92 million of net cash provided by operating activities.\nWe generated adjusted net income of $55 million and adjusted earnings per share of $2.11 per diluted share.\nWe were successful in completing the divestiture of our SMS and GalvaBar Businesses during the year.\nWe closed a couple of galvanizing plants due to both local market conditions and the proximity of our other plants that could efficiently absorb the majority of their business.\nWe also closed the Surface Technology plant in [indecipherable] and coating lines, two of which were recently brought back online.\nIn line with our strategic commitment to value creation, we repurchased over 1.2 million shares for $48.3 million and distributed $7.6 million in dividends.\nIn Metal Coatings, we posted sales of $458 million while achieving operating margins of 23.3% on an adjusted basis, up nicely from the previous year.\nThe margin improvement was primarily due to driving operating efficiencies and productivity in the face of rising labor and energy costs.\nThe team completed the acquisition of Acme Galvanizing in Milwaukee near the end of the fiscal year.\nWe remain committed to delivering on the investments made in our Surface Technology business, but it is important to note that customers for this business were more severely impacted by COVID than on the galvanizing sites.\nOur Infrastructure Solutions segment was severely impacted by the COVID pandemic, particularly in the early part of the year.\nSales declined over 32% to $381 million, with adjusted operating income down 52% generating adjusted margins of 4.1%.\nWe divested the SMS business since it was deemed to be non-core to our long-term strategy.\nRestructuring and impairment charges for Infrastructure Solutions totaled $9.2 million for the year.\nFor fiscal 2022, COVID continues to generate some uncertainty, but our folks are managing disruptions well and keeping our employees safe.\nSo we are reaffirming our previously issued guidance.\nWe anticipate sales to be in the range of $835 million to $935 million and earnings per share of $2.45 to $2.95.\nMetal Coatings is continuing to focus on sales growth, including leveraging our spin galvanizing operations at several sites.\nThey are also focused on operational execution and customer service, as labor and operating expenses due to material cost inflation are increasing.\nOur Infrastructure Solutions segment has seen a gradual return to more normalized business activity and entered Q1 with some momentum.\nOur Industrial business is seeing good results from our expanded Poland facility, although globally the business continues to experience some intermittent project delays due to COVID outbreaks at certain customer sites.\nThe electrical platform is focused on operational execution and growing it's e-House and switchgear businesses.\nFor fiscal year 2022, AZZ will continue to execute on strategic growth objectives that drive shareholder value.\nAt our core, we are a metal coatings company and a manufacturer of products and provider of services that are critical to sustaining infrastructure.\nOur commitment to superior customer service is unwavering.\nOur ability to generate strong cash flow is based on initiatives to drive operational excellence, manage costs, ensure pricing discipline and emphasis on receivables collection within our operating platforms.\nWe are confident that our businesses remain vital to improving and sustaining infrastructure, so we are actively working to position our core businesses to provide sustainable profitability long into the future.\nFor the fourth quarter of fiscal year 2021, we reported sales of $195.6 million, $49.7 million or 20.3% lower than the fourth quarter of fiscal year 2020.\nGross margin of $45.8 million for the quarter was $5.3 million or 10.4% below prior year.\nHowever, gross margins rose to 23.4% of sales compared to 20.8% in the prior year fourth quarter, a 260 basis point improvement year-over-year.\nNet income for the quarter was $16.2 million compared to a loss of $10.6 million in the comparable prior year fourth quarter, where the company had recorded a loss on sale of our Nuclear Logistics business and recorded charges related to the impairment of assets within the Infrastructure Solutions segment.\nReported diluted earnings per share for the quarter was $0.63 per share.\nAs Tom had earlier indicated, full year fiscal 2021 sales of $838.9 million were down 21% compared to the prior-year sales of $1.06 billion, largely as a result of the impact to the business from the pandemic, divestitures and lower revenues in China as we continue to execute on our existing China backlog.\nGross margins as reported improved to 22.5% from 22.3% on a year-over-year basis on stronger Metal Coatings performance, partially offset by the impacts of the pandemic within our Industrial and Electrical platforms, which are part of our Infrastructure Solutions segment.\nReported operating profit for the year of $61.6 million was $17.7 million or 22.3% lower than the prior year.\nOperating profit in the current year was reduced $20 million as a result of our second quarter restructuring and impairment charges as well as losses recorded on the divestitures of Metal Coatings GalvaBar business and Infrastructure Solutions SMS business during the year.\nReported operating margins of 7.3% were down 20 basis points from the prior year.\nFull-year operating profit as adjusted was $81.6 million, $25.5 million or 23.8% lower than the prior year's adjusted operating profit of $107 million, mostly as a result of the impact on the Infrastructure Solutions business, where they were impacted more strongly by the Energy market downturn in the pandemic.\nEBITDA for fiscal year '21 was $105.2 million compared with $128.5 million in the prior year due to the lower current year earnings, partially offset by a reduction in tax expense in the current year as compared to the prior year.\nFull year EBITDA as adjusted for impairment and restructuring charges was $125.2 million or 19.9% decrease from prior year's adjusted EBITDA of $156.3 million.\nCash flows from operations in the current year of $92 million were $50 million -- $50.3 million or 35.3% lower compared to the prior year, on lower net income, higher non-cash charges in the prior year and fluctuations in working capital during the year.\nDuring the year, we continued to invest in the business.\nIn regards to capital allocation, we were successfully able to navigate tougher market conditions and accomplished the following.\nWe repurchased $48.3 million in outstanding shares.\nWe refinanced our $125 million 5.42% senior notes with an upsize offering of $150 million over 7-year and 12-year periods bearing interest under 3%, resulting in $2.5 million of lower annual interest expense.\nEven with the pandemic, we were able to reduce debt $24 million, ending our fiscal year with $170 million -- $179 million of borrowings, compared to $203 million in borrowings at the end of last year.\nWe continue to support growth initiative by internally investing $37.1 million in capital projects during the year.\nWe completed our Houston spin plant as well as the expansion and modernization of our Poland manufacturing and operations facility.\nWe acquired one galvanizing and plating operation in January 2021.\nWe divested as had Tom noted and closed underperforming operations during the year and we continue to pay quarterly dividends.\nWe maintain a strong balance sheet with plenty of liquidity and continue to evaluate capital allocation strategies as we progress further on our strategic alternatives.\nLastly, we improved our internal controls over financial reporting and successfully remediated our previously reported material weakness related to our tax accounting.\nHere are some key indicators that we are paying particular attention to.\nFor the Metal Coatings segment's galvanizing business, we are carefully tracking fabrication and construction activity, material and labor cost inflation and progress of infrastructure legislation.\nFor Surface Technologies, we are primarily focused on expanding our customer base and some of our customers may take considerable time in getting back to normal production.\nFor Infrastructure Solutions, we are off to a decent start with turnaround and outage activity having returned to a normal level and the fall season is currently looking to be quite good.\nThe Electrical platform is benefiting from transmission, distribution and utility spending and increasing data center and battery energy storage activity.\nFinally for Corporate, we are focused on completing the strategic review of Infrastructure Solutions and replacing our credit facility.\nWe remain committed to our growth strategy around Metal Coatings and achieving 21% operating margins with galvanizing performance being quite steady as we continue to improve Surface Technologies.\nWe will remain acquisitive, particularly in galvanizing.\nFor Infrastructure Solutions, we will continue to focus on profitable growth in our core businesses.\nOur Infrastructure Solutions business unit should benefit from more normal turnaround and outage seasons and a solid market for T&D, utility and data center, e-houses and switchgear.\n", "role": "user" }, { "content": "azz inc reaffirms fiscal year 2022 guidance.\nazz inc - reaffirms fiscal year 2022 guidance.\nazz inc - sales for the fourth quarter of fiscal year 2021 were $195.6 million, compared to $245.4 million for the prior year.\nazz inc - net income for the quarter was $16.2 million, or $0.63 per share on a diluted basis.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Joining in the Q&A after Bob and Mike's comments will be Jacob Thaysen, President of Agilent's Life Science and Applied Markets Group; Sam Raha, President of Agilent's Diagnostics and Genomics Group; and Padraig McDonnell, President of the Agilent CrossLab Group.\nYou will find the most directly comparable GAAP financial metrics and reconciliations on our website.\nCore revenue growth excludes the impact of currency and the acquisitions and divestitures completed within the past 12 months.\nBefore I get into the detail -- into the quarterly details, I want to start by recognize our Agilent India team.\nDespite the challenging COVID-19 situation, our India team is working closely with our cause of do while we can to help in this time of extreme need.\nIn addition our Agilent India customer support, finance and IT teams have worked tiredlessly to help us close out the second quarter and keep us moving forward.\nI could not be more proud of how the team has worked together in true one Agilent fashion.\nOur thoughts go out the entire Agilent India team and their families during this difficult time.\nIn Q2 the strong momentum in our business continues against the backdrop of a recovering market.\nThe Agilent team delivered another outstanding quarter exceeding our expectations, both revenue and earnings are up sharply versus a solid Q2 last year when revenue and earnings per share were relatively flat.\nOur growth is broad-based across all business groups, markets and geographies.\nWe are also expanding margins driving faster earnings-per-share growth.\nRevenues for the quarter are $1.525 billion.\nThis is up 23% on a reported basis and up 19% core.\nCOVID-19 related revenues accounted for roughly 2% of overall revenues as expected and contributes about 1 point to our overall growth.\nOur revenue growth is not a one quarter or easy compare story, but one that sustained above market growth.\nFor example, our Q2 revenues are up more than 17% core from two years ago.\nQ2 operating margin of 23.9%.\nThis is up 150 basis points.\nEPS of $0.97 is up 37% year-over-year.\nLike our recent acquisitions in Cell Analysis, Resolution Bioscience an example of our build and buy growth strategy in action.\nThe Agilent story remains the same.\nIt is a story of one team outpacing the market to deliver strong broad-based growth in an environment of continuing market recovery.\nMoving onto our end market highlights, we do strongly in all markets.\nOur growth is led by 29% growth in pharma and 22% in food.\nWe are seeing improving growth in the chemical and energy market with 14% growth.\nWe also posted low-teens growth in diagnostics and over 20% growth in academia and government.\nLastly, environmental forensics grew 8%.\nBob will provide end market detail later in his comments.\nGeographically, the Americas led the way with 27% growth.\nStrength in China, Europe and the Rest of Asia continues with all growing in the mid-teens.\nThe 30% growth in China is on top of 4% growth last year when the business started to recover from the pandemic.\nAs we look at our performance by business group, the Life Sciences Applied Markets Group generated revenues of $674 million during the quarter.\nLSAG is up 28% on reported basis and up 25% core off a 7% decline last year.\nLSAG's growth is broad-based across all end markets and geographies.\nOur focus in investments in fast growing end markets continues to pay off.\nThe LSAG Pharma business is very strong, growing 41% with strength in both biopharma and small molecule.\nFrom a product perspective, we saw strength in liquid chromatography and LCMS along with continued growth in Cell Analysis.\nDuring the quarter, Cell Analysis grew 34% with our BioTek business growing close to 40%.\nDuring the quarter the LSAG team also contribute to our long-term companywide focus on sustainability in advance and important ESG initiatives.\nLSAG announced several new products that have earned the highly respected accountability, consistency and transparency, ACT label from My Green Lab.\nMy Green Lab is a non-profit organization dedicated to improve the sustainability of the scientific research.\nLSAG products will also receive two Scientist Choice Awards and now for the Select Science Virtual Analytical Summit.\nOur Cell Analysis business during the quarter -- in our Cell Analysis business during the quarter, excuse me, we launched our Cytation C10 Confocal Imaging Reader, a multi-functional automated system focused on research labs and core facilities looking for increased productivity.\nThis product builds on the BioTek cell imaging leadership with the Cytation multimode leader and expands our reach in the strategic business.\nWhile still early, customer feedback has been extremely positive.\nWe are also very pleased with the progress and trajectory of our Cell Analysis business overall and see a very positive future for this space.\nThe Agilent Cross Lab Group posted revenues of $536 million.\nThis is up a reported 19% and up 15% on the core basis versus a 1% increase last year.\nACG's growth is driven by demand for consumables and services across the portfolio as lab actively continues to increase for our customers.\nThis is leading to more on-demand services and parts consumption.\nRevenues from our contract business continues to drive strong growth due to the high level of contract renewals seen in the previous quarter.\nOur strong instrument placements and the increase in installed base will benefit the ACG business going forward.\nAt the same time our digital investments continue to pay off with continued strong customer uptake and consumables and our digitally enabled services offerings.\nOur LSAG and ACG businesses come together in the iLab.\nThis is where we believe we are well positioned to continue driving above market growth as we build on our market leading portfolio, strong service organization and outstanding customer service.\nFor the Diagnostics Genomics Group revenues were $315 million, up 20% reported and up 16% core versus the 5% increase last year.\nGrowth is broad-based, led by our NASD oligo and genomics businesses.\nDemand for our NASD offerings remains strong and our capacity expansion plans for a high-growth NASD business remain on track.\nWe're very pleased with the acquisition of Resolution Bioscience during the quarter with our liquid biopsy technology, Resolution Bioscience is the key player in a very exciting area of cancer diagnostics.\nWe are very glad to have them on the Agilent team.\nI'm confident as time goes on.\n, You'll be hearing more and more from us on this business and its contributions.\nI would now like to recap the second quarter and take a look forward.\nThe strong momentum in our business continues.\nThis is being driven by our relentless customer focus, the strength of our portfolio and the execution capabilities of the one Agilent team.\nOur build and buy growth strategy is delivering as intended of above market growth.\nOver the last year, I've often said, that Agilent's focused on coming out of the pandemic even stronger as a company.\nI believe you're seeing the impact of this approach in our current results.\nAs we look ahead we do so with a sense about optimism and confidence.\nWe are optimistic, because of the continued market recovery and the strength of our portfolio.\nWe are confident, because we have the right team, customer focused, operationally excellent and driven to win.\nAs a result we are once again raising our full-year revenue and earnings guidance.\nBob will share more details, but we expect that a continuation of excellent top line growth.\nWe also expect to compare this strong top line into excellent earnings growth and cash generation.\nDuring our Investor Event in December, we discussed our shareholder value creation model and our goals for increasing long-term growth and expanding margins.\nSix months into fiscal 2021 we are well on our way to achieving those objectives.\nOur build and buy growth strategy is delivering.\nThe one-Agilent team continues to demonstrate its execution prowess and strong drive to win.\nWe raised the bar on customer service and continue to exceed customer expectations in providing industry-leading products and services.\nWhile we are yet to fully emerge from the global pandemic, we are looking forward to the future with both optimism and confidence.\nI will now hand the call off to Bob.\nIn my remarks today, I'll provide some additional details on Q2 revenue and take you through the income statement and some other key financial metrics.\nI'll then finish up with our updated outlook for the year and the third quarter.\nRevenue for the second quarter was $1.525 billion, reflecting reported growth of 23%.\nCore revenue growth was 19%, while currency contributed just under 4 points of growth.\nWe are very pleased with our second quarter results as we saw strong broad-based growth with all three business groups posting mid-teens growth or higher and all end markets growing strongly.\nFrom an end market perspective, our focus on fast growing markets is paying off.\nPharma, our largest market, again led the way delivering 29% growth.\nThis is on top of growing 5% last year.\nGrowth was led by Cell Analysis LC and mass spec.\nThese tools are delivering critical capabilities to our biopharma customers as they continue to make investments to develop new therapies and vaccines.\nOur Biopharma business grew roughly 40% and represented over 35% of our Pharma business in the quarter.\nOur Small Molecule segment also has momentum, growing in the mid 20s in the quarter.\nOverall, we are well positioned within Pharma and expect the Pharma market to continue to be the strongest end-market as we enter the second half of the year.\nThe food market continued its strong performance, growing 22%.\nWe experienced strong growth across all regions and segments as we continue to see global investments across the entire food supply chain.\nAnd we were very pleased to see the non-COVID diagnostics businesses continue to improve throughout the quarter, growing 13% as routine doctor visits return closer to pre-pandemic levels.\nWe posted a very strong month in the diagnostics and clinical market as we came to anniversary, the weak April we experienced in our large markets at the onset of the pandemic last year.\nAnd we exited the quarter with testing volumes at a run rate slightly higher than pre-pandemic level.\nThe chemical and energy market continues to recover as we grew 14% of a decline of 10% last year.\nOur results were primarily driven by continued strength in the chemicals and materials markets and in a positive sign, our order growth rates were ahead of revenues and finished the quarter strong leading us to believe this trend will continue.\nWe also saw a nice recovery in the academia and government market as non-COVID related labs resume operations in a strong funding environment.\nWith the increase in activity, our business grew 21% against the weakest comparison of the year.\nWe would expect the academia and government market to continue to recover throughout the rest of the year.\nAnd lastly, the environmental and forensics market saw high single-digit growth driven by the Americas, services and consumables at Atomic Spectroscopy.\nOn a geographic basis, all regions grew led by the Americas at 27%, the pharma and academia and government markets in Americas grew in the low 30% range and all markets grew at least 20%.\nEurope experienced 16% growth led by food, academia and government and C&E.\nThose three markets all grew more than 20%.\nAnd as Mike noted, China grew 13% after growing 4% last year.\nThis was driven by pharma growth in the high 30s.\nOur growth in orders outpaced revenue growth by mid single-digits during the quarter.\nNow turning to the rest of the P&L.\nSecond quarter gross margin was 55.4% flat year-on-year, despite a headwind of more than 30 basis points from currency.\nOur operating margin for the second quarter came in at 23.9%, driven by volume, this is up a solid 150 basis points from last year, even as we saw increased spending as activity ramped and we invest in the future.\nStrong top line growth coupled with our operating leverage helped deliver earnings per share of $0.97, up 37% versus last year.\nOur tax rate was 14.75% and our share count was 307 million shares.\nNow on to cash flow and the balance sheet.\nOur performance translated into very strong cash flows.\nWe delivered $472 million in operating cash flow during the quarter, up more than 50% from last year.\nThe strong cash flow has continued to help drive our balanced capital deployment strategy.\nDuring the quarter we returned $254 million to our shareholders, paying out $59 million in dividends and repurchasing 1.55 million shares for $195 million.\nAnd as Mike mentioned, we also continue to strategically invest in the business, We spent a net of $547 million to purchase Resolution Bioscience and invested $31 million in capital expenditures.\nYear-to-date, we returned $657 million to shareholders in the form of dividends and share repurchases, while reinvesting in the business by spending $619 million on M&A and capital expenditures.\nAnd we ended the quarter with a strong balance sheet, which enables us to enjoy financial flexibility going forward.\nDuring the quarter, we raised $850 million in long-term debt at very favorable terms, redeemed $300 million that was maturing next year and reduced our ongoing interest expense.\nWe ended the quarter with $1.4 billion in cash, $2.9 billion in outstanding debt and a net leverage ratio of 1 time.\nNow turning to the outlook for the full year and the third quarter.\nWe see a great opportunity to build on our strong first half results.\nLooking forward, while the pandemic is still with us, we continue to see recovery in our end markets and have solid momentum in all of our businesses.\nAs a result, we are again increasing our full year projections for both revenue and earnings per share.\nThis reflects our strong Q2 results an increasing expectations for the second half of the year.\nWe are also incorporating the Resolution Bioscience into our guidance.\nFor revenue, we are increasing our full-year range to a range of $6.15 billion to $6.21 billion, up nearly $320 million at the midpoint and representing reported growth of 15% to 16% and core growth of 12% to 13%.\nIncluded is roughly 3 points of currency and 0.5 point attributable to M&A.\nThis increased outlook also reflects continued growth in our end markets.\nWe see sustained momentum in the second half of the year in pharma, food and environmental and forensic markets.\nEnd markets that we expect to continue to recover in the second half include the Diagnostics and Clinical, academia and government and C&E.\nAs Mike mentioned during our Investor Event in December, we provided a long-range plan of annual margin expansion in the range of 50 to 100 basis points.\nOur updated guidance for the year exceeds the top end of that range.\nAnd in addition, we are increasing our fiscal 2021 non-GAAP earnings per share to a range of $4.09 to $4.14 per share.\nThis is growth of 25% to 26% for the year.\nNow for the third fiscal quarter, we're expecting revenue to range from $1.51 billion to $1.54 billion, representing reported growth of 20% to 22% and core growth of 15% to 17.5%.\nAnd we expect third quarter non-GAAP earnings per share to be in the range of $0.97 to $0.99 per share with growth of 24% to 27%.\nWe believe our strategies and our execution of driving the strong results we've achieved and put us in a great position to continue to drive strong results for the remainder of the year.\nWith that Ruben back to you for Q&A.\nGabriel, if you could please provide instructions for the Q&A.\n", "role": "user" }, { "content": "q2 non-gaap earnings per share $0.97.\nsees q3 revenue $1.51 billion to $1.54 billion.\nsees fy revenue $6.15 billion to $6.21 billion.\nq2 revenue $1.525 billion versus refinitiv ibes estimate of $1.4 billion.\nagilent technologies - fy 2021 non-gaap earnings guidance has increased to range of $4.09 to $4.14 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: Joining in the Q&A after Bob and Mike's comments will be Jacob Thaysen, President of Agilent's Life Science and Applied Markets Group; Sam Raha, President of Agilent's Diagnostics and Genomics Group; and Padraig McDonnell, President of the Agilent CrossLab Group.\nYou will find the most directly comparable GAAP financial metrics and reconciliations on our website.\nCore revenue growth excludes the impact of currency and the acquisitions and divestitures completed within the past 12 months.\nTachi was much more than a knowledgeable, deeply involved Agilent Board member for nine years.\nAs many of you on the call already know, Tachi lived a very full life as a doctor, a scientist, as a humanitarian who was driven to help others.\nI know that the Agilent team is not alone and recognize that Tachi Yamada will be greatly missed and we extend our deepest sympathies to Tachi's family.\nNow, on to the third quarter review and our updated outlook for the year.\nIn Q3, the very strong broad based momentum in our business continues.\nThe Agilent team delivered another outstanding quarter, exceeding our expectations.\nQ3 revenue of $1.59 billion is up a reported 26% and is up 21% core.\nThis is against the mass decline of 3% in Q3 of last year, so we are well above fiscal year 2019 pre-pandemic levels.\nIn addition, as other positive sign of continued momentum, orders outpaced revenue during the quarter.\nOur growth is broad based across all business groups, markets and geographies.\nThe combination of strong top line performance and execution translated into excellent growth and profitability and earnings per share.\nOur Q3 operating margin is 26%, this is up 230 basis points from last year.\nEPS is $1.10, up 41% year-over-year.\nAgilent's success continues to be driven by our build and buy growth strategy and execution prowess.\nWe are developing market-leading products and services, investing in fast growing businesses while delivering outstanding customer service and continue to drive profitability.\nSince the onset of the pandemic, we have taken actions to ensure Agilent emerged even stronger as a company.\nWhile we have yet to leave COVID-19 in the rearview mirror, our Q3 results are another indicator our actions are delivering the intended results.\nBob will provide more details on end markets and geographies, but I want to briefly highlight our performance in our two largest end markets, pharma and chemical energy.\nWe continue to perform extremely well in pharma, our largest market growing 27% with strength in both small and large molecule segments.\nOur large molecule business grew roughly 52% in the quarter and now represents 36% of our overall pharma revenue, up from the mid 20s just a few years ago.\nIn chemical energy, our business is recovering faster than expected, expanding 23% in the quarter.\nThis is an acceleration of the momentum we achieved in the first half and our order funnel continues to strengthen.\nLooking at our performance by business unit, The Life Sciences and Applied Markets Group generated revenue of $680 million.\nLSAG is up 22% on a reported basis, this is up 18% core, off just a 4% decline last year.\nLSAG's growth is broad based across all end markets.\nOur performance is led by strength in pharma, which is up 22% and chemical energy up 31%.\nAll businesses delivered strong growth led by Cell Analysis at 38% growth and our LC and LCMS businesses, which grew 22%.\nWe continue to strengthen our position in the fast growing large molecule market segment.\nDuring the quarter, the LSAG team launched three InfinityLab Bio LC systems at the well attended InfinityLab LC Virtual Conference in June.\nThese new products further extend our LC leadership position.\nIn addition, building on our already strong pharma offerings, we launched new compliance ready LC/Q-TOF and LC/TOF solution to our portfolio in the quarter.\nThe Agilent CrossLab Group posted revenue of $560 million, this is up a reported 21% and up 15% on a core basis.\nThese results are on top of 1% growth last year.\nThe business is benefiting from increased activity and customer labs and instrument connect rates.\nThis is leading to more contracted services, on-demand services and consumables consumption across all end markets.\nAll end markets grew mid teens or higher with the exception of environmental and forensics, but still grew 9%.\nThe pandemic has shown ACG to be our most durable business, with ACG grown each quarter since COVID-19 first emerged.\nOur customer-focused approach and digital investments continue to pay dividends.\nLooking forward, instrument placements and demand bode well with continued strong performance by ACG as we drive attachment rates and increased customer lifetime value.\nThe Diagnostics and Genomics Group produced revenue of $346 million, up 44% reported and up 37% core, compared to an 8% decline last year.\nThe growth was broad based across product lines and regions and was led by our NASD GMP oligo business.\nThe ramp of our facility in Frederick, Colorado continues to go very well.\nThe quarterly results exceeded our expectations, easily surpassing the $30 million revenue milestone, while one quarter does not make a trend, our team has done a tremendous job increasing the output in a high quality manner.\nThis gives us increased confidence in our ability to exceed the $200 million annual run rate of revenue with existing capacity.\nIn addition, the Train B manufacturing line expansion is well underway and on schedule.\nOur genomics instrumentation and consumables businesses rebounded strongly in the quarter as did our pathology-related businesses.\nFor the first time in several quarters, we saw a diagnostic testing above pre-pandemic levels.\nWhile we are watching Delta variant very closely, to date we have not seen a meaningful negative impact on testing volumes.\nI also want to highlight our performance in China.\nWhile still less than 10% of DGG revenue, our China business grew 50% in the quarter.\nWe continue to see tangible progress in building a stronger China market position.\nIn Q3, we signed our first ever companion diagnostic development services agreement with a China based biopharma company.\nEarlier this month, we also announced the initiation of in-country manufacturing for our SureSelect product line.\nWe are very bullish about long-term growth prospects in China for our DGG product and services offerings.\nIn addition, the integration of Resolution Bioscience team is going well and we are very pleased to enter and expand our participation in the fast growing NGS based cancer diagnostic market.\nIt was a busy quarter at Agilent.\nSo, I have a few other achievements I'd like to share with you.\nLast month, we published Agilent's 21st Annual Corporate Social Responsibility Report.\nAt a time when some are just starting to look at issues like sustainability and societal impact, this has always been a key part of who we are as a company.\nWe've been addressing these issues since our founding more than two decades ago.\nI would encourage you to review our report on the Agilent website.\nWe're also very pleased to receive recognition of the Great Place to Work in United States by the Great Place to Work Institute.\nThis result is just one more example of Agilent having a highly engaged and energized team, and as you know, teams with high engagement win in the market.\nLooking ahead, building on another excellent quarter and the momentum we're seeing, we expect the business to continue to perform well as we close out what we believe will be an outstanding fiscal year 2021.\nAs a result, we are once again raising our full-year revenue and earnings guidance.\nI will share more details, but we are expecting a continuation of our excellent top line growth and earnings generation.\nWhile the world has yet to fully emerge from a global pandemic, Agilent is well positioned to deliver excellent results again in the fourth quarter.\nI remain very proud of the Agilent team's ability to consistently deliver for our customers and shareholders.\nI will now hand the call off to Bob.\nIn my remarks today, I will provide some additional details on Q3 revenue and take you through the income statement and some other key financial metrics.\nI'll then finish up with our updated outlook for the fourth quarter and the full year.\nAs Mike mentioned, we had an excellent result in the third quarter.\nRevenue was $1.59 billion, reflecting reported growth of 26%, core revenue growth was 21%.\nCurrency added 4.5% for the quarter and M&A added 0.5 point.\nIn addition, COVID-related revenues were in line with the prior year.\nAll end markets performed well with pharma and chemical and energy as standouts versus our expectations.\nOur largest market pharma grew 27% during the quarter, after growing 2% last year.\nThe performance was led by the continued strength in our Large Molecule business growing 52%, while our Small Molecule business grew mid teens, and all regions in the pharma market grew double-digits.\nOur Large Molecule business was driven by our NASD division and demand for LC and Mass Spec instrumentation and solutions, while our Small Molecule business was primarily driven by QA-QC refresh.\nChemical and energy also performed well this quarter with 23% growth.\nEven after accounting for the comparison against the 10% decline last year, this was clearly our best quarter since the onset of the pandemic.\nThis result was driven by increasing momentum in demand for advanced materials and the general global economic growth.\nOur view is that the chemical and energy market still has additional room to grow moving forward.\nThe diagnostics and clinical market grew 28% against the decline of 10% a year ago, our softest quarter last year.\nWe are very encouraged with the continued recovery in the market as our genomics and pathology businesses saw very good growth.\nOn a regional basis, all regions grew with China up 41% and Americas delivering 38% growth.\nIn the academia and government market, we delivered 12% growth as most research labs continue to open globally and expand capacity.\nOn a regional basis, Europe led the way.\nThe food market continued its double-digit performance growing 12% on top of growing 1% last year.\nFood manufacturers continue to invest in increased testing to ensure quality and authenticity.\nA developing cannabis testing market, primarily in the U.S. also contributed to growth in this market and regionally the food market was led by the Americas and Europe.\nRounding out our key markets, environmental and forensics came in with 5% growth.\nOn a geographic basis, all regions demonstrated solid growth led by the Americas at 32% and Europe at 23%, both exceeding our expectations.\nThe performance was broad-based across all markets.\nAnd as expected, China was up 8% on top of 11% growth last year.\nAll three business groups grew in China during the quarter.\nPharma, chemical and energy and diagnostics were the key drivers.\nNow turning to the rest of the P&L, third-quarter gross margin was 55.9%, up 80 basis points from a year ago despite roughly 40 basis points of headwind from currency.\nOur strong top line, some positive product mix, coupled with the strong execution from our operations team drove the year-on-year improvement.\nAnd our supply team is doing a tremendous job getting our products to customers, despite the increase in demand.\nGross margin improvement -- performance along with continued operating expense leverage resulted in operating margin for the third quarter of 26%, improving 230 basis points over last year.\nPutting it all together, we delivered earnings per share of $1.10, up 41% versus last year.\nOur tax rate was 14.75% and share count was 306 million shares, as expected.\nWe delivered $334 million in operating cash flow during the quarter, showing a strong conversion from net income and up more than 15% from last year while crossing the $1 billion mark in nine months.\nDuring the quarter, we returned $172 million to our shareholders, paying out $59 million in dividends and repurchasing roughly 800,000 shares for $113 million.\nYear-to-date, we've returned $829 million to shareholders in the forms of dividends and share repurchases.\nAnd we ended the quarter with $1.4 billion in cash, $2.9 billion in outstanding debt and a net leverage ratio of 0.8.\nAccounting for our Q3 performance and improved outlook in the fourth quarter, we are again raising our full-year projections for both revenue and earnings per share.\nWe are increasing our full-year revenue projection to a range of $6.29 billion to $6.32 billion, up $125 million at the midpoint from previous guidance and representing reported growth of 17.8% to 18.4% and core growth of 14.5% to 15%.\nIncluded is roughly three points of impact from currency and a small amount from M&A.\nIn addition, we are on track to deliver roughly $100 million in COVID-related revenue in fiscal 2021, in line with our expectations from the beginning of the year and flat to last year.\nWe expect to continue our strong operating leverage, and so we are increasing our fiscal 2021 non-GAAP earnings per share to a range of $4.28 to $4.31 per share, up 30% to 31% for the year.\nThis translates the fourth quarter revenue ranging from $1.63 billion to $1.66 billion.\nThis represents reported growth of 10% to 12% and core growth of 8.5% to 10% on top of the 6% growth in Q4 of last year when we started to see early signs of recovery from the strict lockdowns.\nIn addition, while COVID revenue was roughly flat year-on-year for the full year, last year's fiscal fourth quarter represented the high watermark in our COVID related revenue.\nAnd as a result, we expect to see roughly a one point headwind due to COVID revenue in the quarter.\nSo, our core growth excluding COVID would be comparable to 9.5% to 11%.\nWe are forecasting higher expenses in the fourth quarter as we invest to maintain our strong momentum, but expect continued operating leverage in excess of 100 basis points.\nNon-GAAP earnings per share is expected to be between $1.15 and $1.18 with growth of 17% to 20%.\nWe believe our strategy is the right ones for Agilent, but we couldn't achieve these results we’ve been producing without the excellent execution by the team.\nWith that Parmeet, back to you for Q&A.\nPaul, if you could please provide instructions for the Q&A now?\n", "role": "user" }, { "content": "agilent technologies q3 adj earnings per share $1.10.\nq3 non-gaap earnings per share $1.10.\nsees q4 revenue $1.63 billion to $1.66 billion.\nsees fy revenue $6.29 billion to $6.32 billion.\nq3 revenue $1.59 billion versus refinitiv ibes estimate of $1.54 billion.\nsees fy non-gaap earnings per share $4.28 to $4.31.\nsees q4 non-gaap earnings per share $1.15 to $1.18.\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 in the Q&A after Bob's comments will be Jacob Thaysen, President of Agilent's Life Science and Applied Markets Group; Sam Raha, President of Agilent's Diagnostics and Genomics Group; and Padraig McDonnell, President of Agilent CrossLab Group.\nYou will find the most directly comparable GAAP financial metrics and reconciliations on our website.\nCore revenue growth excludes the impact of currency and the acquisitions and divestitures completed within the past 12 months.\nAlso as announced, we will hold our virtual Investor Day in a few weeks on December 9th.\nWe look forward to having you join us on December 9th.\nToday, I want to get straight to our quarterly results, because they tell a very compelling story.\nThe Agilent team delivered a very strong close to 2020.\nWe posted revenues of $1.48 billion during the quarter.\nRevenues are up 8% on a reported basis and up 6% core.\nOperating margins are a healthy 24.9%.\nEPS of $0.98 is up 10% year-over-year.\nThese numbers tell the story of a strong resilient company that is built for continued growth.\nOur better-than-expected results are due to the strength of our core business, along with signs of recovery in our end-markets.\nGeographically, China continues to lead the way with double-digit growth.\nFrom an end-market view, both our pharmaceutical and food businesses grew double-digits.\nIn addition, our chemical and energy business grew after two quarters of declines, exceeding our expectations.\nWe also saw a rebound in U.S. sales during the quarter.\nOverall, COVID-19 tailwinds contributed just over 2 points of core growth.\nAchieving these results in the face of a global pandemic is a tribute to our team and the company we've built over the last five years.\nI couldn't be more pleased with the way the Agilent team has performed over the last quarter and throughout 2020.\nWe have again proven our ability to work together and step up to meet any challenge that comes our way.\nDuring the quarter, all three of our business groups grew high-single digits on a reported basis.\nOur Life Sciences and Applied Markets Group generated $671 million in revenue, up 8% on a reported basis and up 4% core.\nLSAG growth is broad based.\nThe cell analysis and mass spec businesses both grew at double-digit rates.\nIn terms of end markets, chemical and energy returned to growth, food grew double-digits and pharma high-single digits.\nLSAG remains extremely well positioned and is outperforming the market.\nThe Agilent CrossLab Group came in with revenues at $518 million.\nThis is up a reported 9% and up 7% core.\nACG's growth is also broad based across end-markets and geographies.\nOur focus on on-demand service is paying off as activity on our customer labs continues to increase.\nThe ACG team continues to build on its already deep connections with our customers, helping them operate through the pandemic and continue to drive improved efficiencies in lab operations.\nFor the Diagnostics and Genomics Group, revenues were $294 million, up 9% reported and up 7% core.\nGrowth was broad based, with NASD oligo manufacturing revenues up roughly 40%.\nThe genomics and pathology businesses continued to improve during the quarter.\nI'm also very proud of our NASD team for successfully ramping production at our new Frederick site this year.\nWe have built a very strong position in this attractive market with excellent long-term prospects for high growth.\nLet's now shift gears and look at our full-year fiscal 2020 results.\nDespite the disruption, uncertainty and economic turmoil of dealing with the global pandemic, the Agilent team delivered solid results.\nWe generated $5.34 billion in revenue, up 3% on a reported basis and up nearly 1% core.\nTo put this in perspective, it's helpful to recall the progression of our growth.\nIn Q1, we delivered 2% core growth, as you saw the first impact of COVID-19 in our business in China.\nBoth Q2 and Q3 declined low-single digits as the pandemic spread across the globe and governments instituted broad shutdowns.\nWith 6% core growth, 8% reported in Q4, we're seeing business and economies start to recover.\nAs a result, we are clearly exiting 2020 with solid momentum.\nOur recurring types of businesses represented by ACG and DGG proved resilient, growing low-to-mid single digits for the year.\nIn a very tough capex market, our LSAG instrument business declined only 2% for the year and returned to growth in the final quarter.\nChina led the way for our recovery with accelerating growth as the year progressed.\nIn our end-markets, pharma remained the most resilient and food markets recovered most quickly.\nFull-year earnings per share grew 5% during fiscal 2020 to $3.28.\nThe full-year operating margin of 23.5% is up 20 basis points over fiscal 2019.\nAs we head into 2021, we do so with tremendous advantage.\nOur diverse industry-leading product portfolio has never been stronger.\nOur building and buying growth strategy with a focus on high-growth markets continue to deliver.\nOur ability to respond quickly to rapidly changing conditions is also serving us well.\nThe way our sales and service teams have been able to quickly pivot to meet customer requirements during the pandemic has been nothing short of remarkable.\nOur approach is focused on delivering above market growth while expanding operating margins along with a balanced deployment of capital.\nWe prioritized deployment of our capital, both internally and externally, on additional growth.\nA few proof points on our growth-oriented capital deployment strategy.\nA year ago, we spoke about recently closing the BioTek acquisition and the promise of growth that BioTek represented.\nToday, BioTek is no longer a promise but a driver of growth.\nIn total, the cell analysis business generated more than $300 million in revenue for us during the year, with double-digit growth in Q4 and continued strong growth prospects.\nSimilar to last year, I was talking about ramping up our new Frederick site facility, a $185 million capital investment.\nIn addition to successfully ramping Frederick as we planned, we did so with an expanding book of business.\nWe also recently announced additional $150 million investment to our future manufacturing capacity.\nWe are aggressively adding capacity to capture future growth opportunities in this high-growth market.\nEven in the face of the pandemic, we stayed true to our build and buy strategy.\nWe have clearly seen the advantages of our approach.\nI'm confident our strategy will tend to produce strong results for us.\nThe strength of our team and resilience of our business model has served us well, and as you can see from the numbers, our growth strategy is producing outstanding results for our customers, employees and shareholders.\nWhile uncertainties remain, as we begin fiscal 2021, we're operating from a position of strength.\nBecause of this, we're cautiously optimistic about the future.\nWe have built and will sustain our track record of delivering results and working as a one-Agilent team on behalf of our customers and shareholders.\nAs I noted earlier, I couldn't be more pleased with the results the Agilent team delivered in the fourth quarter and throughout the year.\nI will now hand the call off to Bob.\nIn my remarks today, I will provide some additional revenue detail and take you through the fourth quarter income statement and some other key financial metrics.\nI'll then finish up with our outlook for 2021 and the first quarter.\nWe are very pleased with our fourth quarter results as we saw strong growth exceeding our expectations, especially considering the ongoing challenges associated with COVID-19.\nFor the quarter, revenue was $1.48 billion, reflecting core revenue growth of 5.6%.\nReported growth was stronger at 8.5%.\nCurrency contributed 1.7%, while M&A added 1.2 points to growth.\nFrom an end-market perspective, pharma, our largest market, showed strength across all regions and delivered 12% growth in the quarter.\nBoth small and large molecule businesses grew, with large molecule posting strong-double-digit growth.\nWe continue to invest and build capabilities in faster growth biopharma markets and offer leading solutions across both small and large molecule applications.\nThe food market also experienced double-digit growth during the quarter, posting a 16% increase in revenue.\nWhile our growth in food business was broad based, China led the way.\nAnd as Mike noted earlier, our chemical and energy market exceeded our expectations, growing 3% after two quarters of double-digit declines.\nWhile one quarter does not a trend make, we are certainly pleased with this result, and the growth came primarily from the chemical and materials segment.\nDiagnostics and clinical revenue grew 1% during Q4, led by recovery in the U.S. and Europe.\nWe continue to see recovery in non-COVID-19 testing, as expected, although the levels are still slightly below pre-COVID levels.\nAcademia and government was flat to last year, continuing the steady improvement in this market, and revenue in the environmental and forensics market declined mid-single digits against a strong comparison from last year.\nOn a geographic basis, all regions returned to growth.\nChina continues to lead our results with broad-based growth across most end-markets.\nFor the quarter, China finished with 13% growth and ended the full year up 7%.\nJust a great result from our team in China.\nThe Americas delivered a strong performance during the quarter, growing 5% with results driven by large pharma, food, and chemical and energy.\nAnd in Europe, we grew 2% as we saw lab activity improved sequentially, benefiting from our on-demand service business in ACG, as well as from a rebound in pathology and genomics as elective procedures and screening started to resume.\nHowever, while improving, capex demand still lags our service and consumables business.\nNow turning to the rest of the P&L.\nFourth quarter gross margin was 55%.\nThis was down 150 basis points year-over-year, primarily by a shift in revenue mix and an unfavorable impact of FX on margin.\nIn terms of operating margin, our fourth quarter margin was 24.9%.\nThis is down 20 basis points from Q4 of last year, as we made some incremental growth-focused investments in marketing and R&D, which we expect to benefit us in the coming year.\nThe quarter also capped off in full-year operating margin of 23.5%, an increase of 20 basis points over fiscal 2019.\nNow wrapping up the income statement, our non-GAAP earnings per share for the quarter came in at $0.98, up 10% versus last year.\nOur full-year earnings per share of $3.28 increased 5%.\nIn addition, our operating cash flow continues to be strong.\nIn Q4, we had operating cash flow of $377 million, up more than $60 million over last year.\nAnd in Q4, we continued our balanced capital approach, repurchasing 2.48 million shares for $250 million.\nFor the year, we repurchased just over 5.2 million shares for $469 million and ended the fiscal year in a strong financial position with $1.4 billion in cash and just under $2.4 billion in debt.\nAll in all, a very good end to the year.\nNow let's move on to our outlook for the 2021 fiscal year.\nWe and our customers have been dealing with COVID-19 for nearly a full year and are seeing our end-markets recover.\nVisibility into the business cadence is improving.\nAnd as a result, we are initiating guidance for 2021.\nThere is still a greater than usual level of uncertainty in the marketplace across most regions, and so while we're providing guidance, we're doing so with a wider range than we have provided historically.\nIt is with this perspective that we're taking a positive but prudent view of Q1 in the coming year.\nFor the full year, we're expecting revenue to range between $5.6 billion and $5.7 billion, representing reported growth of 5% to 7% and core growth of 4% to 6%.\nThis range takes into account the steady macro-environment we're seeing.\nIt does not contemplate any business disruptions caused by extended shut downs like we saw in the first half of this year.\nIn addition, we're expecting all three of our businesses to grow, led by DGG.\nWe expect DGG to grow high-single digits, with the continued contribution of NASD ramp and the recovery in cancer diagnostics.\nWe believe ACG will return to its historical high-single-digit growth, while LSAG is expected to grow low-to-mid single digits.\nWe expect operating margin expansion of 50 basis points to 70 basis points for the year, as we absorb the build out costs of the second line in our Frederick, Colorado NASD site.\nAnd then helping you build out your models, we're planning for a tax rate of 14.75%, which is based on current tax policies and 309 million of fully diluted shares outstanding, and this includes only anti-dilutive share buybacks.\nAll this translates to a fiscal year 2021 non-GAAP earnings per share expected to be between $3.57 and $3.67 per share, resulting in double-digit growth at the midpoint.\nFinally, we expect operating cash flow of approximately $1 billion to $1.05 billion and an increase in capital expenditures to $200 million, driven by our NASD expansion.\nWe have also announced raising our dividend by 8%, continuing an important streak of dividend increases, providing another source of value to our shareholders.\nNow let's finish with our first quarter guidance.\nBut before we get into the specifics, some additional context.\nMany places around the world are currently seeing renewed spikes in COVID-19 that could cause some additional economic uncertainty.\nAnd while we're extremely pleased with the momentum we have built during Q4, we are taking a prudent approach to our outlook for Q1, because of the current situation with the pandemic.\nFor Q1, we're expecting revenue to range from $1.42 billion to $1.43 billion, representing reported growth of 4.5% to 5.5% and core growth of 3.5% to 4.5%.\nAnd first quarter 2021 non-GAAP earnings are expected to be in the range of $0.85 to $0.88 per share.\nTo be where we are now after knowing where we stood in March is truly remarkable.\nAdd to this, the strong momentum we saw in Q4, I truly believe we are well positioned to accelerate our growth in fiscal 2021.\nWith that, Ankur, back to you for Q&A.\nDavid, let's provide the instructions for Q&A.\n", "role": "user" }, { "content": "q4 non-gaap earnings per share $0.98.\nq4 revenue $1.48 billion versus refinitiv ibes estimate of $1.4 billion.\nsees q1 revenue $1.42 billion to $1.43 billion.\nsees fy 2021 revenue $5.6 billion to $5.7 billion.\nsees q1 non-gaap earnings per share $0.85 to $0.88.\nsees q1 revenue up 4.5 to 5.5 percent.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Factors that may cause our actual results to materially differ from expectations are detailed in our earnings materials and the SEC filings that are available on the website.\nInformation about the non-GAAP financial measures, including reconciliations to those, can also be found in our earnings materials that are available on the website.\nI hope all of you continue to manage safely through the new variant.\nOur new CFO has been in that role since November 1, and he's off to a great start, and you're going to hear from him in a minute.\nSo just stepping back on the cover slide.\nToday, we reported $7 billion in after-tax net income or $0.82 per diluted share.\nThat's up significantly from the year-ago period.\nThis quarter was a repeat of the themes we discussed with you in the last few quarters.\nThe pre-pandemic organic growth engine that is Bank of America is fully back in place and producing success.\nWe had strong organic and responsible growth across all our businesses.\nWe grew revenue and produced positive operating leverage.\nWe continue to see very strong asset quality metrics.\nWe support our clients and our need for capital, and we made further progress in support of local community efforts across all our markets.\nLet's go to start on Slide 2 and a few comments about our full-year results.\nThis quarter capped a record year of $32 billion in earnings for 2021 and represented significant growth in net income over 2020.\nWe even saw a more significant growth in earnings per share as share count dropped.\nWe generated more than $7 billion of earnings in every quarter in 2021.\nRevenue grew 4% year over year and activity gained momentum throughout the year.\nNII grew well in the second half of the year, which complemented fee growth, especially in our markets-related businesses.\nWealth management, investment banking and sales and trading revenues were all strong in '21.\nRecall that in the first quarter 2021, we noted at the time that our expectation is that quarterly NII could progress up by $1 billion per quarter as we entered the fourth quarter.\nAnd in fact, we have recorded fourth quarter NII that is $1.2 billion or 12% better than first quarter '21.\nOur teams managed well through the rate volatility, and we grew loans and deposits with our customers as the year progressed.\nThat sets us up nicely for 2022, and Alastair is going to talk about that in a minute.\nExpense was well-managed, but expense did go up as we continue to invest for growth.\nOur COVID-related costs remained elevated and revenue-related costs grew.\nSo while we do not see full-year operating leverage, we did, however, return to strong operating leverage in each of the last two quarters of the year, restarting our streak that we had before the pandemic.\nCredit remains stellar through 2021.\nCharge-offs consistently improved each quarter.\nOur commitment to responsible growth remains well-placed.\nWe are growing faster than the market and keeping credit costs in check.\nThe economic improvement and our strong credit allowed us to release much of the reserves we built in 2020.\nWhen you look at the balance sheet, we grew deposits $270 billion in 2021.\nThat was on top of the $360 billion of growth we had in 2020.\nOur loan growth accelerated throughout the year.\nFourth quarter represented the strongest quarter of organic loan growth we have experienced at Bank of America.\nNow, of course, that's absent the first quarter of 2020 at the start of COVID, which had $70 billion of panic drawdowns in a few weeks.\nAt the end of the day, we produced strong ROA and a 17% ROTCE for you, our shareholders, and we returned $32 billion in capital during the year.\nLet's go to Slide 3.\nThe best way to highlight the drivers behind the earnings success is to look at the momentum in client activity across the businesses.\nThis shows organic growth engine is running hard.\nMore and more of this client activity is powered by our digital transformation, which is foundational to everything we do.\nWe are proud of our digital stats and continue to spotlight our results later in the materials, as usual, see Pages 24 to 28.\nBut some key stats on this page: Consumers logged into our digital channels more than 2.7 billion times in the fourth quarter alone.\nErica, our digital financial assistant, completed more than 400 million requests from our clients in year 2021.\nHalf our consumer sales were digital in the fourth quarter.\n86% of all the check deposit transactions are now digital.\nCustomers use Zelle to transfer $65 billion in the most recent quarter.\nThe number of Zelle transactions now surpasses the checks written by our consumers.\nCash flow approvals by our commercial and corporate clients to move money grew 240% since the pandemic.\nSo the digital journey continues, and that supercharged our relationship manager-driven model.\nAnd together, that has driven the growth in loans and deposits, and fees.\nNet new checking accounts have grown in each of the past 12 quarters.\nThis contributes to the continued growth in our core deposits.\nThis also demonstrates the extent of our leadership position with U.S. consumers and deposits.\nWe have $1.4 trillion in deposits from all American consumers.\nOn credit cards, at roughly 1 million new accounts in the fourth quarter alone, that's now operating at the same level of new card production as it was pre-pandemic.\nWe're going to continue to drive that opportunity.\nWhen you think about consumer investments, Merrill Edge, as we call it, we opened 525,000 new accounts in the year 2021.\nThose accounts carried when they renew at opening, $70,000 in balances for each of those accounts.\nThis demonstrates the deep penetration of the mass affluent customer base of America.\nSales of bank products in both Merrill and our private bank teams have remained strong.\nNow when you combine Merrill, the private bank, and consumer investments, they produced more than $170 billion in net client flows in 2021.\nIn global banking, we had record years of investment banking fees combined with strong GTS results.\nIn global markets, we saw record equity sales and trading revenue.\nThese are just a few examples of the types of client activity that are driving market share gains for our company.\nAs I've done in the past, I want to spend a few minutes on the broader economy, and I'll use our own customer data to make a few points.\nLet's go to Slide 4.\nFirst, on consumer spending, I'd offer a few thoughts.\nWe are a provider of choice for individuals and businesses when paying for goods and services.\nOur award-winning and easy-to-use capabilities across all forms help clients budget, save, spend and borrow carefully and confidently.\nWe look at all forms of consumer spending, including ACH wires bill pay, P2P cash, and checks.\nMany firms focus -- many firms and many people discuss credit and debit spending, but as you look at the chart on the lower left-hand side of Page 4, you can see that 80% of the money moves in other form.\nSo what happened in 2021?\nWell, consumers spent record amounts in context in comparing '21 against the pre-pandemic period of '19, and you can see that in the upper chart on both sides of the page.\nBank of America's 67 million clients made $3.8 trillion in total payments during 2021.\nThat was an increase of 24% over pre-pandemic levels, an all-time high.\nFourth quarter in December payments also reached record highs.\nFourth quarter payments were up 28% over 2019.\nThe December payments were up 30% over 2019.\nThese are the dollar volume payments, but likewise, the numbers of payments were up double digits also and showing more and more activity.\nJust focus on debit and credit spending, for the holiday period of November and December, spending was up 26% over 2019.\nThis data confirms that consumers continue to spend into the holiday season.\nAnd so far this year, that strength continues.\nFor all the spending of all types through January 17, 2022, we have seen it up over 11% versus the start of '21, which is well up over '20 and '19.\nThat bodes well for the rest of the year and quarter.\nFocusing on the channels of payment in the lower right-hand chart that you'd expect cash and check volumes are down 24% for 2021 compared to '19.\nThis simply means more and more customers are using our digital capabilities to achieve their goals each year.\nNow importantly, though, this allows us to grow our consumer business with lower cost.\nWe believe there's lots of potential spending capacity left as average deposit balances continue to move up to the end of the year despite the heavy spending you see.\nWe had one segment, one cohort of deposits that dipped for one month out of the last part of the year.\nIn November, we had a small dip in customers who had $2,000 or less in their balances pre-pandemic.\nThey dipped by 1%.\nOther than that, every cohort from June, July, August, September, October, November, and December all grew every month.\nAnd what's striking is that the balances for people who had less than $2,000 average balances before the pandemic, they're now sitting with five times the balances they had pre-pandemic.\nFor those customers at $10,000 in accounts before the pandemic, they're now sitting with two times in their accounts .\nThe teams track this data carefully and it shows the spending power left in the American consumer.\nAnother economic signpost worth noting with our customer activity was acceleration of loan growth in the fourth quarter.\nEarlier this year, we -- earlier last year, we talked about the green shoots of loan growth we saw in the first quarter, and we saw that turn into growth as we move through the quarters, culminating with $50 billion in record loan growth this quarter.\nWe note these borrowers, both consumer and commercial, have strong capacity to continue to borrow if they so desire as lines across the border in low-usage status.\nWe provide Slide 5 to show you the daily outstanding loans again this quarter, which gives you a sense of progression across time.\nEvery loan category saw improvement this quarter except for home equity.\nWhat I would draw your attention, too, on Slide 5 is the addition of the pre-pandemic starting point to give you some reference.\nSome of the growth this quarter was in global markets, and that business ebbs and flows with the market activity.\n$35 billion of that $50 billion was in the core consumer and commercial books.\nSo far in January, the businesses other than global markets continue to show growth over the end of the year.\nSo let's start and talk about the commercial portfolio where we have moved above the pre-pandemic level for the most recent growth.\nCommercial loans; excluding PPP, grew $43 billion or 9% linked quarter.\nCompared to quarter 3, growth this quarter was broad-based across all segments of commercial lending.\nWe saw improvement in both new loans, as well as improving utilization from existing clients.\nThis reflects the intense relationship manager effort our teams have done and -- across the last couple of years and adding more and more relationship managers.\nCommercial loans of wealth management clients extended their growth trend this quarter as these customers barred for various liquidity needs for asset purchases.\nIn small business lending, the all-important small business segment, lending activity is running consistently above pre-pandemic levels.\nAnd especially in our Practice Solutions Group that supports medical, dental, and veterinary practices, we continue to see continued momentum and finished one of the best years across all small business with our Business Advantage rewards cards.\nTurning to consumer loans.\nCard loans grew $4.6 billion or 6% from quarter 3 levels.\nThis occurred as spending increased and even occurred as payment rates -- paying off the card completely trended higher for the quarter.\nCard balances still remain well below the pre-pandemic levels of $95 billion, and we continue to push that opportunity.\nMortgage loan levels grew 2% linked quarter as origination remained at high levels and paydown slowed down.\nOn the next, Slide 6, I would like -- I would say that while we deliver capital back to our shareholders, $32 billion, and we invested in our teammates, we also continue to invest in our communities through our local teams across the country focused on our markets.\nI call out the reference in the bottom of the slide, middle -- bottom-middle of Slide 6 to the sweeping changes we announced last week in our NSF policies.\nThese updates continue the work we began over a decade ago to simplify our product set and allow a great experience for our clients and an efficient capability for our operations.\nEliminating NSF fees and reducing the overdraft charge per occurrence from $35 to $10 and the other changes we're making is a big win for our clients.\nIt's going to have an obvious impact on those fees, which have fallen dramatically since 2009 and 2010, but currently run about $1 billion in '21, and we'd expect them to drop by 75% over the next year or so.\nI'm going to take us to our fourth quarter results on Slide 7, focusing on comparisons against the prior-year quarter.\nAnd I'll also talk through the high-level commentary on Slide 8.\nAs Brian noted, we produced $7 billion in net income, which grew 28% from fourth quarter '20, while earnings per share of $0.82 improved at a faster 39% pace due to our share repurchases.\nLooking at our top-line improvement on a year-over-year basis, revenue rose 10%.\nThe improvement was driven by a $1.2 billion increase in NII and a little more than $800 million increase in noninterest income.\nEach business segment produced strong noninterest income results.\nAnd as you look at significant components of revenue, it was pretty consistent through the quarters in 2021.\nOne important aspect of responsible growth has been to grow consistently and sustainably.\nAnd I think we executed on that in 2021 with investment banking over $2 billion each quarter; sales and training -- trading near or above $3 billion each quarter; investment and brokerage services revenue over $4 billion each quarter.\nWith regard to expenses, our revenue-related costs increased and we continue to make investments in our people and our capabilities to grow the franchise.\nAt the same time, lower COVID costs and further digital engagement have helped to offset some of those increases.\nIn the fourth quarter, revenue growth outpaced expense growth on a year-over-year basis, which produced operating leverage of 400 basis points and a 19% year-over-year improvement in pre-tax pre-provision income to $7.3 billion.\nWith regard to returns, our ROTCE was 15%, ROA was 88 basis points, both of which improved nicely over the year.\nMoving to Slide 9.\nDuring the quarter, the balance sheet grew $85 billion to a little less than $3.2 trillion, and this reflected the $100 billion of growth in deposits.\nThese deposits funded $51 billion of loans growth.\nAnd we also added $14 billion in securities, and so our cash increased by $68 billion.\nPartially offsetting these increases were typical year-end moves in our global markets balance sheet.\nOur liquidity portfolio grew to $1.2 trillion or a little more than a third of our balance sheet, and shareholders' equity declined $2.4 billion from Q3, driven by the $8.9 billion of capital distributions, which once again outpaced earnings in the fourth quarter as it did in Q3.\nWith regard to our regulatory ratios, CET1 under the standardized approach was 10.6% and remains well above our 9.5% minimum requirement.\nThe CET1 ratio declined 50 basis points from Q3, driven by excess capital reduction, as well as an increase in our RWA, due to the strong loans growth.\nAnd we're happy to see that capital usage increasingly needed to support customers and to fuel their growth, while still producing plenty of capital to return to our shareholders.\nEarnings alone in the most recent quarter contributed 45 basis points to our CET1 ratio before the other capital impacts of share repurchase.\nGiven our deposit growth, our supplemental leverage ratio declined to 5.5% versus a minimum requirement of 5%, which still leaves plenty of capacity for balance sheet growth.\nAnd our TLAC ratio remained comfortably above our requirements.\nTurning to Slide 10.\nWe included the schedule on average loan balances, but in the interest of time, I don't have anything to add beyond what Brian noted earlier.\nMoving to deposits on Slide 11.\nWe continue to see significant growth across the client base as we deepened relationships and added net new accounts across our deposit-taking businesses.\nCombining both consumer and wealth management customer balances, I would highlight that retail deposits grew $48 billion from Q3.\nOur retail deposits have now grown to nearly $1.4 trillion, and we lead our competitors.\nWe also saw continued strong growth with our commercial clients.\nAnd remember, the deposits we're focused on and are gathering are the operational deposits of our customers in both consumer and wholesale.\nTurning to Slide 12 and net interest income.\nOn a GAAP non-FTE basis, NII in Q3 was $11.4 billion.\nBut I know, as investors, you tend to focus on the FTE NII number, which was $11.5 billion.\nSo focusing on the change on an FTE basis, net interest income increased $1.2 billion from Q4 '20 or 11%, driven by deposit growth and related investing of liquidity.\nNII versus Q3 of '21 was up $319 million, driven by deposit growth and then higher securities levels, as well as loans growth.\nPremium amortization declined roughly $100 million to $1.3 billion in Q4, and the positive NII impact of lower premium amortization offset lower PPP fees.\nGiven continued deposit growth and low rates, our asset sensitivity to rising rates remains significant.\nIt's modestly lower quarter over quarter as long-end rates moved higher, and we recognized some of that sensitivity in our now higher reported level of NII.\nSo I'd like to give you a couple of thoughts on NII expectations for 2022.\nFirst, I want to start by reiterating Paul's comment last quarter that we expect to see robust NII growth in 2022 compared to 2021.\nThat assumes we see continued loans growth and the rising rate expectations embedded in the forward curve.\nAnd in the first quarter specifically, we expect two headwinds.\nFirst, there are two less interest accrual days in the quarter.\nAnd as a reminder, we picked those back up in the subsequent two quarters.\nSecond, we expect less PPP fee benefits.\nCombined, those two headwinds add to about $250 million.\nDespite those headwinds, we would still expect Q1 to be up about a couple of hundred million from Q4 and should grow nicely each subsequent quarter in 2022.\nAgain, that's, of course, dependent upon the realization of the forward curve and some loans growth.\nLastly, as we see the forward curve now expecting a new rate hiking cycle to begin, we added Slide 13, as we thought it might be helpful from a historical context to see the trend of NII across the years since the last rate hike cycle.\nAnd what I'll draw your attention to is the stark difference in the size of our balance sheet today.\nAnd because of that balance sheet differential, today's NII is already at the NII level we saw when we were well into the middle of the last rate cycle.\nAnd importantly, our short-end asset sensitivity today is twice what it was in the third quarter of 2015 as that cycle began.\nLet's turn to costs, and we'll use Slide 14 for that discussion.\nOur Q4 expenses were $14.7 billion, an increase of $291 million from Q3.\nHigher revenue-related costs, and to a lesser degree, seasonally higher marketing costs, drove the increase.\nAs Brian noted at the mid-quarter conference, our Q4 expenses were a bit higher than we anticipated when we ended the last quarter.\nRevenue continued to hold up well, and the company had a good year, both resulting then in higher incentive costs.\nCompared to the year-ago period, expense growth was driven by incentive costs associated with all of our markets-related improvements.\nAs we look forward, we continue to invest in technology and people at a high rate across our businesses, and we continue to add new financial centers in expansion and growth markets.\nSo let me say two things about 2022 expenses.\nFirst, relative to Q4 expense, we expect Q1 to include two elements of seasonality.\nWe typically experience seasonally higher payroll tax expense, and that was about $400 million in 2021.\nAlso, Q1 is typically our best period of sales and trading revenue which results in modestly higher associated costs.\nSecond, with regard to full-year 2022, our best expectation currently is we can hold expenses flat compared to 2021, which finished just below $60 billion.\nThis guidance incorporates our expected continuing investments, strong revenue performance, and the inflationary costs we experienced in the second half of 2021.\nIt also relies upon our continued expense discipline, operational excellence improvements, and the benefits of digital transformation to deliver the operating leverage we seek.\nTurning to asset quality on Slide 15.\nThe asset quality of our customers remains very healthy and net charge-offs this quarter fell to a historical low of $362 million or 15 basis points of average loans.\nThey continued a steady decline through the quarters of 2021, with Q4 down $100 million from Q3 and down more than $500 million from Q4 last year.\nOur credit card loss rate was 1.42%, and that's less than half of the pre-pandemic rate.\nIt improved each quarter during the year.\nSeveral other loan product categories have been in recovery positions throughout the year.\nProvision was a $489 million net benefit in Q4, driven primarily by asset quality, and macroeconomic improvement, and was partially offset by loans growth.\nThis included a reserve release of $850 million, primarily in our commercial portfolio.\nAnd on Slide 16, we highlight the credit quality metrics for both our consumer and commercial portfolios.\nTurning to the business segments, let's start with consumer banking on Slide 17.\nI'll start by acknowledging what a strong year the consumer bank has had as they generated nearly $12 billion of earnings, which is 37% of record year results for the company.\nConsumer opened over 900,000 net new checking accounts.\nAnd in fact, this quarter represents their 12th consecutive quarter of net new consumer checking account growth.\nAnd in turn, consumer grew deposits by more than $140 billion.\nThey opened 3.6 million credit cards and grew card accounts in 2021 by more than any of the past four years.\nThis helped card balances grow in Q4 despite payments remaining high.\nThey also opened 525,000 new consumer investment accounts.\nAnd that helped us to reach a new record for investment balances of $369 billion, growing 20% year over year as customers continue to recognize the value of our online offering.\nYes, market valuations grew balances, and we also saw $23 billion of client flows since Q4 '20.\nSo Q4 was a strong finish to these results.\nAnd in the quarter, the business produced $3.1 billion of earnings off $8.9 billion of revenue and managed costs well.\nOur 8% revenue growth was led by NII improvement as we continue to recognize more of the value of our deposit book.\nAnd while revenue grew, expense declined by 1% year over year, generating over 900 basis points of operating leverage.\nLower COVID costs and increased digital adoption by clients more than offset our continued investments in people and our franchise.\nThis expense discipline has now driven our cost of deposits to an industry-leading 111 basis points.\nNet charge-offs declined and we had $380 million of reserve release in the quarter.\nAnd as you can see, and as I already noted, deposits continued to grow strongly both year over year, as well as linked quarter.\nImportantly, our rate paid remained low and stable.\nTurning to the wealth management business.\nBank of America continued to deliver wealth management at scale across a full range of client segments.\nThe continued economic progress, strong market conditions, and the efforts of our advisors contributed to strong client flows and net new household growth.\nThis allowed Wealth Management to generate more than $4 billion in earnings in 2021, up more than 40% from 2020.\nIn Q4, this powerful combination of Merrill Lynch and our private bank produced records for revenue, earnings, investment balances, and asset management fees, as well as record levels of loans and deposits.\nIn fact, with regard to loans, this is the 47th consecutive quarter of average loans growth in the business.\nIt's consistent and it's sustained.\nQ4 net income was $1.2 billion, improving 47% year over year and driven by strong revenue growth, good expense controls, and lower credit costs.\nRevenue growth of 16% was led by strong improvements in both AUM and brokerage fees, as well as higher NII on the back of solid loan and deposit increases.\nExpenses increased 8% in alignment with the higher revenue and resulted in 800 basis points of operating leverage.\nClient balances of $3.8 trillion rose $491 billion, up 15% year over year, driven by higher market levels, as well as very strong net client flows of $149 billion.\nWithin these flows, deposits grew $68 billion year over year to $390 billion, and loans grew $21 billion year over year to $212 billion.\nAnd that loan and deposit growth is further evidence that more and more Merrill and private bank clients are using the bank's products broadly.\nNet new household generation is getting closer to pre-pandemic levels as advisors are meeting in person more with clients and are building their pipelines back following the shutdown during the pandemic.\nThis quarter, Merrill Lynch's net new households of 6,700 and private banking relationships net new of 500 were both up more than 30% from the year-ago period.\nThe clients of this business continue to lead our franchise in digital adoption, utilizing digital tools to access their investments and also for other banking needs like mobile check deposits and lending.\nThe evolution is forming a modern Merrill, which is advisor-led and powered by digital.\nMoving to global banking on Slide 19.\nThe business momentum through the back half of the year was strong.\nNet interest income grew on the back of accelerating loans growth.\nInvestment banking fees reached record levels and deposits continued to grow as clients navigated the pandemic.\nWe also saw strong demand from our clients around ESG investments driving improvements in bottom-line results.\nNet income for the full year was a record $9.8 billion or 31% of the company's overall net income.\nThe business earned $2.7 billion in Q4, improving nearly $1 billion year over year, driven by higher revenue and lower provision costs, partially offset by higher expenses.\nRevenue improvement of 24% year over year reflected more than 30% growth in investment banking fees in this segment, and net interest income increased 18%.\nThis investment banking performance allowed us to gain market share and record No.\n3 ranking in overall fees in what was a very strong Q4 market.\n1 in investment grade and No.\n2 in leverage finance with market share improvement compared to the year-ago period.\nAnd we also saw another record M&A period.\nAnd most importantly, our investment banking pipeline remains quite healthy.\nProvision expense reflected a reserve release of $435 million, compared to a $266 million release in the year-ago period.\nAnd what I'd draw your attention to here is the reduction in net charge-offs year over year from $314 million in Q4 of '20 to small recoveries in Q4 '21.\nThat year-ago period included some losses from clients in those industries that were heavily impacted by COVID.\nFinally, given the strength of revenue we saw expenses increase by 12%, which is still only half of our increase in revenue.\nSwitching to global markets on Slide 20.\nFull-year net income of $4.6 billion reflects another solid year of sales and trading revenue.\nThis included a record year for equities, up 19% versus 2020.\nInvestments made in this part of the business are seeing good results as our financing clients are doing more business with our company.\nAs we usually do, I'll talk about the segment results, excluding DVA, even though net DVA was negligible in both Q4 '21 and Q4 '20.\nIn Q4, global markets produced $667 million in earnings, $167 million lower than the year-ago quarter.\nFocusing on year over year, revenue was modestly down, driven by sales and trading.\nSales and trading contributed $2.9 billion to revenue, a decline of 4% year over year.\nFICC, down 10%, while equities improved 3%.\nFICC results reflect a weaker credit trading environment in Q4 '20, and the strength in equities was driven by growth in client financing activities and the multiplier effect.\nThe year-over-year expense move was driven by investments in revenue-related sales and trading costs, partially offset by the absence of costs associated with the realignment of liquidating business activity to the all other units in Q4.\nFinally, on Slide 21, we show all other, which reported a loss of $673 million, which declined a little more than $250 million from the year-ago period.\nRevenue declined as a result of higher volume of deals, particularly solar, and partnership losses on ESG investments.\nThat's offset by the tax impact in this reporting unit.\nExpense increased as a result of costs now recorded here after the fourth quarter realignment out of global markets, which was partially offset by a decrease in various other expenses in the segment.\nThat realignment obviously had no bottom-line impact on our company overall.\nAnd in all other, we incorporate the impact of our ESG tax credits and any other unusual items.\nFor the full year, the effective tax rate was 6%.\nAnd excluding the second quarter '21 positive tax adjustment triggered by the U.K. tax law change, and other discrete items, the tax rate would have been 14%.\nFurther adjusting for ESG tax credits, our tax rate would have been 25%.\nAnd looking forward, we would expect our effective tax rate in 2022 to be between 10% and 12%, absent any tax law changes or unusual items.\nAnd with that, I think I'll stop and we'll open it up for Q&A.\n", "role": "user" }, { "content": "compname reports q4 net income of $0.82 per share.\ncompname reports q4-21 net income of $7.0 billion; earnings per share of $0.82.\nqtrly fixed income currencies and commodities (ficc) revenue of $1.6 billion and equities revenue of $1.4 billion.\nqtrly provision for credit losses improved by $542 million to a benefit of $489 million.\nqtrly net interest income up $1.2 billion, or 11%, to $11.4 billion.\nqtrly revenue, net of interest expense, increased 10% to $22.1 billion.\nbank of america - qtrly noninterest income up 8% to $10.7 billion, driven by record asset management fees and record investment banking revenue.\nfourth-quarter results were driven by strong organic growth, record levels of digital engagement, and an improving economy.\nqtrly noninterest expense rose 6% to $14.7 billion.\nin quarter, historically low net charge-off ratio of 0.15%, down 5 basis points from the prior quarter.\nin quarter, wealth management had record client flows & strongest client acquisition numbers since before pandemic.\nadded $100 billion of deposits during the quarter.\nbank of america - in quarter, global markets had highest sales & trading revenue in a decade, led by record equities performance as we invested in business.\nbank of america - asset quality remained strong with loss rates at historically low levels as global economy continued to improve.\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 Rubun Dey, Head of Investor Relations.\nAnd with me to talk about our business and financial results are Horacio Rozanski, our President and Chief Executive Officer; and Lloyd Howell, Executive Vice President, Chief Financial Officer and Treasurer.\nDuring todays call, we will also discuss some non-GAAP financial measures and other metrics, which we believe provide useful information for our investors.\nWe include an explanation of adjustments and other reconciliations of our non-GAAP measures to the most comparable GAAP measures in our first quarter fiscal year 2022 slides.\nWe are now on slide four.\nAs always, Lloyd and I are pleased to share our latest financial results and to represent the great work of the more than 28,000 people of Booz Allen.\nOur industry, in fact, the entire economy is transitioning to more in-person work as we recover from the COVID-19 pandemic.\nAnd at Booz Allen, we are excited about the opportunities this presents to our people and clients.\nAfter my remarks, I will give Lloyd the floor to cover the financials in more depth.\nLet me start with an overview of the quarter.\nOn our last call in late May, we talked about our near and midterm priorities and our fiscal year 2022 outlook.\nWe said we expect another year of significant revenue growth with strong earnings growth, continued cash generation and strategic deployment of capital.\nAt the same time, we noted that the pattern for the year would likely look different from recent years with lower revenue growth in the first half and significant acceleration in the second half.\nThis pattern is due to several factors, including the recovery from the pandemic, the implementation of a new financial system and our acquisition of Liberty IT Solutions.\nAs such, we are pleased to reaffirm our guidance for the full fiscal year.\nOperationally, we continue to move back to pre-pandemic business rhythms.\nIn our Defense and Civil businesses, we are aligned to our governments top priorities, have a robust pipeline and several great wins in the quarter.\nThese two parts of our portfolio represent three quarters of our revenue, and they continue to deliver solid growth.\nIn our intelligence business, hiring is going well, and the portfolio reshaping we have done has yielded some important wins.\nThe first quarter decline in revenue was largely due to low billable expenses, and we continue to expect a growth year in this business.\nGlobal Commercial represents 2% of our revenue.\nContinued declines are tied to our portfolio reshaping and the impact of the pandemic.\nWe do expect to see year-over-year growth in the second half of the fiscal year.\nTaken together, our entire portfolio of business produced low single-digit revenue growth year-over-year, as we expected.\nThe relatively slow growth was driven primarily by a return to more normal staff utilization and PTO trends compared to the first quarter of first quarter of last fiscal year, when the country was largely in lockdown.\nAt the bottom line, adjusted EBITDA, adjusted EBITDA margin and adjusted diluted earnings per share were ahead of our expectations.\nBook-to-bill for the quarter was also strong.\nAnd we are excited about the quality mission center work we are winning.\nCash from operations came in light, primarily driven by one-time costs related to the Liberty transaction.\nLloyd will discuss all the numbers in detail in a few minutes.\nAs you may remember, on our last call, we spoke about a set of near and midterm priorities that are critical to our success.\nThe main reason for our optimism about the year is the great progress we have made to-date.\nLet me go through them briefly.\nOur top priority is recruiting.\nAnd in the first quarter, we began to see results from our laser focus in this area.\nWe are seeing sequential month-over-month growth and believe momentum will build over the remainder of the year.\nSecond, the reshaping of our intelligence and global commercial portfolios continues.\nWe believe the tactical and strategic moves we are making will yield year-over-year growth.\nThird, we are very pleased to have completed the Liberty acquisition in mid-June.\nOur teams are working side-by-side and everything we have seen since the closing confirms that this was a great deal for Booz Allen and for Liberty.\nWe are very excited about the strategic opportunities we have to augment each others strengths.\nFourth, the NextGen financial system successfully launched on April 1st and is running very well to the great credit of the team.\nAfter more than three years of preparation, launching the system and executing the first quarter closed without any major disruptions were critical milestones.\nAnd fifth, we continue to invest in our people and capabilities as we carefully manage the transition to a post-COVID environment.\nConsistent with that creating the best possible experience for our talent is a constant area of focus for us.\nIn that vein, I would like to take a few minutes today to share with you how Booz Allen is thinking about the future of work.\nWe are cautiously optimistic that the worst of the pandemic is behind us in the United States and most places that Booz Allen operates.\nAs such, we are preparing to fully reopen our offices the day after Labor Day, provided that health and safety allow it.\nAs we move toward that reopening, we intend to take the best of what we have learned over the past 16-months and create ways of working that better serve our talent, our clients and the critical missions we are part of.\nGoing forward, our workforce will have three operating models.\nFirst, we have always had a small group of employees who are purely remote, and we expect that to continue and for that group to remain relatively small.\nSecond, we have a group of people who work full time at government and our facilities.\nAnd that too will continue, although we expect it to proportionately decline from historical levels.\nOur clients have shown a great deal of creativity over the course of the pandemic.\nAnd based on this experience, many are interested in flexible models that better serve their missions while reducing the number of people who are 100% on-site.\nThe third workforce model is a hybrid.\nAnd we expect overtime for this to be a majority of our people.\nEmployees in this group will spend less time in Booz Allen and client offices than previously and instead have a mix of telework and in-person collaboration.\nThis gives people much more flexibility in their personal and family lives while at the same time preserving our culture and the close connection to clients, our firm and each other.\nWhat is most exciting about the future of work conversations we have been having internally and externally is the opportunity everyone sees for greater flexibility.\nIn fact, there is an expectation that we need to work in new ways because the technology allows it and the competition for talent simply requires it.\nTo succeed, today and in the future, employers, whether they are in the government or the private sector must foster a workforce that is more distributed, more digital and certainly more diverse.\nBooz Allen is a leader in this area, working with our government clients to help them rethink and reshape the way they accomplish critical missions.\nMany clients believe that the reality of todays world and the needs of the next decade demand fundamental change in how federal agencies execute their business on behalf of all of us.\nAnd consistent with who we are we will lean into those change opportunities proactively.\nAnd so as we look toward the fall and beyond, our firm has a lot to be optimistic and excited about.\nWe are working very hard to take care of our people, build our business, serve clients and position Booz Allen for the future.\nAs always, our overriding goal is to continue to create near and long-term value for our investors and all our stakeholders.\nAnd with that Lloyd, over to you.\nBefore I jump into the financials, I want to note that this has been a truly busy quarter for us.\nA few of the major highlights included closing our acquisition of Liberty and launching the integration process, replenishing our balance sheet through the bond market.\nInvesting in latent II, a highly strategic, rapidly growing company in the AI ML space.\nDoubling down on our recruiting and hiring efforts with promising results.\nImplementing our NextGen financial system.\nAnd, of course, engaging across the firm on our strategic review and our next investment thesis.\nWe are energized by the pace of activity and look forward to sharing more in the months to come.\nNow on to first quarter performance.\nAs we noted in May, we expected some early year choppiness in our top-line results as we move into a post-pandemic operating rhythm.\nHowever, we were able to maintain strong performance at the adjusted EBITDA and ADEPS line through disciplined cost management.\nAdditionally, we are encouraged by our solid bookings performance as well as our pace of recruiting.\nOperating cash flow was light of our initial forecast, but we view most of the moving pieces as either one-time or transitory.\nAltogether, today s results are in line with the expectations we laid out last quarter, and we remain confident in our plan for the full fiscal year.\nAt the top-line, in the first quarter, revenue increased 1.7% year-over-year to $2 billion.\nLiberty contributed approximately $16 million to revenue growth.\nRevenue excluding billable expenses grew 1.9% to $1.4 billion.\nRevenue growth was driven by solid operational performance, primarily offset by higher-than-normal staff utilization in the comparable prior year period.\nTop-line performance for the quarter was in line with our expectations.\nAs a reminder, we forecast constrained low single-digit top-line growth in the first half of the year, driven by four dynamics: First, the need to ramp up on contracts and hiring; second, a more normalized utilization rate in the first half of this fiscal year compared to the high staff utilization in the first half of fiscal year 2021, which we believe to be worth roughly 300 basis points of growth.\nThird, high PTO balances coming into the fiscal year with an expectation that our employees will take more time off; and fourth, minor timing differences in our costing of labor, resulting from implementation of our new financial system.\nAs we noted before, we expect growth to accelerate throughout the year.\nNow let me step through performance at the market level.\nIn defense, revenue grew 4.4%, with strong growth in revenue ex billable expenses, partially offset by significant materials purchases in the prior year period.\nIn Civil, revenue grew 6%, led by strong performance in our health business and the addition of Liberty.\nWe expect momentum to build throughout the year.\nAs more administration priorities ramp up and we continue to capture opportunities, building on our strong win rates.\nRevenue from our intelligence business declined 6.4% this quarter.\nRevenue ex-billable expenses grew in line with our expectations, but were more than offset at the top-line by lower billable expenses.\nWe are excited by a number of critical recent wins in the portfolio.\nAnd we believe we have the right leadership and strategic direction in place to execute a growth year.\nLastly, revenue in Global Commercial declined 27.4% compared to the prior year quarter.\nWe anticipate year-over-year growth in the second half, an outcome that is largely dependent on hiring additional talent to capitalize on growing demand as well as moving past challenging prior year comparables in international.\nOur book-to-bill for the quarter was 1.3 times, while our last 12-months book-to-bill was 1.2 times.\nTotal backlog grew 16.5% year-over-year, including Liberty, resulting in backlog of $26.8 billion, a new record.\nFunded backlog grew 1.6% to $3.5 billion.\nUnfunded backlog grew 91% to $9 billion and price options declined 3.7% and to $14.3 billion.\nWe are proud of our bookings performance in the first quarter, coming off a seasonally strong fourth quarter results.\nWe believe that the stability of our longer-term book-to-bill demonstrates continued strong demand for our services as well as the high value placed on our understanding of client missions.\nPivoting to headcount as of June 30th, we had 28,558 employees, up by 1,177 year-over-year or 4.3%.\nAccelerating headcount growth to meet robust demand for our services is our top priority for the year.\nWe are encouraged by how we closed the first quarter, and we expect to see progress throughout the year.\nMoving to the bottom line, adjusted EBITDA for the quarter was $238 million, up 11.8% from the prior year period.\nThis increase was driven primarily by our ability to again build for fee within our intelligence business as well as the timing of unallowable expenses within the fiscal year.\nThose items, along with continued low billable expenses as a percentage of revenue pushed our adjusted EBITDA margin to 12%.\nWe expect billable expenses and unallowable spend to pick up as we move throughout the year.\nFirst quarter net income decreased 29% year-over-year to $92 million, primarily impacted by Liberty transaction-related expenses of approximately $67 million.\nAdjusted net income was $146 million, up 12.3% from the prior year period, primarily driven by the same factors driving higher adjusted EBITDA.\nDiluted earnings per share declined 27% to $0.67 from $0.92 in the prior year period.\nAnd adjusted diluted earnings per share increased 15% to $1.07 from $0.93.\nThese increases to our non-GAAP metrics which exclude the impact of the transaction-related costs noted were primarily driven by operating performance and a lower share count in this quarter due to our share repurchase program.\nTurning to cash, cash flow from operations was negative $11 million in the first quarter.\nThis decline was driven primarily by lower collections largely attributable to timing around receivables associated with the integration of our new enterprise financial system.\nAs our employees and clients adapt to the new invoicing system, we expect to return to a more typical collections cadence over the coming months.\nOperating cash flow was negatively impacted by approximately $67 million of transaction costs paid in the first quarter, which includes approximately $56 million of cash payment at closing of the Liberty acquisition.\nThese cash payments represent a reallocation of a portion of the overall $725 million purchase price prior to adjustments from investing cash flows into operating cash flows.\nCapital expenditures for the quarter were $9 million, down $11 million from the prior year period, driven primarily by lower facility expenses.\nWe still expect capital expenditures to land within our forecast range for the year.\nDuring the quarter, we issued $500 million of 4% senior notes due 2029.\nAdditionally, we extended the maturity of our Term Loan A and revolving credit facility to 2026 and increased the size of our revolver by $500 million to $1 billion of total capacity.\nThose moves are in support of our disciplined capital deployment strategy.\nWe will continue to use our balance sheet as a strategic asset.\nDuring the quarter, we paid out $52 million for our quarterly dividend and repurchased $111 million worth of shares at an average price of $83.91 per share.\nIn total, including the close of the Liberty acquisition, we deployed $889 million.\nToday, we are announcing that our Board has approved a regular dividend of $0.37 per share, payable on August 31st to stockholders of record on August 16th.\nAs our actions this quarter demonstrate, we remain committed to preserving and maximizing shareholder value through a disciplined balanced capital allocation posture.\nPlease move to slide seven.\nToday, we are reaffirming our fiscal year 2022 guidance.\nAs we discussed last quarter, the first half, second half dynamics we laid out are still the guiding framework for our full-year growth expectations.\nWe expect total revenue growth to be between 7% and 10%, inclusive of Liberty.\nOur contract and hiring ramp will determine where we land within that range.\nWe continue to expect revenue growth to accelerate throughout the year.\nWe expect adjusted EBITDA margin in the mid-10% range.\nWe expect adjusted diluted earnings per share to be between $4.10 and $4.30 based on an effective tax rate of 22% to 24% and 134 million to 137 million weighted average shares outstanding.\nADEPS guidance is inclusive of both Liberty and incremental interest expense from our $500 million bond offering.\nWe expect operating cash flow to grow to $800 million to $850 million, inclusive of the aforementioned $56 million of cash payments related to the Liberty transaction.\nDue to these one-time payments, we expect to end the year at the lower end of our range, with partial offset through a combination of working capital management and operational performance.\nAnd finally, we expect capex in the $80 million to $100 million range.\nIn summary, we are starting off the year just as we expected and look forward to a great year.\nWe were ambitious in trying to execute both a major acquisition and a companywide rollover of our financial systems in the same quarter.\nWith that, Rubun, let s open the line to questions.\nOperator, please open the line.\n", "role": "user" }, { "content": "booz allen hamilton qtrly earnings per share $0.67.\nqtrly earnings per share $0.67.\nqtrly adjusted earnings per share $1.07.\nreaffirms fiscal 2022 guidance.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'm Rubun Dey, Head of Investor Relations.\nAnd with me to talk about our business and financial results are Horacio Rozanski, our President and CEO, and Lloyd Howell, Executive Vice President, CFO and Treasurer.\nDuring today's call, we will also discuss some non-GAAP financial measures and other metrics, which we believe provide useful information for investors.\nWe include an explanation of adjustments and other reconciliations of our non-GAAP measures to the most comparable GAAP measures in our third quarter fiscal year 2021 slide.\nWe are now on Slide 5.\nToday, Lloyd and I will take you through our third quarter results and the dynamics that drove them.\nAnd we will put the results in the context of the successful culmination of our three-year investment thesis and the strength of our business in the near and long term.\nOur revenue grew more slowly than expected.\nConversely, our bottom line results, profit margins and cash flow are excellent and ahead of expectations.\nSince the beginning of our fiscal year, we have described three macro environmental factors that created uncertainty about our second half, the outcome of the election, the status and outlook for the federal budget, and the course of the COVID-19 pandemic.\nLet me talk specifically about how those are playing out on the demand front, on the supply front and the impact on revenue and profits.\nUnderlying demand for our services and solutions remains quite strong.\nIn the third quarter, we saw delays in some procurements in the intelligence market, largely due to the pandemic.\nAnd in the civil market, we saw movement to the write on awards and even some pullback on funding, which we believe is due to the turmoil surrounding the presidential election.\nThese shifts in procurements and funding were greater than we anticipated and greater than we normally experience during a change in administrations.\nWe expect these dynamics to be temporary with a return to more typical market rhythms over the next six to nine months.\nSecondly, on the demand side.\nI'll note the reduction in billable expenses in comparison to our third quarter last year.\nWe have said previously that billable expenses are unpredictable and not a significant source of profitability.\nThe third quarter drop-off was partially due to COVID and is another dynamic that may last for a couple more quarters.\nTurning now to the supply side.\nThere were two factors in play.\nThe first was a fast return to more historical productivity rates.\nDuring the first half, we spoke of meaningful jump in productivity because of high retention and low use of paid time off.\nWe always knew that was temporary.\nOur expectation was that we would see a gradual shift to typical patterns as COVID vaccines rolled out.\nInstead, we saw a quick snapback to more normal, albeit lower productivity levels in November.\nEarly indication is that our fourth quarter productivity levels may remain closer to historical norms.\nAlso in the third quarter, the combination of lower-than-desired recruiting rates and the strategic divestiture of a small defense contract led to a sequential decline in headcount.\nAs productivity declined in the first half, we were comfortable with slower headcount growth.\nBut with the snap back to normal levels, we need to accelerate recruitment.\nWe have already ramped up and expect to see improvement in three to six months.\nShifting to our other key metrics.\nLet me highlight the strength of our margins, bottom line and cash flow.\nWhile the reduction in billable expenses helps margins, our over performance at the bottom line and in cash flows is primarily driven by our strong execution of the business.\nDespite the challenges of the past year, our team has remained focused on the fundamentals that drive our performance, high-quality client delivery, smart capture of new business, targeted cost management and continued investment in our differentiators, especially our people.\nAs a result, we have made our business leaner and more competitive, enhanced our brand in the market for talent and doubled down on our growth drivers, all while delivering outstanding value to shareholders and strengthening our balance sheet.\nWe expect both the headwinds and tailwinds I just described to be with us for the next few months, and that is reflected in our updated full-year guidance, which Lloyd will talk through in detail.\nIn addition, noting our confidence in the business, we are pleased to announce a $0.06 increase in our quarterly dividend and an increase in our share repurchase authorization, which will continue to support our ongoing share repurchase program.\nWe are proud that through all the challenges of COVID, social unrest, natural and man-made disasters, budget uncertainty and the most difficult election and postelection period in our lifetimes, Booz Allen is on track to deliver another year of growth and value creation.\nAnd we also know we have some work to do.\nAs the fourth quarter gets under way, the leadership team has prioritized four specific areas.\nConverting a rich opportunity pipeline into awards and revenue as quickly as the market permits, ramping up recruiting to take full advantage of growth opportunities, continuing to reshape our intelligence portfolio to drive growth and maximizing value creation from our very strong balance sheet by deploying capital against strategic opportunities such as a recent investment in Tracepoint and other levers of shareholder value creation.\nAfter that summary of our near-term performance and priorities, let me take the discussion up a level and put it in a fuller context.\nMy leadership team and I are confident and optimistic about the direction of our business and the meaningful difference our people continue to make in support of client missions.\nCOVID vaccinations are under way, a federal budget is in place, and the new administration has hit the ground running.\nWe view these as important stabilizing forces in the overall economy and in our market.\nThe President has nominated an experienced team of leaders to execute the business of government.\nThey have clear agendas and understand the value of using technology to accelerate mission.\nInside Booz Allen, even as we focus on day-to-day operational excellence, we continue to plan for the long term.\nOur overriding objective is to expand and strengthen our unique market position at the intersection of technology, mission and consulting.\nWe do that by staying close to our clients, anticipating what they will need next and investing in the right talent and capabilities to advance missions.\nThe investments we've made to grow and reshape our portfolio over many years, are both driving today's performance and bolstering our prospects for the future.\nFor example, we believe we are the largest provider of artificial intelligence services to the federal government with 60% year-over-year revenue growth in our AI services portfolio, albeit from a small base.\nThis is an addressable market that we expect to increase tenfold in the next five years and we are in the pole position to shape it.\nWe also support key federal agencies that form the epicenter of US cybersecurity across the civil, defense and intelligence domains.\nWith our ranking by Frost & Sullivan as the leading provider of cybersecurity services in North America, we view ourselves as uniquely positioned to both help the nation and capture opportunity in this critical area.\nThe new administration is already signaling renewed focus on cyber in the wake of the solar winds attack.\nWe're also building scale and depth in 5G and in the next-generation tech stack.\nA 5G network requires the integration of hardware, software, IoT devices, security, analytics and emission insights, which plays to our strengths and our brand in the federal market.\nWe're standing up a 5G lab to support research and development.\nWe have partnerships with leading 5G technology companies and we are prototyping integrated capabilities.\nThese key technology areas and others from edge computing to digital warfare to cloud solutions and open data platforms, to immersive technology and human performance.\nThey all inform our thinking as we develop our next strategy.\nWe continue to make good progress and look forward to sharing our strategy with you later this year, along with an updated multi-year financial outlook.\nI'll make one final important point before giving the floor to Lloyd.\nWith less than one-quarter remaining in the three-year time horizon of our investment thesis, we are on track to deliver greater than 80% growth in ADEPS against an already ambitious 50% goal we originally set in June of 2018.\nEven in the most turbulent times, our firm has translated its differentiated market position into high-quality performance and shareholder value, as expected of an industry leader.\nOn the strength of this performance and with our purpose and values as a guide, we will continue to succeed and strengthen this institution over the short, medium and long term.\nLloyd, over to you for additional perspective on the third quarter and our outlook ahead.\nAs we approach the end of our 2021 fiscal year, a year of unprecedented challenge, we are proud of how well our people have consistently executed on our clients' most important missions.\nAs Horacio mentioned earlier, in outlining our 2021 annual operating plan, we identified three major sources of uncertainty, the November election, the budget outlook and the COVID-19 pandemic.\nAfter an exceptional top-line performance in the first half, helped by unusually strong staff utilization, we expected slower growth in the second half as PTO trends began to normalize.\nWe also anticipated the potential for a slowdown in award activities following the November presidential election.\nWe factored these elements into the annual guidance we provided at the end of the second quarter.\nHowever, we did not correctly anticipate the timing and magnitude of the top-line impact of those dynamics.\nOur cost management efforts to date enabled us to hold the line at adjusted EBITDA.\nI'll now run through our third quarter results.\nRevenue and revenue excluding billable expenses increased 3% and 6.2%, respectively, compared to the same quarter last year.\nRevenue growth was primarily driven by solid operational performance, indicative of continued demand from our clients, tempered by lower billable expenses largely attributable to COVID.\nLet me give you more color at the market level, starting with the demand side.\nRevenue in defense grew 6% year-over-year, against a challenging third quarter comparable.\nI'd note that revenue excluding billable expenses, continued to grow strongly, but our defense business carries the bulk of Booz Allen's exposure to billable expenses.\nThese were lower than expected in the third quarter due to less travel during the pandemic, and they were elevated in the prior year period due to significant materials purchases on aircraft programs.\nAs Horacio mentioned, underlying long-term demand for our services and solutions remain strong, but we did experience lower-than-expected starts on existing defense contracts and a few large awards slipped to the right.\nWe expect these to be resolved over the next few months.\nIn civil, revenue growth was 7% in the third quarter.\nHere, we believe the chaotic postelection period shifted some awards to the right.\nIn addition, there was a pause on a large cyber program due to funding availability.\nWe expect the pause to have a larger impact on the fourth quarter.\nBut given that it is a critical cybersecurity program for the customer, we believe work will ramp up again longer term.\nLastly, I would note that we expect increasing demand in civil as the new administration starts implementing its priorities.\nRevenue from our intelligence business declined 3% in the third quarter.\nOur focused efforts to reshape that portfolio continue, and we expect to see stronger performance in FY '22.\nLastly, Q3 revenue in global commercial, which accounted for approximately 3% of our total revenue, declined 35% year-over-year.\nThe drop was driven by our international business based in part on market dynamics, but also due to our own decision to shift our strategic focus to our cyber business in the US in the port of that, we made a minority investment in Tracepoint, a digital forensic rand incident response company serving clients in the public and private sectors.\nWe are excited to partner with Tracepoint and see a significant opportunity to cross-pollinate with Booz Allen's own digital forensics expertise.\nThat covers the demand side.\nNow let me step through the supply side dynamics as well as our expectations for the rest of the year.\nIn the first half of the year, given the limited ability to travel during the pandemic, our employees took very little time off from work.\nWe encouraged our people to take PTO in the interest of their personal health and expected a gradual return to normal productivity levels as a result.\nInstead, PTO utilization returned back to historic levels in November, and we believe that trend may continue.\nWe note that the timing around the rollout of a COVID vaccine could have a material influence on PTO utilization.\nRegarding headcount, while attrition remained low, we did not add as much headcount in the third quarter as we had planned, in part due to a strategic contract divestiture.\nOur hiring needs were somewhat lessened in the first half of the year due to unusually strong staff productivity, but we intend to pick up the pace on recruiting.\nThis will take us some time to address, but we expect to be back on track by early next year.\nWe ended the quarter with 27,566 employees, an increase of 390 or 1.4% year-over-year.\nExcluding the impact of the 110-person workforce transferred as a part of the army-related contract divestiture, we would have ended the quarter with 1.8% headcount growth year-over-year.\nOn Slide 7, you'll see that total backlog increased 6.1% to $23.3 billion.\nFunded backlog was up 2.8% to $3.6 billion, unfunded backlog grew 12.5% to $6 billion and price options rose 4.3% to $13.7 billion.\nOur book-to-bill for the quarter was 0.3 times, and our last 12 months book-to-bill was 1.2 times.\nThe relatively low quarterly number is attributable to two factors.\nFirst, seasonality following our historical pattern, and second, the aforementioned delay in awards.\nNote that we continue to expect volatility in quarterly book-to-bill as we pursue larger and more technically complex bids.\nMoving to the bottom line.\nAdjusted EBITDA for the third quarter was $205 million, up 7.7% year-over-year.\nAdjusted EBITDA margin was 10.8%.\nAdjusted EBITDA performance was driven by strong execution across the portfolio and ongoing prudent management of discretionary expenses.\nAdjusted EBITDA margin was also impacted by lower billable expenses.\nThird quarter net income and adjusted net income grew 29% and 28% year-over-year to $144 million and $145 million, respectively.\nDiluted earnings per share and adjusted diluted earnings per share each increased 30% to $1.03 and $1.04, respectively.\nThe increases were due to solid operating performance and the release of a large tax reserve stemming from our previous Aquilent acquisition in fiscal year 2017.\nThis reserve release was factored into our previous guidance.\nWe generated $233 million in operating cash during the third quarter, an increase of 133% over the prior year.\nCash ended the quarter at $1.3 billion.\nExceptional operating cash flow was driven by the overall growth of the business, continued strength in collections and reduced payables attributable to cost management.\nThese first three quarters of cash generation represent our strongest year-to-date performance since our IPO, a truly phenomenal result.\nCapital expenditures for the quarter were $16 million.\nThis year, we continue to prioritize technology and tools that enable a virtual work environment.\nAlso, we are nearing the implementation of our next-generation financial system, which will support the company's growth into the future.\nDuring the quarter, we repurchased $27 million worth of shares at an average price of $83.76 per share.\nIncluding dividends and the minority investment, we deployed a total of $142 million in the third quarter.\nAs Horacio noted, our share repurchase authorization has expanded.\nAs of January 26, with the $400 million increase, we now have a total authorization of $747 million.\nIn addition, the company has authorized a dividend of $0.37 per share payable on March 2 to stockholders of record on February 12.\nWith $1.3 billion in cash on hand, we continue to view our balance sheet as a strategic asset.\nWe remain committed to preserving and maximizing shareholder value through patient, disciplined capital allocation.\nWe see ourselves as well positioned to act quickly on opportunities as they arise.\nNow on to our updated guidance.\nPlease move to Slide 9.\nWhile revenue growth was slower than expected, we are proud of our team's ability to manage the business and gain efficiencies amid the many macro environmental challenges of this fiscal year.\nMargins, ADEPS and cash flow are all trending above our expectations.\nIn our view, this speaks to the strength and resilience of the Booz Allen business model.\nIn the fourth quarter, we are focused on fundamentals.\nWe plan to continue investing in our people and our long-term growth initiatives.\nWe will continue to recruit aggressively to sustain long-term organic growth and intend to reward our people for their strong execution through the first three quarters.\nWe are also nearing implementation of our new financial system, which will further support our business leaders.\nOur revised guidance reflects these efforts, in addition to the third quarter performance and trends I just outlined.\nLet me run through the numbers.\nFor the full fiscal year, revenue growth is now expected to be in the range of 4.8% to 6%.\nOur revised range reflects $150 million to $250 million of revenues tied to the second half uncertainties we outlined earlier, the election, the budget and COVID-19.\nThey break down as follows.\nTemporary programmatic shifts of $50 million to $100 million, $50 million of risk tied to a material incremental step down in staff utilization, and lastly, lower than forecast billable expenses of $50 million to $100 million, largely from lower pandemic-related travel.\nFor your models, we also note that fourth quarter working days will have a difficult year-over-year comp because last year was a leap year.\nWe expect adjusted EBITDA margin for the year to be in the mid-to-high 10% range.\nWe have raised the range for adjusted diluted earnings per share by $0.10 to between $3.70 and $3.85.\nOn operating cash, we have raised the range by $25 million to between $625 million and $675 million for the full year.\nAnd finally, our outlook for capital expenditures is unchanged at $80 million to $100 million.\nWe have confidence in exceeding 80% ADEPS growth over the three-year period.\nThis growth is supported by 6% to 9% annualized revenue growth since fiscal year 2018 at mid-to-high 10% EBITDA margins in fiscal year 2021.\nWe also are proud of our option value initiatives over the period and our progress toward $1.4 billion in capital deployment.\nI am pleased to say that we are well positioned to exceed our three-year ADEPS growth goal organically while, retaining the strongest balance sheet in the history of the company in spite of the turbulence of the last three years.\nAs we move toward our next investment thesis, I believe that the people of Booz Allen will rise above the challenges that emerge in order to continue meeting the high standard our shareholders have come to expect.\nWe remain confident in the long-term trajectory of the business and focus on maintaining our role as the industry leader.\nOperator, please open the lines.\n", "role": "user" }, { "content": "quarterly diluted earnings per share of $1.03.\nexpects adjusted earnings per share growth to exceed three-year investment thesis ending with fiscal year 2021.\nqtrly adjusted diluted earnings per share of $1.04.\nadjusts full year guidance at the top and bottom line.\nincreased quarterly dividend by $0.06 to $0.37 per share.\nsees for fiscal 2021 revenue growth in 4.8 to 6.0 percent range.\nsees fiscal 2021 adjusted diluted earnings per share $3.70 - $3.85.\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 Rubun Dey, Head of Investor Relations, and with me to talk about our business and financial results are Horacio Rozanski, our President and CEO; and Lloyd Howell, Executive Vice President, CFO and Treasurer.\nDuring today's call, we will also discuss some non-GAAP financial measures and other metrics, which we believe provide useful information for investors.\nWe include an explanation of adjustments and other reconciliations of our non-GAAP measures to the most comparable GAAP measures in our fourth quarter fiscal year 2021 slides.\nWe are now on Slide 5.\nThe past year was unlike any other in this Company's 107-year history.\nBut before diving into our latest results on our outlook for the current year, I want to highlight that the fiscal year end on March 31 also marked the close of the three-year period covered in our investment thesis.\nWhen we first shared our thesis in June of 2018, we committed to 50% growth in adjusted diluted earnings per share over three years.\nWe said that growth would be driven by our unique position in the market and the combination of industry-leading organic revenue growth, adjusted EBITDA margin expansion, and robust capital deployment.\nWith our fiscal year 2021 results are now final, Booz Allen has significantly exceeded our three-year financial objectives.\nADEPS nearly doubled over the period to $3.90 in fiscal year 2021.\nAverage annual revenue growth was above the midpoint of the 6% to 9% range we originally provided.\nAdjusted EBITDA margin was above 10% in each of the three years and we deployed $1.3 billion in capital.\nThe majority of which was achieved through increased dividends and a robust share repurchase program.\nDuring the three-year period, we navigated through significant budget uncertainty, including the longest government shutdown we've ever experienced, a turbulent presidential transition period and a once-in-a-century pandemic.\nAnd throughout, we continued to invest in our people, especially when we set aside $100 million in response to the pandemic to support our employees and help the most vulnerable in our communities.\nAll the while we also continued to invest in our key technologies and develop elements of our option value portfolio.\nSo the story of the last three years is certainly of our outstanding financial performance.\nBut more importantly, as we look to the future, it is the basis for our optimistic outlook on the business.\nOver the last decade, we further differentiated Booz Allen's brand and market position to the point that today federal and commercial clients rely on us for advanced technology solutions that deliver both speed and mission scale.\nAnd our unique combination of consulting expertise, mission knowledge, innovation and technology serves as a strategic accelerator for both our firm and our clients.\nI've said many times, Booz Allen learns and evolves continuously.\nOur next strategy and long-term financial outlook, which we plan to share with you in the fall will build on Vision 2020's growth and transformation.\nWe are very comfortable with our direction of travel as we anticipate the opportunities of the next decade.\nThe most recent example of our confidence in our strategic direction is our agreement to acquire Liberty IT Solutions, LLC.\nAs we discussed when we announced it on May 4, this acquisition is directly on strategy.\nLiberty is an exceptional company with highly skilled talent, trusted client relationships, closeness to mission, a solid growth trajectory and digital transformation capabilities that augment Booz Allen's extensive set of offerings.\nThe transaction is expected to close in this quarter, subject to customary closing conditions.\nAnd we look forward to officially welcoming the Liberty team to the Booz Allen family.\nLloyd and I are proud of the team's performance in an unprecedented year on all metrics we have met or exceeded the updated guidance we provided at the end of January.\nFor the full-year, organic revenue growth was strong albeit slower than recent years due to the pandemic and some delays in funding and awards after the election.\nWe also delivered excellent bottom line results.\nFull-year earnings profit margins and cash flow are all ahead of expectations.\nAnd as the market began to stabilize post-transition, our team did a great job in capturing opportunities, driving a record book-to-bill in the fourth quarter and year-end backlog of $24 billion.\nUnderlying demand for our services and solutions remains robust, with our defense and civil businesses delivering excellent organic growth in fiscal year 2021, while the intelligence and global commercial continue to reshape their portfolios.\nLloyd will go into greater depth about market dynamics in a few minutes.\nNext, I am pleased to report that the Department of Justice has closed the criminal investigation that we first disclosed in June 2017.\nThe civil DOJ and SEC investigations remain pending, and we continue to cooperate with the government to bring those matters to an appropriate resolution.\nLet's shift now to how we are thinking about the business in the year ahead.\nAs we opened fiscal year 2022, we are very focused on a set of near- and mid-term priorities.\nFirst and foremost, to fully benefit from our strong backlog and demand pipeline, we need to accelerate our recruiting efforts.\nSecond, we must capitalize on the reshape portfolios in intelligence and commercial to drive growth in both businesses.\nThird, we will carefully manage the transition to a post-COVID environment by investing in our people and the advanced capabilities we need for the future.\nFourth, having launched our next-generation financial system on April 1, we are making strong progress and we'll keep focused on a seamless implementation.\nAnd fifth, upon close of the Liberty acquisition, we will work closely together on a smooth and successful integration.\nAs we look further out, we are also focused on positioning for growth beyond the current fiscal year.\nOur overriding goal is to accelerate into the next wave of changes in our markets.\nFor monetizing the option value portfolio, to investing in new areas like Low Code, 5G, AI, or quantum, to finalizing our strategic review.\nBooz Allen is committed to being a leader in ensuring our clients can scale new technologies into their missions faster than ever.\nTurning now specifically to our fiscal year 2022 outlook.\nLloyd will walk you through the guidance in a few minutes.\nBut I will note that the growth pattern will be different from recent years.\nThis is due to a number of factors from productivity and PTO trends, to the Liberty acquisition, and the timing of headcount gains.\nWe expect these factors together to produce a revenue profile with low-single-digit growth in the first half, followed by significant acceleration in the second half.\nWe plan to the full-year and as our guidance indicates, we expect another year of significant revenue growth in FY'22.\nContinued excellence in operational performance is also expected to produce strong EBITDA growth, continued cash generation and strategic capital deployment.\nSo to sum up, I am excited and optimistic about the coming year and beyond.\nOur clients have clear priorities and the ability to marshal resources toward them.\nWe have an exceptional team, an exceptional team tested and successful through good times and challenging ones.\nOur balance sheet is strong.\nOur unwavering commitment to people over the past year has bolstered our already strong brand in the market for talent.\nAnd all of us are committed to and focused on serving clients with excellence and living our purpose and our values.\nSo, while we may still see some choppiness and we have work to do on hiring in the coming months, I have tremendous confidence in our team's ability to deliver growth in the near- and the long-term.\nLet me start by echoing Horacio's comments on the close-out of our investment thesis.\nLast quarter marked the end of a three-year period with ADEPS growth of 96%, an increase that was primarily driven by strong organic revenue growth and sustained margin expansion.\nThis performance resulted from investments related to Vision 2020 and our early positioning in core areas of rising demand for our clients.\nBooz Allen has proven its ability to outperform competitors even in some of the toughest macro environments.\nMoving forward, we will keep a sharp focus on positioning Booz Allen for long-term success, building on the excellent performance of the last three years.\nAs we look back over the past year, we are proud of the resilience and dedication shown by our people in close collaboration with our clients.\nTheir excellent work resulted in another strong year of operational and financial performance.\nAs we begin fiscal year 2022 and anticipate moving toward a post-pandemic operating rhythm, we expect some choppiness, but we have clear operational focus areas.\nOur confidence in our continued success is grounded in our record of consistent performance and the strong foundation we have built to deliver on near- and long-term objectives.\nLet's turn to our fiscal year 2021 results.\nAt the top line, revenue increased 5.3% for the full-year to $7.9 billion.\nRevenue, excluding billable expenses, grew 7.1% to $5.5 billion.\nThis organic top line growth largely reflects strong execution on sustained demand for our services, helped by higher than normal staff utilization in the first half of the year.\nAs a reminder, in January, we adjusted our revenue guidance to a range of 4.8% to 6%, due to three factors: first, programmatic shifts in the presidential transition period; second, a snap back to more typical PTO usage; and third, lower expectations for billable expenses as a percentage of revenue, which landed in the low-end of our 29% to 31% range.\nThese factors played out in the fourth quarter as expected.\nLet me step through the market performance.\nRevenue growth for the full-year was led by our defense and civil businesses, which grew 9% and 8%, respectively.\nIn defense, growth slowed in the second half of the year due to the factors I noted earlier.\nHowever, underlying long-term demand for our services and solutions remained strong, as evidenced by recent business wins and continued tactical sales execution.\nGrowth in our civil business also slowed in the second half of the year.\nThis was largely related to a pause on a large cyber program due to funding availability, which occurred in the third quarter and continued into the fourth quarter.\nGiven the importance and criticality of this program for the client, we believe work will ramp up again in the coming quarters.\nRevenue from our intelligence business declined 3% for the full-year.\nOur focused effort to reshape that portfolio continues and we are pleased with the results so far.\nWe expect to see our intelligence business return to growth in this fiscal year as we ramp up recent contract wins.\nFurthermore, the pandemic-related headwind we faced in fiscal year 2021 and inability to bill for fee will continue to abate as more and more of our employees return to work at client facilities.\nLastly, revenue in global commercial, which accounted for approximately 3% of our total revenue in fiscal year 2021, declined 22% year-over-year.\nThe drop was primarily driven by our decision to exit from parts of our Middle East business due to market dynamics and geopolitical trends and to focus strategically on our US-based cyber business.\nWe are pleased with our excellent book-to-bill performance for the quarter and the full-year.\nBook to bill of 1.38 times was a fourth quarter record, resulting in a full-year book to bill of 1.42 times.\nTotal backlog grew 16%, yielding our largest-ever fiscal year-end backlog of $24 billion.\nFunded backlog grew 3% to $3.5 billion.\nUnfunded backlog grew 35% to $6.1 billion and priced options grew 13% to $14.4 billion.\nThroughout the year the team did a great job sustaining our historical win rates for recompete and new work, even as we navigated the pandemic and a presidential transition period.\nAs we've noted previously, we continue to augment our traditional foundation of diversified smaller awards by pursuing larger and more complex bids that, by their very nature, caused quarter-to-quarter volatility in book-to-bill.\nOur record backlog speaks to ongoing robust demand for our services, the quality of our people and our closeness to clients missions.\nPivoting to headcount, as of March 31, we had 27,727 employees, up by 554 year-over-year, or 2%.\nExcluding the impacts of our contract divestiture in the third quarter, headcount would have been up 2.4%.\nAs Horacio emphasized, we are focused on accelerating headcount growth to meet strong demand signals and execute our backlog.\nMoving to the bottom line.\nAdjusted EBITDA for fiscal year 2021 was $840 million, up 11.4% from the previous year.\nThis increase was driven primarily by our top line growth, strong cost management and lower-than-expected billable expense mix and what was truly an anomalous year.\nAs a result, our adjusted EBITDA margin for the full-year was 10.7%.\nFull-year net income, diluted earnings per share and ADEPS also grew significantly.\nNet income increased 26% year-over-year to $109 million.\nAdjusted net income was $542 million, up 21% from the previous year.\nDiluted earnings per share increased 28% to $4.37 from $3.41 the year prior.\nAnd adjusted diluted earnings per share increased 23% to $3.90 from $3.18 the year prior.\nThese increases were primarily driven by strong operating performance, a lower effective tax rate and a lower share count in fiscal year 2021 due to our share repurchase program.\nRegarding our effective tax rate, during the fourth quarter, we recognized a tax benefit under the CARES Act that allowed tax loss carrybacks to prior tax years.\nAs a result, we recognized approximately $77 million in remeasurement tax benefit this quarter, which we excluded from adjusted net income and adjusted diluted earnings per share.\nTurning to cash, we put a plan in place three years ago to improve cash generation.\nWe are extremely proud of our team's performance this year, which we see as the culmination of this multi-year effort.\nWe generated $719 million in operating cash during fiscal year 2021, representing 30% growth over the previous year.\nThat put us above the top end of our forecasted range and we ended the year with $991 million of cash on hand.\nStrong cash performance was largely driven by collections growth in excess of revenue growth, higher cash taxes on the year were offset by relatively light disbursements related to operating in the COVID-19 environment.\nCapital expenditures for the year totaled $87 million, in line with our expectations as we continue to invest in infrastructure and technology to support virtual work.\nApril was a key month for us as we went live with our new NextGen Financial System.\nOur year-end reporting close went smoothly and we have not encountered any material issues to date.\nAs can be expected, we experienced a few minor issues, which were addressed promptly.\nWe have already been reaping the benefits in the form of increased data access and improved productivity.\nWe expect this to translate into cost savings over time, which will be reinvested to help drive future growth.\nI will touch on this topic again in our outlook for fiscal year 2022.\nIn fiscal year 2021, we continued to execute on a prudent capital allocation strategy designed to deliver both near- and long-term shareholder value.\nWe returned approximately $181 million to shareholders through quarterly dividends, which included a 19% year-over-year dividend increase in the fourth quarter.\nThis was the eighth consecutive fiscal year of double-digit growth in our quarterly dividend.\nWe also repurchased 4.1 million shares for $318 million during the fiscal year, with 2.3 million shares repurchased for $185 million in the fourth quarter.\nIn combination with our third quarter investment in Tracepoint, we deployed a total of $571 million in capital in fiscal year 2021.\nGoing forward, our capital allocation priorities remain unchanged, reinvesting in our business, securing our quarterly dividend, strategic acquisitions and share repurchases.\nToday, we are also announcing that our Board has approved a regular dividend of $0.37 per share payable on June 30 to stockholders of record on June 15.\nDividends remain an important component of our strategy to create value for shareholders.\nLastly, I want to briefly touch on our recently announced acquisition of Liberty IT Solutions.\nThis transaction, upon close, will be our largest acquisition to date and will be immediately accretive to revenue growth, adjusted EBITDA margin, and adjusted diluted earnings per share.\nFor us, this transaction represents exactly what we look for in acquisitions, cultural, strategic and financial fit.\nAs we look ahead, we are focused on three objectives: first, a smooth and successful integration; second, continued hiring to help scale up Liberty's recent wins; and third, maintaining excellence in contract delivery.\nAs Horacio noted, we're excited about the acquisition and the long-term value it will create for our shareholders and the people of both Booz Allen and Liberty.\nWe look forward to sharing updates in the months to come.\nTurning to guidance, please move to Slide 9.\nFiscal year 2021 was certainly a year of unprecedented challenges for our people and clients.\nThis resulted in several puts and takes to our fiscal year 2021 financial results, which influence year-over-year comparisons as we move into fiscal year 2022.\nMost of these factors are temporary in nature.\nHowever, we expect them to constrain top line growth for the next couple of quarters before an acceleration into the back half of the fiscal year.\nLet me step through these factors.\nFirst, there is a natural ramp up that needs to occur in both execution of work on recently won contracts and on recruiting and hiring.\nAs Horacio noted, we're focused on both of those priorities.\nThey take time to ramp up, which creates a momentum build toward the back half of the year.\nSecond, we saw unusually high productivity in the first half of fiscal year 2021, driving up revenue growth then slowing growth in the second half as staff utilization and PTO trends normalized.\nThis dynamic will create challenging comps in the first half of fiscal year 2022.\nThird, we expect PTO trends to have an ongoing impact for the next few months.\nAlthough we executed a successful one-time PTO buyback program in the fourth quarter, we know that many of our employees still have elevated balances due to the pandemic.\nWith vaccinations increasing and some are on the way, we expect and have been encouraging our people to take well-deserved time off.\nLastly, our implementation of the new financial system will result in minor timing differences in the costing of labor.\nWe do not expect this dynamic to materially impact our full-year results.\nHowever, we do forecast approximately 50 basis points of revenue growth headwinds in each of our second and third quarters, recovered through a roughly 100 basis point tailwind in the fourth quarter.\nPutting it all together, we expect organic top line growth in the low-single-digit range in the first half of fiscal year 2022 with a significant ramp into the third and fourth quarters.\nFrom an EBITDA perspective, a return to more normal indirect spending patterns and billable expense mix post-pandemic will drive some volatility in our quarterly margin profile.\nNow, let me take you through our fiscal year 2022 guidance.\nWe expect total revenue to grow between 7% and 10%, which is inclusive of a partial year contribution from our announced Liberty acquisition, assuming a first quarter 2022 close.\nThe variance between the top and bottom end of our revenue growth outlook will largely depend on the successful execution and timing of our hiring and onboarding.\nWe expected adjusted EBITDA margin to remain in the mid-10% range.\nWe expect adjusted diluted earnings per share to be between $4.10 and $4.30.\nThis range reflects strong organic growth, incremental D&A expense related to our new financial system, a higher effective tax rate and $0.20 to $0.24 of anticipated accretion from our acquisition of Liberty IT.\nWe expect operating cash flow to be between $800 million and $850 million, largely driven by our operational performance, lower cash tax payments and contributions from Liberty IT.\nAnd finally, we expect capex to be between $80 million and $100 million as we continue to invest in infrastructure and technology.\nWe have once again demonstrated our ability to effectively manage the business, invest in our people and deliver strong returns to our shareholders.\nWe did all of this while weathering a tough macro environment, which gives us confidence in our strategy and positioning to succeed through any market condition.\nOperator, please open the lines.\n", "role": "user" }, { "content": "sees 2022 adjusted earnings per share $4.10 - $4.30.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: And of course, our actual results could differ materially from our current expectations.\nAs usual, I will begin with an overview of Baxter's third quarter performance.\nJay would take a closer look at the financials and outlook for the rest of the year.\nClearly, the most notable highlight from the quarter is last month's announcement of our agreement to acquire Hillrom, subject to the approval of Hillrom shareholders and other customary closing conditions.\nI recently made site visits to select Hillrom locations as part of our integration planning process and I was joined by other members of our senior leadership team, meeting face-to-face with Hillrom's dedicated employees and touring the facilities only underscored our confidence and enthusiasm for the proposed acquisition of Hillrom.\nUpon closing of the transaction, we plan to bring a broader array of products and services to patients and clinicians across the care continuum and around the world.\nWe are focused on identifying opportunities to further accelerate innovation to address the rapidly evolving needs of our customers.\nThe teams are working diligently on plans to bring together these two complementary portfolios to deliver enhanced value for our stakeholders.\nWe look forward to updating you on these acceleration opportunities following the close of the deal.\nEarlier this month, the Hart-Scott-Rodino or HSR waiting period in the U.S. expired with no issuance of a second request by the FTC.\nWhile the FTC reserves its right to take further action, this is a key milestone to clear the way for a successful closing.\nWe are in the process of securing all remaining global regulatory approvals required for closing.\nAnd the Hillrom shareholder meeting to vote on the transaction is currently scheduled for December 2.\nIn addition, our integration planning management office is up and running with teams from both organizations preparing for a swift, effective combination once the deal closes.\nWe will expect to close by early 2022.\nMoving on to the third quarter financial performance.\nI'm pleased to report solid ongoing momentum as we make our way toward the close of the fiscal year.\nBaxter delivered third quarter sales growth of 9% on a reported basis, 7% at a constant currency and 6% operationally.\nLike last quarter, growth was impacted by the continuing, if somewhat erratic, pace of COVID-19 pandemic recovery, while the pandemic still represented a headwind to top line sales in the quarter, the magnitude of this headwind has continued to decline, reflecting the improved rate of hospital admissions in the U.S. as well as ongoing pandemic recovery in international markets.\nThis resulted in a favorable comparison to the same period last year.\nOn the bottom line, third quarter adjusted earnings per share were $1.02, up 23% and exceeded our third quarter guidance.\nPositive mix and disciplined expense management drove the favorability.\nThe pace of pandemic recovery continues to vary by both therapeutic and geographic market.\nOur broad global footprint and diverse portfolio of essential products combined to help mitigate the variability and shore up the strength of our overall enterprise.\nWe also benefit from our resilience and agility, which have been greatly enhanced through our ongoing transformation.\nLooking at performance by business, growth was led by BioPharma Solutions which advanced 45% at constant currency rates.\nPerformance was driven by revenues related to our manufacturing of multiple COVID-19 vaccines.\nMedication Delivery grew at 11% constant currency, reflecting the improved rate of U.S. hospital admissions in new infusion pump contract with a large health system in the U.S. and increased demand for Baxter's small volume parenterals.\nWith respect to our NOVUM IQ 510(k) submission, we are continuing to work with the FDA to address their questions on our submission.\nWhile we hope to receive clearance by the end of this year, it is possible it may shift into early 2022.\nIn Pharmaceuticals, 7% constant currency growth reflects the benefit of our acquisition of specified rights outside the U.S. to Caelyx and Doxil.\nAdjusting results for the acquisition, operational growth rose 1%.\nYear-over-year growth in the quarter reflects lower U.S. sales in part due to a large pandemic-related government order received in Q3 2020 and softness in inhaled anesthesia.\nThis challenging comparison was offset by strong growth internationally, driven by our pharmacy compounding business.\nOur third quarter launch of premix norepinephrine was met with strong demand, part of an increasing trend as hospital pharmacies embrace premix formulated drugs and other products that improve efficiency, particularly in the wake of the pandemic.\nDuring the quarter, advanced surgery performance in the U.S. was affected by lower surgical volumes, which remain depressed versus pre-pandemic rates.\nProcedure volumes were unfavorable to our prior expectations as hospitals delayed elective procedures in light of the delta variant.\nThis was more than offset by growth in the international markets, which could slowly recover from the effects of the pandemic.\nGrowth in Clinical Nutrition reflected the benefit of our new product launches particularly in international markets.\nAcute Therapies continues to perform very well.\nA year-over-year decline in U.S. sales reflects a difficult comparison in the face of last year's surge in demand for continuous renal replacement or CRRT products.\nAgain, this was offset by international growth as an outcome of the pandemic, we now have many more CRRT devices in the food as well as heightened engagement immunization on the part of clinicians creating a platform for sustained momentum.\nGrowth in Renal Care was driven by our home-based peritoneal dialysis or PD products globally.\nAs I have mentioned on past calls, demand does continue to be dampened amid the pandemic due to higher mortality rates for patients with kidney disease and a slowdown in new patient diagnosis.\nWe expect the ESRD market to gradually recover to pre-COVID growth rates over the next one to two years.\nOur Renal Care team's global safer at home campaign is dedicated to helping clinicians, patients and other stakeholders learn more about the benefits of home-based PD care, especially in the context of today's pandemic conditions.\nFrom an ESG perspective, I'm pleased to highlight a new partnership between UNICEF USA and the Baxter International Foundation to improve access to safe water in La Guajira, Colombia, one of the country's most water-challenged regions.\nA $1.5 million foundation grant is helping fund the multifaceted 3-year program.\nThis quarter, we also honored to be included on Forbes latest list of the World's Best Employers and America's Best Employers for women.\nIn addition, we are recognized as a leading organization on Seramount's 2021 inclusion index.\nLooking forward, we continue to navigate with some uncertainty on the horizon.\nThe overall trajectory of pandemic recovery appears more clear but the new geographic contours remain inconsistent.\nNew variants may take an unknown toll on our business and our employees, and we will continue to contend with the effect of macroeconomic issues.\nRelated to this last point, we are not immune to inflationary pressures and the rising cost of raw materials, commodities, components, fuel and ongoing supply chain disruptions.\nWhile we are actively working to address these rapidly rising costs, we recognize these factors may continue to impact our operations into 2022.\nAmid these challenges, we are on pace very strong close to the year.\nThis translates into momentum as we get set to execute on the vast potential of our proposed Hillrom acquisition and launch the next phase of our transformation journey, fueled by the commitment of our outstanding global team.\nNow I will pass it to Jay for a closer look at our financial results and outlook.\nAs Joe mentioned, we're pleased with our strong third quarter performance.\nThird quarter 2021 global sales of $3.2 billion, advanced 9% on a reported basis, 7% on a constant currency basis and 6% operationally.\nSales growth this quarter reflects the benefit from revenues associated with the manufacturing of COVID vaccines, strength in medication delivery and OUS sales of Caelyx and Doxil, which totaled approximately $32 million in the quarter.\nOn the bottom line, adjusted earnings increased 23% and to $1.02 per share, exceeding our guidance range, driven by a favorable product mix, primarily from better-than-expected sales of Acute Therapies and BioPharma Solutions as well as disciplined operational execution.\nNow I'll walk through performance by our regional segments in key product categories.\nStarting with our regional segments.\nSales in the Americas increased 7% on both the constant currency and operational basis.\nSales in Europe, Middle East and Africa grew 7% on a constant currency basis and 3% operationally.\nAnd sales in our Asia Pacific region advanced 8% on both a constant currency and operational basis.\nMoving on to performance by key product category.\nNote that for this [Indecipherable] constant currency is equal to operational sales growth for all global businesses, except for the Pharmaceuticals business, for which we will provide both constant currency and operational growth, adjusting for the acquisition of rights in select territories outside the U.S. for Caelyx and Doxil.\nGlobal sales for Renal Care were $981 million increased 1% on a constant currency basis.\nPerformance in the quarter was driven by global growth in our PD business where we experienced year-over-year improvement in global patient volumes despite the negative impact on volumes resulting from the pandemic, including increased mortality rates in ESRD patients, delays in new patient diagnoses and marketwide staffing shortages.\nPD growth was partially offset by declining international sales in our In-center HD business and Renal Care clinics.\nWe continue to monitor the impact of excess mortality among ESRD patients and delays in new patient diagnosis resulting from the pandemic and expect the market to return to pre-COVID growth rates over the next 12 to 24 months.\nMedication delivery of $747 million increased 11% on a constant currency basis.\nStrong global growth in this business reflects continued recovery in the pace of hospital admissions as well as increased demand for large volume infusion pumps, IV solutions and small volume parenterals.\nDuring the quarter, we estimate that U.S. hospital admissions were down approximately 4% compared to pre-COVID levels, a significant improvement from the same quarter last year, which saw U.S. admissions down approximately [Technical Issues] versus pre-Covid levels.\nIn addition, during the quarter we executed and began delivering infusion pumps under a contract with a large health system in the U.S. which resulted in our highest number of quarterly pump placements in over five years.\nPharmaceutical sales of $589 million advanced 7% on a constant currency basis and 1% operationally.\nPerformance in the quarter was driven by demand for our international pharmacy compounding business and the contribution from OUS sales of Caelyx and Doxil.\nGrowth in the quarter also benefited from increase sales of the Dexmed and our portfolio of premixes as hospitals continue combating the COVID-19 pandemic and look toward premix formulations and workflow efficiencies.\nThis growth was partially offset by declines in our U.S. business related to lower surgical procedures and a government order of approximately $20 million in Q3 2020.\nMoving to Clinical Nutrition, total sales were $244 million, increasing 3% on a constant currency basis.\nPerformance in the quarter was driven by the benefit of new product launches within our broad multichamber product offering.\nSales in Advanced Surgery were $249 million, increasing 5% on a constant currency basis.\nWithin the quarter, we saw a strong growth from our international business and estimate surgical procedures improved both sequentially and on a year-over-year basis in many international markets.\nThis growth was partially offset by performance in the U.S. with surgical procedures estimated at 95% of pre-COVID levels, a sequential and year-over-year decline in surgical procedure volumes due to the impact of the Delta variant and staff shortages.\nThis was below our previous procedures returning to pre-COVID levels during the third quarter.\nSales in our Acute Therapies business were $185 million, advancing 3% on a constant currency basis and were favorable to our expectations.\nPerformance in the quarter continued to benefit from elevated demand for CRRT, particularly given the rise in COVID cases associated with the Delta variant.\nBioPharma Solutions sales in the quarter were $206 million, representing growth of 45% on a constant currency basis, reflecting incremental sales related to the manufacturing of COVID vaccines, which totaled more than $50 million in the quarter.\nMoving through the rest of the P&L.\nOur adjusted gross margin of 44% increased by 140 basis points over the prior year, reflecting a favorable product mix and operational improvements in manufacturing.\nAdjusted SG&A of $640 million increased 11% as compared to the prior year period and was favorable to expectations, driven by disciplined expense management, which more than offset increased supply chain and logistics expenses recognized in the quarter.\nAdjusted R&D spending in the quarter of $129 million increased 6% versus the prior year period.\nBoth adjusted SG&A and R&D spending reflect a somewhat more normalized level of spend as certain expense categories were depressed last year as a result of the pandemic, particularly those related to employee bonus accruals.\nThis improvement in gross margin, coupled with the continued opex management resulted in an adjusted operating margin in the quarter of 20.2%, an increase of 100 basis points versus the prior year.\nAdjusted net interest expense totaled $32 million in the quarter and other nonoperating expense was $12 million in the quarter.\nThe adjusted tax rate in the quarter was 14.8%, a decrease over the prior year, driven primarily by a favorable change in earnings mix.\nAnd as previously mentioned, adjusted earnings of $1.02 per diluted share exceeded our guidance of $0.93 to $0.95 per diluted share.\nWith respect to cash flow, year-to-date, we've generated $1.5 billion in operating cash flow.\nFree cash flow totaled over $1 billion and represented growth of nearly 50% as compared to the prior year period.\nI would like to take a moment to reiterate our excitement around our recent announcement to acquire Hillrom.\nWe believe the strategic rationale and underlying financials of the combination are compelling and provide us with a meaningful opportunity for value creation.\nOur integration teams are hard at work and we look forward to finalizing this combination by early 2022.\nIn the meantime, we continue to follow a strategic approach to capital allocation that is founded on accelerating growth, driving innovation and returning value to our shareholders.\nLet me conclude my comments by discussing our outlook for full year 2021.\nFor full year 2021, we expect global sales growth of 7% to 8% on a reported basis, 5% to 6% on a constant currency basis and 4% to 5% on an operational basis.\nThis assumes a benefit of approximately 100 basis points to both reported and constant currency revenue growth for the acquisition of Caelyx/Doxil and over 200 basis points of positive top line impact from foreign exchange on reported growth.\nOur expectation remains that on a full year basis, hospital admission rates in the U.S. will remain below pre-COVID levels exiting the year down low single digits.\nAlthough surgical procedure data in the U.S. declined sequentially Q2 to Q3, our current expectation is that U.S. surgical procedures will improve sequentially and return to pre-COVID levels in the fourth quarter.\nWe are continuing to monitor this assumption in light of potential impacts from COVID outbreaks and hospital staffing shortages.\nMoving down the P&L, we now expect adjusted operating margin to expand more than 60 basis points.\nFor the year, we now expect an adjusted tax rate of 16.5% to 17% and a full year diluted average share count of approximately 510 million shares.\nBased on these factors, we now expect 2021 adjusted earnings, excluding special items, of $3.58 to $3.62 per diluted share.\nFor the fourth quarter of 2021, we expect global sales growth of 3% to 4% on a reported basis, 4% to 5% on a constant currency basis and 3% to 4% on an operational basis.\nAnd we expect adjusted earnings, excluding special items, of $1 to $1.04 per diluted share.\nWith that, we can now open the call up to Q&A.\n", "role": "user" }, { "content": "sees fy adjusted earnings per share $3.58 to $3.62.\nsees q4 adjusted earnings per share $1.00 to $1.04 excluding items.\nq3 revenue rose 9 percent to $3.2 billion.\nnow expects full-year u.s. gaap earnings per share of $2.82 to $2.86 and adjusted earnings per share of $3.58 to $3.62.\nexpects full-year 2021 sales growth of 7% to 8% on a reported basis.\nbaxter international - worldwide sales in q3 totaled about $3.2 billion, a year-over-year increase of 9% on a reported basis.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We are so pleased you could join us today as we report our fiscal '22 results and take this opportunity to update our longer-term strategy and our multiyear financial outlook.\nToday, we will discuss how our business has evolved and how we are planning to drive value over the next few years.\nWe're not planning to cover all our initiatives or all our business units.\nWe've tried to be as succinct as possible to focus on the topics and initiatives that we believe are most important for you to understand about our business, our plans and where we believe we're headed, both for fiscal '23 and for the longer term.\nFirst, let's discuss our fiscal '22 results.\nFiscal '22 was another record year.\nIn addition to record revenue and earnings, our leaders continue to drive new ways of operating and our employees continue to do amazing things in the face of unprecedented challenge and change to support our customers' technology needs in knowledgeable, fast and convenient ways.\nAs we discussed when we entered the year, we anchored on three concepts we believe to be permanent and structural implications of the pandemic that were and are shaping our strategic priorities and investments.\nOne, customer shopping behavior will be permanently changed in a way that is even more digital and puts customers entirely in control to shop how they want.\nOur strategy is to embrace that reality and to lead, not follow.\nTwo, our workforce will need to evolve in a way that meets the needs of customers while still providing more flexible opportunities for our employees.\nAnd three, technology is a need and is playing an even more crucial role in people's lives.\nAnd as a result, our purpose to enrich lives through technology has never been more important.\nWith these concepts in mind, we piloted numerous store formats to test and learn in the past year.\nWe advanced our flexible workforce initiative and invested in our employees' wellbeing.\nWe introduced new technology tools designed to support both our customers and also our employees.\nAnd we also launched a bold new membership program called Best Buy Totaltech, designed to significantly elevate our customer experience and drive incremental sales.\nWe will be talking more about all these topics today.\nAll of this was against a constantly evolving backdrop.\nDuring the year, we navigated supply chain and transportation challenges, uncertainty as virus peaks rolled across the country and then most recently, the disruption from the Omicron wave.\nOur teams did an amazing job against that backdrop, expertly managing supply chain challenges since the beginning of the pandemic to bring in products our customers needed.\nDuring the year, we continued serving our customers digitally at much higher rates.\nOur online revenue was 34% of our domestic revenue, and while it declined versus last year, it was up 115% or $8.8 billion compared to two years ago.\nAt the same time, we also reached our fastest package delivery speeds ever.\nWe are an industry leader in fast and convenient product fulfillment for our customers.\nIn fact, the percent of online orders we delivered in one day was twice as high as pre-pandemic levels despite the significant increase in volume during that same time frame.\nThese record results are driven by the investment decisions we have made in the last several years in supply chain, store operations, our people and technology, many of which we discussed at our investor updates both in 2017 and 2019.\nMore importantly, these results are driven by our amazing associates across the company.\nOver the past 24 months, they have flexibly dealt with rapidly changing store operations as we responded to impacts of the pandemic.\nThey created safe environments for our customers, and they worked tirelessly to provide excellent service.\nIn fact, despite all the changes we went through in the last year, we delivered NPS improvements both online and in our stores.\nI am truly grateful for and continue to be impressed by our associates' dedication, resourcefulness and flat-out determination.\nFrom a financial perspective, we delivered record revenue and earnings per share.\nOur comparable sales growth was 10.4% on top of a very strong 9.7% last year, growing $8 billion over the past two years.\nOur non-GAAP earnings per share was just over $10, up 27% compared to last year.\nAnd compared to two years ago, we expanded our non-GAAP operating income rate by 110 basis points.\nOur non-GAAP return on investment improved 840 basis points compared to two years ago, and we drove more than $6.5 billion of free cash flow in the last two years.\nIn fiscal '22, we returned $4.2 billion of that to shareholders in the form of dividends and share repurchases.\nWe also continued to deepen our commitment to the community and the environment.\nMany of you may have had the opportunity to view the video that was playing before the event started.\nWe continue to believe that our ESG efforts are directly tied to long-term value creation.\nAnd I am proud of all our initiatives, but we only have time for me to cover a few examples today.\nWe committed to spend at least $1.2 billion with BIPOC and diverse businesses by 2025.\nWe also committed to opening 100 Teen Tech Centers by fiscal '25.\nDuring fiscal '22, we opened nine to end the year with a total of 44.\nThese provide teens in disinvested communities access to the training, tools and mentorship needed to succeed in post-secondary opportunities and careers.\nIn addition, we're building a diverse talent pipeline for jobs of the future.\nIn terms of the environment, in fiscal '22, we were a founding member of the Race to Zero initiative, committing to accelerate climate action within the retail industry.\nWe are also driving sustainability through the unique consumer electronic circular economy.\nWe help keep devices in use longer and out of landfills by leveraging our customer trade-in program, Geek Squad repair services, responsible recycling and Best Buy outlets.\nThese are initiatives our customers and vendors value and capabilities no one else has at our scale and breadth, and we are honored to be recognized for our work.\nNotably, we have placed in the top five on Barron's Most Sustainable Companies list for the past five years in a row.\nThis ranking recognizes our strong performance across all aspects of ESG.\nIn addition, we are on the CDP Climate A List for the fifth year, which recognizes leadership in making a positive impact on the environment.\nNow, let's move on to our Q4 results.\nI am extremely proud of what we accomplished during the fourth quarter.\nOur team showed remarkable execution and dedication to serving our customers throughout the important gift-giving season.\nThis was evidenced by the fact that we drove improvement in year-over-year customer NPS metrics across almost all areas, particularly for in-store, online and chat experiences.\nIn fact, we saw our best ever customer satisfaction scores for our in-store pickup experience.\nOnline sales were almost 40% of domestic revenue compared to 43% last year and 25% in Q4 of fiscal '20.\nWe reached our fastest holiday delivery times ever, shipping products to customer homes more than 25% faster than last year and two years ago.\nWe are deliberately investing in our future and furthering our competitive differentiation.\nThis, as we expected, is temporarily impacting our profitability.\nThe biggest areas of investment in Q4 were our new membership program, technology and Best Buy Health, all core to our future growth potential.\nIn the face of unexpected change, I remain inspired by the way our teams across the enterprise remain flexible to ensure our customers were able to find the perfect gift.\nWe remain well positioned as we head into fiscal '23 as the unique technology provider for the home.\nI'll turn the meeting over to Matt to cover more details on our Q4 results and fiscal '23 outlook.\nOur Q4 revenue was $16.4 billion.\nOur domestic comparable sales declined 2.1%, and our enterprise comp sales declined 2.3%.\nRevenue grew 8% versus two years ago.\nIt was only slightly below the low end of our revenue guidance for the quarter due to a few factors.\nThe first factor was inventory availability.\nWe expected to have pockets of inventory constraints as we entered the quarter and called out a few areas, including appliances, gaming and mobile phones.\nAs the quarter progressed, inventory was more constrained than we anticipated within a few categories and brands.\nThese constraints included some high-demand holiday items, and the categories most impacted were mobile phones and computing.\nThe second factor impacting our results was Omicron.\nThe Omicron wave and the resulting high levels of employee call-outs led to a temporary reduction in our store hours in January and to start fiscal '23.\nIn mid-February, our staffing levels started to improve, and we increased store operating hours for the majority of our stores.\nExcluding these two factors, our revenue would have been comfortably in the guidance range we provided for the quarter.\nFrom a category standpoint, on a weighted basis, the top areas with positive comparable sales growth included appliances, virtual reality, home theater and headphones.\nWe saw comparable sales declines in gaming, mobile phones, tablets and services.\nTurning now to gross profit.\nOur non-GAAP gross profit rate decreased 50 basis points to 20.2%.\nThis was about 20 basis points lower than we expected primarily due to increased promotionality.\nWhen comparing to last year, the largest driver was our services category, primarily driven by Totaltech.\nOur product margins were largely flat to last year as the benefit from category sales mix was offset by increased promotions.\nHigher profit sharing revenue from our credit card arrangement was a benefit to gross profit rate compared to last year.\nLastly, our International gross profit rate improved 210 basis points to last year, which provided a weighted benefit of approximately 20 basis points to our enterprise results.\nOur enterprise non-GAAP SG&A dollars grew 5% versus last year, less than our guide of 8% growth primarily due to lower-than-anticipated incentive compensation.\nWithin our domestic segment, our SG&A dollars increased $139 million.\nThe largest drivers were: one, advertising, which included campaigns for both holiday and to drive awareness for our new membership offering.\nThree, increased store and call center labor that helped drive the record customer satisfaction scores Corie shared.\nAnd four, Best Buy Health, which includes the impact associated with our acquisition.\nBefore I discuss the fiscal '23 financial outlook, let me spend some time on our new Totaltech membership program.\nTotaltech is a near-term investment to drive long-term value.\nThe thesis is that over time, we will capture incremental product sales from our members that will lead to higher operating income, but as we discussed in prior earnings calls, it does come with near-term profitability impacts.\nFirst, at $199, the stand-alone membership is profitable.\nIt just isn't as profitable as legacy service memberships due to the breadth of benefits and the cost to fulfill them.\nSecond, there's a loss of revenue and profit from existing revenue streams that are now included as benefits in the program.\nFor example, previously stand-alone services like extended warranties and products installations are now included within our Totaltech membership.\nWe still offer these services on a stand-alone basis or to nonmembers, but you can imagine there's an aspect of cannibalization as members are no longer paying incrementally for these items.\nSo what does all this mean?\nWe expect that the gross profit rate of our services category will reset to a new level going forward that is lower than it was prior to launching Totaltech.\nThe way to drive more operating income despite these lower services gross profit rate is to add far more members than we thought was possible under our previous membership offerings.\nThe key to increased profit will be through increased volume through a combination of more recurring membership revenue and incremental product purchases of our members.\nThe number of memberships grew very nicely in Q4, and our plans for fiscal '23 assume continued growth.\nBut it will take some time to reach the scale necessary to offset the lower gross profit rate I just described.\nTherefore, Totaltech remains a pressure in fiscal '23 but we expect it to be a meaningful driver of both higher sales and operating income dollars in fiscal '25 targets.\nNow, let's talk about our overall fiscal '23 outlook.\nOur guide is anchored around a comparable sales decline in the range of 1% to 4% and a 5.4% non-GAAP operating income rate.\nOur non-GAAP diluted earnings per share outlook is $8.85 to $9.15.\nBefore we discuss the broader assumptions driving our guide, I want to touch on our expected tax rate.\nOur non-GAAP effective tax rate is planned at a more normalized level of 24.5% in fiscal '23 compared to 19% rate in fiscal '22.\nAs you may recall, our Q2 results this past year included a $0.47 diluted earnings per share benefit from the resolution of certain discrete matters.\nNow, I would like to share a few important assumptions underpinning our guidance.\nFirst, we anticipate the traditional CE industry to decline in the low to mid-single digits next year as we lap the high levels of growth in stimulus actions from this past year.\nIn addition, we anticipate the number of store closures to be in the range of 20 to 30, which is consistent with the trend over the past five years.\nAs I mentioned, our fiscal '23 guidance assumes non-GAAP operating income rate of approximately 5.4% compared to 6% in fiscal '22.\nTo be clear, the biggest driver of the lower operating income rate in fiscal '23 is our investment in Totaltech.\nAs I just described, this near-term pressure will drive long-term value for our shareholders.\nThere are, of course, other factors that we expect to impact our results that for the most part offset each other in fiscal '23.\nWe do expect higher levels of promotional activity to pressure our gross profit rate, which is partially offset by the favorable impact of expected growth and our monetization of our advertising business or Best Buy ads.\nWe expect our full year SG&A expense to be lower than fiscal '22 levels.\nThe largest year-over-year variance is lower incentive compensation expense as we reset our plans after paying out at higher levels in fiscal '22 due to the overachieving of our performance targets.\nWe expect a lower incentive comp to be partially offset by a few areas.\nThe first area is higher technology cost primarily due to annualizing spend in fiscal '22.\nThe second area is higher depreciation and store remodel expense, as Damien will discuss later.\nAnd lastly, we expect to see higher SG&A dollars in support of our Best Buy Ads business.\nFinally, as you may have noticed, we are not providing quarterly guidance, but I would like to provide some insight on the assumed phasing for fiscal '23.\nDue to the strong first half comps last year, we expect our full year comparable sales decline to be weighted more heavily in the first half of the year.\nIn addition, we expect to see significantly more year-over-year operating income rate pressure in the first half of the year compared to the back half.\nTo summarize, the two largest variables for fiscal '23 financial results are the short-term industry declines as we lap high growth in government stimulus and the investment in our new membership program that will drive long-term value.\nAs we look to fiscal '25, we expect the CE industry will return to the high levels we saw in fiscal '22 and that Totaltech will drive meaningful growth.\nI will now turn the meeting back over to Corie to begin our strategic update.\nAs I noted closing out my Q4 summary, we remain well positioned as we head into fiscal '23.\nI'd like to expand on this a bit as we highlight our strategic positioning.\nFirst, technology is a necessity, and we are the unique tech solutions provider for the home.\nSecond, we have built an ecosystem of customer-centric assets, delivering experiences no one else can.\nAnd third, we believe our differentiated abilities and ongoing investments in our business will drive compelling financial returns over time.\nWe believe we have the right strategy to deliver growth and value for all stakeholders, and we are excited to go into more detail about our plans.\nBut first, let's do some level setting.\nOur purpose is unchanged, and more relevant today, this minute than ever, our purpose to enrich lives through technology is enduring.\nAnd we have honed our five-year vision.\nWe personalize and humanize technology solutions for every stage of life.\nTechnology is no longer a nice to have, it is a necessity, and it is expanding into all parts of our lives and homes.\nWorking has forever changed.\nStreaming content has exponentially grown.\nThe metaverse is coming to life.\nWe can power our homes with connected solar panels.\nAnd we can monitor our health, including connecting with the physician, from our living room.\nEvery aspect of our lives has changed with technology, and we uniquely know how to make it human in our customers' homes, right for their lives.\nFor example, we will send a consultant to your home for free to optimize the tech you have or add the tech you want.\nWe can repair your phone's screen and you can try VR headsets while you wait.\nYou can meet with a fitness consultant in our virtual store, who will match your fitness goals with our fitness products, or you can use our Lively device to connect with a caring center agent who can help you schedule a lift.\nFrom a financial perspective, we delivered remarkable results over the past two years, and we are far ahead of where we expected to be when we set our long-term financial targets back in 2019.\nAs I mentioned earlier, in the past two years, we have delivered more than $8 billion of revenue growth and improved our operating income rate by 110 basis points to 6%.\nWe are in a strong position to drive the business forward and deliver growth.\nWe do not for one minute believe we hit our peak revenue and margin this past year.\nAs Matt outlined, we do expect fiscal '23 to look different as the industry cycles the last two years of unusually strong demand and we leverage our position of strength to continue to invest in our future.\nBut in fiscal '25, we expect to deliver revenue growth and expand our operating income rate beyond what we reported in fiscal '22.\nAs we have always said, in order to deliver these financial results, it is paramount that we stay focused on our goal to remain a best place to work, and we continue to deepen relationships with our customers.\nAs you can see, our new fiscal '25 targets are materially higher than what we thought just back in 2019.\nWe now expect to generate approximately $1 billion more in operating income than our original targets.\nGiven our margin rate, this is considerable growth in operating income dollars.\nSo what's changed since 2019?\nWell, the CE industry is larger than we expected.\nOur online mix has nearly doubled.\nWe have found ways to make our operating model more flexible and efficient while also investing in wages and benefits.\nWe are accelerating our category expansion, and we have launched an entirely new membership program.\nOn the flip side, the financial contribution from Best Buy Health is clearer but also a bit longer term than we had originally modeled.\nThis is based on primarily two things.\nFirst, demand in the active aging business and product constraints were impacted by the pandemic.\nAdditionally, based on our internal learnings and insights from consumer behavior changes over the past two years, we tuned our strategy to focus on the growing virtual care opportunity, which Deborah will discuss in more detail later.\nAs we think about our strategy going forward, it is important to look at how dramatically our business has evolved over the past several years.\nHere, we use fiscal '15 to give a longer-term view to what a different business we have become.\nMost of these changes were already in motion before the pandemic and then accelerated significantly in the past two years.\nLet me expand on a few points here.\nI already mentioned our fiscal '22 online business was 34% of our Domestic sales.\nThat is more than $16 billion in sales compared to just $3.5 billion in fiscal '15.\nWhen you look at how we use our stores for fulfillment, the increase in the sheer number of products customers are picking up in our stores is impressive.\nThis is even more meaningful when you consider the fact that our delivery speed is industry leading, and we cut delivery speed essentially in half over the past several years.\nClearly, customers value our stores and the convenience and choice they provide.\nAs Damien is going to discuss, we are increasingly interacting with customers via digital channels like chats and video and in their homes.\nAnd finally, membership is incredibly important, both now and into our future.\nAnd our My Best Buy program now has more than 100 million total members.\nSo with all of that as background, I'd like to tap back to our first key takeaway.\nTechnology is a necessity, and we are the unique tech solutions provider for the home.\nSo let's start with some industry context.\nThe traditional CE industry is large and growing.\nThere's no perfect external source that tracks our business, so here, we're showing a historical view based on selected government PCE category data.\nOur outlook is based on multiple industry forecasts and internal data.\nAs you can see on this chart, the industry was growing for several years and then accelerated during the last two years.\nAs Matt mentioned, we expect it to step back this year as the industry absorbs the very high growth of the past two years.\nBy fiscal '25, we believe it can be back to fiscal '22 levels, which is materially higher than it was pre pandemic.\nIn addition, we're expanding our addressable market by entering new categories in areas like health and electric bikes that are being disrupted by technology in a good way, as well as areas where we can really complete solutions for customers like indoor and outdoor living.\nJason will provide a bit more detail on these in a few minutes.\nAs a reminder, this is also a stable industry.\nContrary to some sentiment, technology is no more volatile or cyclical than other large durable goods categories over time, and the last two years have significantly underscored the importance of technology in day-to-day life.\nWhat historically was seen as a want has become a need.\n40% of Americans use digital technology or the Internet in new or different ways compared with before the pandemic, and the use of telemedicine is triple what it was in just Q1 of 2020.\nThe majority of people who started or increased activities like online fitness, telemedicine, videoconferencing and connecting socially with others virtually say they plan to continue this increased usage even after the pandemic.\nTerms like home nesting and virtual care have been invented to describe what all of us know so well, that where we work, entertain, receive healthcare and connect has changed and our homes are now central to our lives more than ever before and they're also more tech connected than they ever had been before.\nAs a result, there is an overall larger installed base of consumers using technology.\nPeople own more tech devices than ever before.\nThis combination of more devices and more activities also means customers need their tech to work seamlessly every day.\nTrue tech support when the customer wants it underpins living this way and is our unique asset across all these devices.\nAnd technology is extending into all aspects of our home, and we've all grown to depend on it.\nThis is not a heat-driven category.\nIt is an industry that is need-based, stable and has been growing.\nWe firmly believe people will continue to use technology more and both need and want to replace or upgrade their products.\nBillions of dollars of R&D spend by some of the world's largest companies and likely some we haven't even heard of yet means innovation is constant, and that innovation drives interest, upgrades and experimentation into the future.\nThis is not a static industry.\nWe continue to lead the tech industry with significant high share in high-consideration categories.\nWhat I mean by a high-consideration category, generally higher ASPs and a longer period of time from when you start to think about purchasing to when you actually purchase.\nContinuing to grow our share in these large categories like television and computing will always be a cornerstone of our strategy, but to be truly there for our customers and all their technology needs, we need to accelerate our share across other areas of technology as well and also some new spaces.\nThis is where Totaltech comes in.\nOn products with lower ASPs and shorter upgrade and consideration cycles, our share is generally lower.\nTotaltech creates a new value proposition that benefits customers when they consolidate their technology shopping at Best Buy.\nI want to give three examples of a customer journey that illustrate this point.\nLet's start with a customer that actually wants to upgrade their kitchen.\nThey want to buy an entirely new kitchen suite with three pieces.\nThat customer that has Totaltech does not have to worry about delivery and install.\nIt's included in the price.\nThat could be between a $400 and $500 value.\nA little bit later in the year, the same customer hypothetically breaks their phone.\nThey want to get a new iPhone.\nWhen they purchase that iPhone at Best Buy, AppleCare is included.\nJust in the first year, that's just under $120 of value.\nThen a little bit later in the year, they want to get a new pair of wireless headphones.\nIf you purchase those headphones at Best Buy, the warranty is also included if you're a Totaltech member.\nThat's a $30 value.\nExamples like these is where Totaltech benefits come to life for our customers and create a reason to make a considered visit to our app, our website, our store and increases Best Buy share across all of the categories on the slide behind me.\nTechnology innovation never stops.\nAnd even when you look over the past three years, you can see value of the new technology and what it creates for our customers.\nDuring the pandemic, the majority of the focus was around creating products to meet customer demand.\nThis was a distraction, but even with that, there was significant innovation and value created by our vendors.\nThe slide behind me highlights an upgrade over a three-year period of similar price points across laptops and televisions.\nWhile I won't hit on every new feature and advancement that happened, I'll highlight a few.\nFor televisions, you get a full 10 inches more in screen size, almost no Bezel and the ability to navigate your TV with voice if you'd like to.\nOn the laptop side, you can log in with your face.\nIt's faster, thinner, lighter and has significantly longer battery life.\nThese continued evolutionary innovation cycles are never ending, and they drive growth.\nThey create reasons to upgrade and unlock new and better experiences for our customers each and every year.\nIn fact, when we look at our customers' behavior, we're seeing a 7% to 15% reduction in the amount of time it takes a customer to get back into a category.\nThey're coming back to categories faster because of these innovations by our vendors.\nI've highlighted how Totaltech and our vendor innovations will drive growth.\nNow, I'd like to highlight some macro trends that will also drive opportunities in our business.\nI'll start with 5G and fiber.\nThe expansion of speed and networks in general are really, really good for customers and technology.\nYou can download a movie in minutes, collaborate with others instantly, access a video game or video content anywhere you want without latency.\nThese are things that will drive new experiences and growth for our customers.\nThe next trend is the metaverse and cloud.\nHave virtual experiences, play golf with friends or family members virtually, travel to places that you actually can't and have a full experience in the virtual world.\nIn addition to that, when you look at the virtual world and cloud, there are new experiences that are created.\nPreviously, you could just play a game on a gaming system and your television.\nNow, you can take that same game seamlessly from the system to your phone to your tablet.\nIn fact, if some of you have children like I do, you're constantly battling the ability for them to play anywhere they want, anytime they want.\nThe cloud also solves a significant customer pain points.\nPreviously, our customers would tell us when they wanted to upgrade a computing product, it would take them 60 minutes to get it the exact way they'd want to that would be moving their icons, their data, just getting it the way the old one was and having the features of the new.\nToday, with cloud, you simply put in your credentials and in 10 to 15 minutes, it's actually exactly the way you want.\nYou get all the benefits of the new technology, and you get all of the placement and all the setup of your old product instantly.\nThat does drive upgrade and it drives interest in customers in upgrading more frequently.\nThe next trend I would like to talk about is automation and support.\nThe connected home has been around for years, and it's now moving into automation and support more specifically.\nSingle-function devices like robot vacuums today.\nTomorrow, they'll move into security of the entire home, communication and assistance for individuals.\nThis is very, very important as our population ages and people want to stay in their homes longer.\nAutomation and support is one of the ways where technology can enable people to just do that and accomplish their goals and solve that pain point.\nNext, I'd like to talk about customization and personalization.\nCustomers have always wanted to express themselves, and technology is not excluded from that.\nBut there has been significant advancement in manufacturing from appliances to cellphones where customers can express themselves with a touch of color, a family photo or any other type of personal expression that they'd like to integrate into the products.\nSustainability is also a significant trend that's important to customers but also very important to Best Buy.\nI'll start with a vendor example.\nSamsung televisions that we sell in our stores today have what is called Samsung solar cell technology in their remote controls.\nThis eliminates the need for batteries, which is obviously very beneficial to the environment.\nBut it also charges off of not only solar but ambient light in the home, and it means that you're never going to have a remote that's out of power.\nThat solves a significant customer pain point.\nTechnology like this will expand to more and more categories and drive upgrade cycles.\nIn addition to that, we want to make sure that we're supporting customers that want to upgrade more frequently.\nToday, you see that come to life with our recycling and trade-in programs which are a very important part of our value proposition to customers.\nOver time, that will start to move into new usage models that may actually be upfront conversations about exactly how long a customer wants to use a product and when that next upgrade will happen.\nWill it be one year?\nWill it be two years?\nOr will it be three years as we move forward?\nLet's watch a video highlighting many of the areas I've talked about and even some new additional areas that will drive growth.\nAs we look over the past decade, we've had over $12 billion in sales growth with the vast majority coming from large categories like TVs, computing and appliances and a third coming from new categories like wearables and VR, just to name a few.\nAs we move forward, that innovation will continue, and there will continue to be new categories that don't even exist today.\nWe're also looking to accelerate that expansion by entering new categories that are aligned with where our customers want us to be and places where Best Buy can solve real customer pain points.\nFor the next 12 to 24 months, we'll continue to focus on these five areas of expansion.\nI'll go a bit deeper on three of these, fitness and wellness, outdoor living and personal electric transportation, in the next few minutes.\nI'll start with fitness and wellness.\nThis is a $34 billion industry that we are uniquely positioned to compete in with our Blue Shirts but also our large product fulfillment network that was built for televisions and appliances.\nOur assortment has grown by 650% in the last 12 months, and we are implementing a larger, more premium experience in 90 stores over the next 18 months with dedicated zones for vendors.\nDamien will touch on the virtual store a little bit later, but customers today actually have the ability to have a virtual chat or video consultation with a fitness expert.\nThe next area I'd like to talk about is personal electric transportation.\nThis is a $3 billion industry with rapid growth.\nWe've introduced 250 new products this holiday with 500 additional accessories around those products.\nWe'll be adding physical assortment to 900 stores and a more premium experience in 90 stores over the next 18 months.\nWe currently offer assembly, and we're in the pilot stages of service and support and repair for our customers.\nThe last category I'd like to highlight is outdoor living.\nThis is over a $30 billion industry, and our acquisition of Yardbird, a leading premium outdoor furniture company, provides the ability for us to accelerate this business across a nationwide network.\nThat acquisition, combined with our strength in outdoor television and audio and new partnerships with leading brands like Traeger, Weber and Bromic, create a comprehensive solution for our customers.\nWhen we couple that assortment with our home consultants and the physical and digital experiences that we've developed for customers, this is a really, really fast-moving category that has the ability to grow.\nYou'll start to see Yardbird products as fast as this spring in Southern California market, and we're very excited about that.\nTo reiterate, we expect growth from Totaltech, consistent innovation from our vendors, macro trends that I've mentioned, new product categories that we don't even know about yet and five new areas of expansion to move our business forward.\nI'll hand it back to you, Corie.\nObviously, you are the expert.\nBack to our second key takeaway.\nWe have built a unique ecosystem of customer-centric assets delivering experiences that no one else can.\nConsumer electronics is a distinctive industry.\nThe products are constantly evolving, they're connected to networks that are constantly evolving, they all use different operating systems, and they range from small and powerful to large and breakable, often at high price points.\nAnd customers are more comfortable using tech than they have ever been yet.\nThey also admit it's likely not doing all it could to make their lives better.\nAgainst that backdrop, we have built a unique ecosystem of assets that all work together to create a stickier and more valuable relationship with the customer.\nAnd we're investing in this ecosystem as we pivot against a backdrop of even higher customer expectations.\nSo anchoring this ecosystem is our expert advice and service.\nCustomers are excited about tech and want to be confident in their purchase.\nWe provide that in ways literally no one else can, from our expertly curated assortment to in-home consultations all the way to tech support when your tech isn't working the way you want or trade in and recycling when you want to upgrade.\nAnd then, building on that strength, our Totaltech membership ties these experiences together and provides unique benefits that customers value and no one else can provide.\nWe then combine those unique experiences with our strength in omnichannel retailing, industry-leading and seamless shopping experiences and services across all channels, including in home, in store, digitally, remotely and virtually.\nAnd finally, all these interactions provide us rich data and insights across customer experiences to create personalized technology solution tailored to the customer-specific technology and needs.\nAnd all this data fuels our business like Best Buy Ads, matching our partners' marketing to the most appropriate audiences based on our first-party data.\nWhen this ecosystem works together, it provides a unique experience tailored to the customer.\nIt also reaches beyond our consumers into business partners, suppliers and other strategic relationships that leverage our capabilities.\nWhether it's our consultative services highlighted on partners' websites or vendors leveraging our in-store pickup to fulfill from their websites, others value our capabilities.\nSo let me add some color around the first part of the ecosystem.\nAs I said, customers are excited about tech and want to be confident with their purchase, particularly when it's part of their daily life at home.\nSo instead of me trying to describe all the parts and pieces to you, I think this video does an excellent job bringing to life the unique ways we provide expert advice and services seamlessly across all our touch points.\n[Commercial break]So again, just to reinforce, there is no one else that can provide this type of immersive experience at scale in a world where more and more of our lives are being lived in a way that requires technology.\nAnd we felt it was important to double down on our unique capabilities with an equally unique membership offer.\nThis represents literally years of customer research and innovation and truly puts the customer at the center of our investments.\nMatt talked earlier about the financial implications of our new membership program.\nNow, I get to talk about the fun part.\nFundamentally, Totaltech is designed to provide our customers complete confidence in their technology, buying it, getting it up and running, enjoying it and fixing it if something goes wrong.\nMatt and Jason already mentioned some of the benefits, but as a reminder, Totaltech includes product discounts and periodic access to hard-to-get inventory, free delivery and installation, free technical support, extended warranties on products and much more.\nBecause the membership is so comprehensive, it has broad appeal among our customers.\nThere is truly something for everyone.\nAnd the benefit that's most appealing can vary based on a customer's unique shopping journey or their stage in life.\nSo let me share some early examples.\nI say early because as a reminder, we literally just rolled this program nationally in mid-October.\nThe benefits associated with purchasing products like product warranty and member pricing are being leveraged the most.\nYounger generations are using these benefits, especially AppleCare, at a higher rate than older generations.\nThis is exciting and important as extended warranties as a stand-alone business was definitely not a growing part of our business or strategy.\nAnd additionally, it's exciting that our employees have embraced this offer.\nRealizing the suite of benefits means there is something in it for every customer.\nThis makes for a more comfortable and natural sales environment and allows the employees to truly focus on the customers' needs.\nThe VIP access to phone and chat support and access to Geek Squad support and services in general are used more often by older generations, which our legacy plans over indexed on.\nAnd the access to hard-to-get inventory is resonating with some of our most engaged customers who already interact and spend with us very frequently.\nThat broad appeal is one of the main reasons we rolled out this program.\nWe have significantly elevated the customer experience by packaging up unique benefits our customers value that no one else can provide, and by doing so, we believe we have made it inconceivable for them to purchase their tech anywhere else.\nFrom a business perspective, of course, the goal is to increase customer frequency and capture a larger share of CE spend.\nAs a specialty retailer, our customer frequency has a different profile than mass merchants.\nAs a result, it is even more crucial that we stay in the consideration set as customers are building out their technology solutions.\nI am incredibly happy to say that we are indeed seeing increased interactions with our Totaltech customers to the tune of about 60%.\nAlso, when we look at NPS surveys specifically from customers who are Totaltech members, they are running about 1,400 basis points higher than nonmembers.\nFrom a spend perspective, it's difficult to calculate with precision given the early stage of the membership and our historical customer frequency, but we currently believe customers who sign up for the membership are spending about 20% more than they would have if they did not have the membership.\nWe already have 4.6 million members.\nNow, to be transparent, we auto converted 3.7 million Totaltech support and other legacy support programs.\nWe have actively enrolled more than 1 million members since launching nationwide in October, and we see a path to double the number of members by the end of fiscal '25.\nThis membership program is a vital addition to our customer relationship ecosystem, providing an offer that no one else can and interaction data that is incredibly valuable to all aspects of our business, fueling our growth over time.\nAnd to deliver this offer seamlessly, we leverage another part of our ecosystem: omnichannel retailing strength.\nIt's great to be here with you today to talk about our accomplishments and our plans for this year and beyond across our omnichannel portfolio.\nAs Corie mentioned earlier, omnichannel retail is a critical component of our strategic ecosystem.\nIt's the most direct way to connect our strategy to the needs of our customers and employees.\nLet's look at the last two years before we dive into where we're going.\nThese last two years have challenged our employees in ways we could have never imagined.\nPowered by our strategic investments, we were able to serve our customers' needs and grow the business.\nThere are two areas I want to highlight.\nFirst, the connection between our online sales, which expanded to 34% of our total domestic revenue, and the 150% growth we've seen in our virtual interaction across video, chat and voice.\nToday, 84% of Best Buy customers use digital channels throughout their shopping journey.\nThese virtual opportunities have created new ways for us to offer customers the immediate ability to shop with an expert wherever they are.\nSecond, and also connected to our customers using digital channels throughout their shopping journey, is we've seen a 72% growth in customers who are using our app while in our stores.\nThis also creates an opportunity for us to build more digital interactions and technology-related solutions to support their needs.\nThese numbers are amazing.\nWe could not be more proud of our teams and how they've delivered.\nJust as importantly, it gives us an incredible foundation for continued growth and optimism as we look to the future.\nNow, from an omnichannel perspective, we look at the combination of customer experience, loyalty plus operating efficiency.\nThe two main drivers of that and what I'm going to talk about today are how we optimize our workforce and reimagine our physical presence in ways that serve our customers' needs in an ever-growing digital world.\nOur focus is on further developing our teammates to give them the skills to help customers inside and outside of our stores, but more importantly, through any number of digital channels at our customers' fingertips.\nAt the same time, we will optimize our store portfolio, and as Matt mentioned, we will maintain the trend of closing 20 to 30 stores per year.\nHowever, with online penetration growing so rapidly in the last two years, we're making investments in our stores to provide a better, more seamless shopping experience as customers move from online shopping to visiting our stores to video chatting from their home.\nSo I'll start with our people.\nWe have significantly improved efficiency and productivity of our store labor model.\nWe've seen a more than 100 basis point improvement in store domestic labor expense as a percentage of revenue compared to FY '20.\nWe've also materially increased store productivity over the past two years.\nWe've done this by reskilling our teammates and making investments that lean into physical and digital shopping experience.\nA few examples include our fulfillment improvements, consultation labor and our virtual store.\nThis allows us to leverage our employees more effectively inside and outside of our stores.\nThe great news is that as we've made these adjustments, we've maintained a strong NPS in our stores.\nThese investments in our people have allowed us to help them learn new skills, grow their careers, gain flexibility and realize their dream by keeping them with us longer.\nWe've increased our average wage rate 20% in the last two years by raising our minimum wage to $15 an hour and shifting some of our employees into higher-skilled, higher-paying roles.\nIn fact, our average wage for our field employees this year will be over $18 an hour.\nSince we've started our flexible workforce initiative in 2020, 80% of our talented associates are now skilled to support multiple jobs inside and outside of our stores, and we're proud of the fact that our field turnover rates remain significantly below retail average and are near our pre-pandemic turnover rates.\nOverall, we're in a place we like right now.\nWe're becoming more efficient without losing sight of delivering amazing experiences for our customers and our employees.\nWe're going to continue to strike the balance between spend and productivity as we look at the factors that I've just outlined.\nNow, an obvious differentiator for our workforce is our Geek Squad team, which continues to deliver an experience that creates repeat customers, builds trust, and drives an incremental spend.\nAs I showcased earlier, we have nearly 21 million services interactions across in-store and in-home services.\nWe've significantly expanded our repair capabilities in categories that are important to customers' everyday lives like mobile phone repair.\nThis work is expanding our customer base.\nIn fact, 35% of our mobile phone customers are new reengaged with Best Buy.\nThis is enabled by a technical workforce that has an average tenure of almost nine years and a retention rate at 86%.\nNo one can match that level of expertise at the scale we can.\nThat tenure has helped us produce fantastic NPS results in-store, in-home, and through our remote support.\nAnd after we complete the repairs, customers spend 1.7 times more and engage 1.6 times more often across all Geek Squad services.\nGeek Squad will be a vital part of our Totaltech initiative, and we'll continue to offer stand-alone services that matter to customers, deepen those relationships and drive frequency.\nNow, customers, are also leveraging our expertise through consultations as well, both inside and outside of our stores.\nThese consultations provide a direct access to customers for our ever-growing set of experts.\nEmployees who have the skill sets to complete the consultation has grown by 78% last year.\nAnd with each consultation, we can inspire what's possible.\nCustomers spend 17% more across their lifetime value and they purchase more often when engaged for a consultation.\nCustomers are loving this experience, and we're seeing strong NPS.\nWhen surveyed 92% of customers say they will likely continue working with their expert.\nAnd when customers engage with one of our consultants or designers, they shop with Best Buy two times more frequently.\nSo looking ahead, we believe our annual consultations will grow by more than 200% by fiscal '25.\nAs you saw earlier, we had 45 million virtual interactions across all channels, creating opportunities to engage our customers differently.\nWe're excited about our virtual store, which just launched last fall.\nTo date, our virtual store in comparison to historical chat experiences is generating higher close rate, higher sales and a 20% improvement in customer satisfaction.\nAnd that's not all.\nOur vendors are extremely excited about it as well.\nWe started with 17 vendors onboard, and we will end fiscal '23 with over 60 vendors investing in our virtual store.\nThis is an investment in us and the belief that we're creating a totally differentiating experience.\nWe're expanding our virtual store and adding more categories like appliances and home theater, and we expect our virtual sales interactions to double by fiscal '25.\nSo let's talk about ways we're reimagining our store in support of our physical and digital shopping experiences.\nWe are very excited about the things that we're testing, learning and in some cases, implementing in our stores.\nFirst, let's talk about our experiential store.\nIn 2020, we launched a test in one of our Houston stores and added two additional locations since then.\nSome of the key enhancements include dedicated showcase spaces for some of the new categories Jason mentioned earlier like e-transportation, outdoor living, fitness.\nWe expanded our Microsoft and Apple shops and dedicated more space to premium experiences like appliances, home theater and audio.\nWe expanded our Geek Squad presence for more customer interactions and space for repair services.\nAnd we've also enhanced fulfillment capabilities to include exterior lockers, additional space for shipping, packing and fulfilling from our store warehouses.\nAnd we're excited about the performance.\nWe've seen a 370-basis-point improvement in NPS.\nWe've seen a steady lift in customer penetration in the retail trade area, as well as overall customer spend.\nAnd we expect to continue to see strong revenue lift in these experiential stores.\nAnd we will remodel 50 locations in fiscal '23 and about 300 locations expected by fiscal '25.\nNow, I want to highlight our 16 outlet stores that are sort of open box, clearance, end-of-life, and otherwise distressed large product inventory across major appliances and televisions which might otherwise be liquidated at a significantly lower recovery rate.\nThese outlets unlock value by alleviating space and capacity from our core stores, and they are an important element of our circular economy strategy by providing a second opportunity for products to be resold instead of ending up in the landfill.\nIn FY '22, gross liquidation recovery rate is almost two times higher than alternative channels.\nThese locations are attracting new and reengaged customers.\n16% of customers are new and 37% of customers are reengaged.\nIn FY '23, we will double the amount of outlet stores, and we'll test expanding our assortments by adding computing, gaming and mobile phones.\nAs we discussed last year, we launched a test in Charlotte of a new holistic market approach.\nAnd as I mentioned earlier, the ways people are shopping today are entirely different than how they shop two years ago, and our stores and the way they operate need to change and adjust accordingly.\nThis work in Charlotte is a manifestation of the shopping evolution, and this pilot leverages all of our assets in a forward portfolio strategy across stores, fulfillment, services, outlets, consultation labor, and we bring it all together with our digital app.\nWithin the test, we are looking at how a variety of store formats across 15,000, 25,000 and 35,000-square-feet locations can serve the customer's needs.\nAnd this summer, we will be introducing a 5,000-square-foot store into the marketplace.\nWhen you look at the before and after map of the Charlotte market, you can see we have reduced our overall square footage by 5% and yet, we've increased our customer coverage in the marketplace from 76% to 85%.\nWe've also added 260 access points where customers can get their gear and employee delivery covers nearly half of the metro.\nSo looking ahead, we'll be focusing on using this market to learn in fiscal '23 before we make decisions on what to scale or what not do.\nTechnology enhancements are at the center of many of the changes I just mentioned, from self-checkout to virtual store, technology supporting our teams and customers in new and exciting ways.\nTake a look at this video to see what we're doing.\n[Commercial break]As you can see, technology brings it all together in support of our optimized workforce and how our physical locations will enhance the shopping experience inside and outside of our stores.\nWe're excited about this year and our future as we focus on the combination of customer experience, loyalty plus operating efficiency.\nHere is the ecosystem slide Corie and Damien shared, and it's a perfect introduction to Best Buy Health as our work is an excellent example of the Best Buy ecosystem and flywheel.\nToday, I will share the strategy of health at Best Buy.\nBut first, let's see it come to life in this video.\n[Commercial break]I hope the video begins to answer the question that I hear often: Why in the world is Best Buy in health?\nI understand the question because health is complex, it has a longer return on investment and other companies have not succeeded.\nSo why will Best Buy succeed?\nWe didn't build this strategy to be like any other company or to change who Best Buy is.\nWe built our strategy on Best Buy's strengths, our world-class omnichannel, distribution and logistics, strong analytics, presence in the home and our empathetic caring center agents.\nOur strategy is supported by the rapid consumerization of health and two significant trends.\nFirst, technology is moving into health.\nWe recognize an $80 billion market opportunity for health technology and the desire for consumers to use technology to manage their health.\nAnd second, health is moving into the home.\nBy 2025, an estimated $265 billion in Medicare services will move into the home and 61% of patients say they would choose hospital care at home.\nAnd Best Buy has long proven we're a trusted advisor for technology in the home.\n70% of the U.S. population lives within 10 miles of a Best Buy store, able to shop health and wellness products, speak with our expert blue shirts and utilize our distribution hubs to fulfill their health technology needs.\nGeek Squad makes 9 million home visits annually, helping consumers set up technology and perhaps more importantly, teaching them how to use it.\nAnd we have the confidence of our customers and partners as we work to help enhance the health industry.\nOur strategy is to enable care at home, building on the strengths in three focal areas.\nIn consumer health, we provide curated health and wellness products.\nIn active aging, we offer health and safety solutions to enable adults to live and thrive at home.\nIn virtual care, we connect patients with their physicians and enable care at home.\nOur presence in each of these focal areas creates a flywheel where growth in one adds momentum to the other two.\nThis is the strength of our story.\nNow, let us look at the customer journey.\nJason touched on a few areas of consumer health earlier, and our video introduced you to Angela, a 45-year-old mother and caregiver to an aging father.\nYou saw her purchase a Tyto Care home medical kit when her son was sick, and Angela can find countless other products to support the health of her family, from weighted blankets to exercise equipment to blood pressure cuffs and more.\nThese products not only support our customers in their day-to-day health but also serve as an entry to our other two focal areas, active aging and virtual care.\nLively supports adults who want to age independently at home.\nOur easy-to-use phones and personal emergency response devices feature one-touch access to our caring center and services like urgent response, fall detection and more, providing patients and caregivers with the peace of mind that care is only a call away.\nLast year, we launched our new Lively brand and a Lively partnership with Apple to feature our health and safety services on Apple Watch.\nAnd today, I'm happy to announce Lively on Alexa, which will launch this spring.\nOur Lively monthly subscription service provides a consistent revenue stream, and last year, we drove 15% year-over-year growth by adding 348,000 new lives served.\nOur caring center agents connected with our customers over 9 million times last year, offering a variety of health and safety services.\nSo let's jump back to Angela's story.\nAngela worries about her father living at home alone, so she purchases a Lively smartphone and an Amazon Echo for her dad from Best Buy, along with a monthly Lively health and safety subscription plan.\nJacob uses his Lively Smart to request a Lyft ride to a doctor's office through a caring center agent.\nHe had a minor fall at home and uses his Amazon Echo to alert the caring center, who can follow protocol to determine if emergency medical services are needed.\nAnd this patient journey is just one example of the many ways Lively supports active aging adults at home.\nNow, let's look at virtual care.\nAccelerated by the COVID-19 pandemic, perhaps the most exciting opportunity lies within virtual care, where we enable patients to connect with their care teams.\nIn November, we acquired Current Health.\nCurrent Health is making inroads into care at home through securing strong partnerships with successful programs at Baptist Health, Mount Sinai, AbbVie, the Defense Health Agency and more.\nOur acquisition merges Current Health's FDA-cleared at-home platform with Best Buy's scale, expertise and connection to the home.\nTogether, we create a powerful virtual care experience.\nJacob is in the hospital with sepsis.\nThe hospital physician identifies and enrolls Jacob into the hospital's hospital at home program.\nBest Buy sets up Jacob's home with the technology needed for remote patient monitoring and trains both Jacob and Angela on how to use it.\nThis ensures the hospital physician can focus on treating patients rather than being a tech consultant.\nThis is a job that physicians had to play during the pandemic and it overtaxed our health system.\nAt home, Jacob is monitored by Current Health's platform and a virtual command center.\nThe hospital physician checks in daily with video visits to ensure he's healing on track.\nThe command center coordinates Jacob's home medications and notices a lack of data from his monitor.\nAfter discovering that he's improperly wearing the device, the Geek Squad is deployed to a system.\nThe platform's algorithm alerts the command center that Jacob has a persistent fever and the on-call health system physician prescribes therapeutic, which is delivered by the pharmacy partner.\nWhen Jacob recovers, the hospital physician discharges Jacob, and Jacob continues to be supported by Lively.\nA few of the pieces in this patient journey are still in development, the Geek Squad integrated with Current Health, for example, but this is our direction.\nAnd you can see Best Buy is there for the patient with technology, support and connections to enable care at home.\nAnd we're not building this alone.\nWe're creating an ecosystem to support consumers in their care-at-home journey.\nConsumers are at the heart of our strategy, and throughout a lifetime of health needs, Best Buy is there to help enrich and save lives through technology and meaningful connections.\nAs I mentioned earlier, our health opportunity creates a flywheel, driving growth in all three focal areas.\nOur revenue in fiscal year '22 was $525 million.\nWe're growing 35% to 45% a year, and we are accretive in fiscal year '27 as the health industry has a longer return on investment.\nYou've heard details from Corie, Jason, Damien and Deborah about some key areas that give us excitement about the opportunity in front of us.\nWe firmly believe our differentiated capabilities and focused investments will lead to compelling returns over time.\nWhile fiscal '22 was certainly an amazing year, we see a path to even higher revenue and earnings by fiscal '25.\nAnd as we look beyond fiscal '25, we see even more opportunity for revenue growth and operating income rate expansion as the benefits from our initiatives like Totaltech and Best Buy Health grow even further.\nBefore I share additional details on our fiscal '25 targets, I would like to review a few guiding behaviors that have been our brand for several years.\nFirst, we plan to fund our growth through the cash we generate to return excess cash to shareholders.\nSecond, we are committed to leveraging cost reductions and efficiencies to help offset investments and pressures in our business.\nOur current target set in 2019 is to achieve an additional $1 billion in annualized cost reductions and efficiencies by the end of fiscal '25.\nWe achieved approximately $200 million during fiscal '22, taking our cumulative total to $700 million toward the $1 billion goal.\nLet me take a moment to reflect on our past performance.\nWe have talked about our record results over the past couple of years, but it is also important to note that we have had very steady growth in the years leading up to the pandemic.\nThis past year was the eighth straight year of comparable sales growth.\nIn addition, we have expanded our operating income rate, earnings per share and ROI.\nWe expect our revenue in fiscal '25 to be in the range of $53.5 billion to $56.5 billion.\nThis range reflects a three-year compound annual growth rate of approximately 1% to 3%, despite the anticipated decline in sales in fiscal '23.\nI would also note that due to expected store closures, our comparable sales CAGR would be approximately 2% to 4%.\nThere are a few key assumptions underlying the revenue expectations.\nFirst, as Corie shared, we believe the consumer electronics industry will remain significantly higher than it was pre-pandemic, and we expect that fiscal '25 will be back to a level similar to fiscal '22.\nSecond, we believe we have an opportunity to capture even more market share than we have in the past.\nThis is due to growth from Totaltech and the store initiatives that Damien talked about.\nAs it relates to Totaltech, we believe that the combination of membership revenue and incremental purchases by members will add approximately $1.5 billion in revenue by fiscal '25 compared to fiscal '23.\nThis is a net impact.\nSo it incorporates the impact of cannibalizing other stand-alone services now part of our membership offering.\nOf course, we also expect revenue growth from Best Buy Health and the expansion into additional categories that Jason shared earlier.\nAs we move to our fiscal '25 operating income rate outlook, we expect to expand our rate to a range of 6.3% to 6.8%.\nAs we have highlighted, Totaltech is currently pressuring our fiscal '23 operating income rate.\nHealth has also been an area of investment for us over the past few years.\nHowever, as each of them scales, we expect them both to meaningfully contribute to our fiscal '25 rate outlook.\nWe also see opportunities to lean in even further on capabilities like our in-house media business, Best Buy ads, which as Corie mentioned earlier, is fueled by our first-party data.\nWe expect this business will benefit our fiscal '23 operating income with benefits increasing in the out-years.\nIn addition, we expect to see rate benefits from our continued focus on finding cost efficiencies that benefit both gross profit and SG&A.\nDamien highlighted a number of strategies that are part of this effort.\nAs we've discussed over the past few years, technology will be critical in unlocking many of these opportunities.\nOf course, there are areas where we will likely see pressure on our rate in the future.\nThe first example of this is pricing.\nThroughout most of the pandemic, the level of promotions in our categories has been well below levels of fiscal '20.\nThis has been largely a result of higher demand and more challenged or constrained inventory environment.\nWe have seen pockets of promotional activity increase over the past two quarters, and our belief is that the promotions will continually progress back to fiscal '20 levels.\nA second area I would highlight is increased spend in technology in our store portfolio.\nAs we have shared over a number of quarters, our technology spend has been increasing in support of our initiatives and overall omnichannel experience.\nIn addition, we expect more depreciation expense from our capital investments in our stores.\nLastly, there are a few other factors we will continue to assess, but at this point, don't see as being material to our rate in fiscal '25 compared to fiscal '23.\nFirst, from a store labor standpoint, we expect to maintain expenses at a similar rate of revenue.\nWe will continue to invest in higher pay for our employees, but expect to balance the higher wages to efficiencies, leveraging technology and more flexible workforce.\nSecond, we do not expect channel mix to have a material impact to our rate.\nAs Damien shared earlier, our outlook assumes closing 20 to 30 stores per year through fiscal '25.\nThis assumption reflects our belief that the online channel mix will grow approximately to 40% in fiscal '25.\nWe will continue to apply a rigorous process for lease renewals to ensure we are comfortable with the financial return and overall customer experience.\nCurrently, the vast majority of our stores are cash flow positive, and we believe are essential for us to serve our customers.\nI'll move next to our cash flow and our capital allocation approach.\nTo start with, we have been generating healthy levels of free cash flow for several years, which provides us ample room to fund our growth investments.\nOur average annual free cash flow over the past five years is more than $2.3 billion.\nOur capital allocation strategy has been consistent for several years.\nOur first priority is to reinvest in our business to drive growth, highlighted by the strategies you've heard today.\nThis includes both capital expenditures and operating expense investments.\nNext, we may explore additional partnerships and acquisitions if we believe they will accelerate our ability to achieve more profitable growth.\nWe also plan to continue to be a premium dividend payer and return excess cash through share repurchases.\nLet me quickly expand on a few of these areas.\nWe expect our annual capital expenditures to increase to a range of $1 billion to $1.2 billion over the next three years.\nEarlier, Damien outlined a number of changes to our stores to further our strategy.\nConsistent with our iterative approach, we will test, learn and deploy once we have vetted anticipated returns of our initiatives.\nTechnology investments are expected to remain similar to fiscal '23, simply decreasing as a mix of our capital deployment.\nOur targeted dividend payout remains in the range of 35% to 45% of prior year's non-GAAP diluted earnings per share.\nLastly, this year marked a record level of share repurchases at $3.5 billion.\nIn fiscal '23, we plan to spend approximately $1.5 billion on share repurchases.\nSo with that, let me turn the stage back over to Corie.\nExtraordinary ecosystems have formed over the past 20, 30, 40 years as digital has transformed every aspect of how we all do business.\nThat same transformation is happening in our homes, meaningfully accelerated in the last two years.\nAnd while we started as a music retailer selling fun-to-have products, we're now the only company built around the same extraordinary transformation of technology in our lives and in our homes.\nWhile others sell some of the same products we do, we alone offer the complete technology solution across manufacturers and operating systems.\nWe are the only company in all channels and at scale that can do everything from design your personalized hardware and software solution in the home, to install and connect all of it, to keep it working when there are any issues from unreliable networks to broken screens.\nThese assets appeal not only to our customers, but they are also unique and investable for our marketing partners, technology vendors, small business and education relationships and other strategic connections.\nAs we look to the future, we see technology as a permanent and growing need in the home, constantly evolving as the world's largest companies innovate with new use cases around the metaverse, transportation, green electricity and health, just to name a few.\nWe have a unique value creation opportunity into the future and are investing now as we have successfully invested ahead of change in our past to ensure we pivot to meet the needs of our customers and retain our exclusive position in our industry.\nWe are excited to help customers enrich lives through technology in ways no one else can.\nAnd with that, we will break for 10 minutes before beginning our Q&A session.\nWe are excited to begin the Q&A portion of our event, which we expect to run approximately 45 minutes.\nMany of you spent time with Rob Bass and may know that he recently announced that he is stepping away from a life in retail to pursue some other passions as we have been discussing for quite some time.\nThat incredible work extended to his ability to bring in top-tier talent.\nOne example of that is Mark Irvin, who came to Best Buy in 2013, specifically to work with and learn from Rob.\nMark has been an instrumental part of the team that has led our supply chain transformation and is ready to use his lifetime of knowledge in the space to continue to advance our industry-leading supply chain efforts.\nWe are thrilled to have Mark Irvin taking over the reins in supply chain.\nAnd we've invited him to join us for Q&A.\nSo operator, we are now ready for our first question.\n", "role": "user" }, { "content": "sees fy non-gaap earnings per share $8.85 to $9.15.\nq4 comparable sales decreased 2.3% compared to 12.6% growth in q4 fy21.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Please keep in mind that our actual results could differ materially from these expectations.\nAll these documents are available on our website at brunswick.com.\nOur businesses had a fantastic start to 2021 with a very healthy marine market, strong boating participation and outstanding operating performance, driving historic financial results.\nRobust retail demand for our products continues to drive low field inventory levels, with increased production across all our facilities necessary to satisfy orders from our OEM partners and dealer network.\nOur teams have performed exceptionally well in the face of supply and transportation headwinds, tighter labor conditions, and continued impact from the COVID-19 pandemic.\nAnd we are excited about our ability to further harness the positive momentum we've generated to propel our growth and industry leadership.\nOur Propulsion business continues to deliver outstanding top-line, earnings and margin growth, outperforming the market by leveraging and expanding the strongest product lineup in the industry.\nOur parts and accessories businesses delivered strong top-line growth and robust operating margins as a result of increased boating participation, which drove strong aftermarket sales, together with high demand for our full range of OEM systems and services, as boat manufacturers attempt to satisfy retail demand.\nOur boat business performed well, as anticipated, in the quarter, reaching double-digit adjusted operating margins for the first time in over 20 years.\nDespite elevated production levels consistent with our plans for the year, the continued surge in retail demand is still driving historically low pipeline inventory levels, with 41% fewer boats in dealer inventory at the end of the first quarter, versus the same time last year.\nFinally Freedom Boat Club has had an extremely busy start to the year, which I will discuss further in a couple of slides.\nWe have exceptional momentum as we enter the prime retail season in most markets, and as you can see from our significant guidance increase, we are confident in our ability to perform for the rest of the year and well beyond.\nBefore we discuss the results for the quarter, I wanted to share with you some updated insights from 2020 concerning our boat buyers and Freedom Boat Club members that reflect very favorable trends for the future of our business.\nWe continue to outperform the industry in attracting new, younger and more diverse boaters, positioning us for very strong growth in the years to come.\nLast year, Brunswick's average boat buyer age was two years younger than the industry average and reached its lowest level in over a decade.\nAdditionally, Brunswick's first-time boat buyers averaged five years younger than our overall boat buyer demographic, and three years younger than the industry.\nEqually encouraging was the fact that the percentage of Brunswick female boat buyers in 2020, while still a minority, equaled the highest percentage on record and first-time female boat buyers entered at double that rate, which was a notable 700 basis points higher than the industry.\nIn Freedom Boat Club, we saw even more promising trends with the average Freedom member being almost three years younger than our typical boat buying customer, and female Freedom members making up 35% of our member base in 2020 and 2021.\nThese trends are an extremely important validation of our strategy to secure a healthy future for Brunswick and are also favorable for the entire marine industry.\nI also wanted to briefly update you on some very important awards and milestones for Brunswick during the first quarter, which are important in positioning Brunswick for investors and employees, and our ability to secure top new talent.\nI am pleased to announce that for the second consecutive year, Brunswick has been recognized by Forbes as one of the Best Employers for Diversity.\nThose recognized were chosen based on an independent survey of over 50,000 employees working for companies employing at least 1,000 people in their U.S. operations.\nDiversity and inclusion are cornerstones of our culture and a source of innovation and inspiration for our Company.\nWe also published our 2020 Sustainability Report at the end of March which reviews the exceptional progress we have achieved against our sustainability goals, including our prioritization of the health and safety of our employees.\nIn 2020, we reported the lowest recordable incident rate in Company history, in the face of immense challenges resulting from the COVID-19 pandemic.\nAnd I also wanted to share with you a snapshot of what the return to in-person boat shows looks like.\nThe Palm Beach International Boat Show was recently held for the first time since the Spring of 2019.\nThis was the first major in-person saltwater show of the 2021 season and the outcomes were very positive.\nAttendance was up and our brands outperformed the broader marine industry.\nOver the course of the four-day show, Sea Ray and Boston Whaler more than doubled the number of boats sold this year vs.\n2019 and revenues more than tripled, driven by increased demand for the recently launched models.\nConsumers were also able to see Mercury's V-12 600 horsepower Verado in person for the first time, with many eager to repower their boats with this new, game changing engine.\nI'll now provide some first quarter highlights on our segments and the overall marine market.\nOur Propulsion business continues to gain significant retail market share in outboard engines, especially in higher horsepower categories where we have focused higher levels of investment in recent years.\nMercury gained share in each horsepower category over 50 horsepower in the first quarter, with outsized gains in nodes in excess of 200 horsepower.\nAs I mentioned earlier, Mercury launched its new 600 horsepower, V-12 Verado engine in February at Lake X in Florida to much fanfare.\nMany OEM partners, including Fountain, Scout, Viking and Tiara, and our own Boston Whaler and Sea Ray brands, have already designed boats with this engine in mind and are taking orders.\nMany models are already sold out for 2021, with twin-, triple- or even quad-configurations being very popular with both OEMs and customers.\nNew or enhanced OEM relationships, along with significant investments in new technology, have also helped fuel the continued growth in Mercury's industry-leading controls, rigging and propeller businesses.\nAs Mercury's growth continues to accelerate, we regularly review our capacity requirements to ensure we are able to meet projected demand and fully capitalize on future growth opportunities.\nIn this regard, we anticipate having to pull ahead some additional capacity actions.\nOur Parts and Accessories businesses also experienced significant top-line and earnings growth in the quarter as aftermarket sales remain elevated due to strong participation trends and service needs, with increased OEM orders to keep up with production resulting from the accelerating retail demand.\nOur dealer network reports that their service centers are busier than ever, with the strong participation trends from 2020 continuing into 2021.\nIn addition, favorable weather conditions in many parts of the U.S. are enabling consumers to return to the water early and in force.\nThis demand drives the need for aftermarket service parts and a healthy distribution network to get dealers the products they need on a same-day or next-day basis.\nThe Advanced Systems Group, which has a larger OEM component to its business and also serves some non-marine segments demonstrated significant growth across all its product categories and delivered strong operating margins that were accretive to the overall segment.\nOur boat segment had an outstanding quarter, with successful execution of its product plan, resulting in strong revenue and earnings growth, together with double-digit operating margins.\nGiven the continued retail demand surge, 95% of our production slots are now sold for the calendar year, with many Whaler, Sea Ray and other models now sold out at wholesale well into 2022.\nPipeline inventory, which Ryan will discuss in more detail in a few slides, remains at historically low levels, and we continue to hire additional workers at most facilities to ramp up production consistent with our stated plan.\nWe remain on track with our plans to reopen and staff the Palm Coast facility and expand our operations at Reynosa and Portugal.\nHowever, it remains very unlikely that pipelines will be significantly rebuilt until 2023 at the earliest.\nFreedom Boat Club also continues to exceed our growth expectations, now with over 40,000 memberships and 280 locations, which is more than 100 new locations since we acquired Freedom in 2019.\nFreedom has been expanding both through acquisition and organic growth in 2021.\nWe acquired franchise operations in major boating markets including Chicago and New York, and opened our first location in the U.K. As a reminder, having company operated locations allows us to gain the full economic benefits of the territories, and allows us to increase investment to enable faster growth.\nIn addition, company operated locations provide the opportunity to get close to the end boating consumer and allow us to enhance our other offerings including Boateka and our F and I businesses.\nThe outstanding operational and financial performance I have been discussing has not been without some external challenges that our businesses continue to manage and mitigate, sometimes on a daily basis.\nOur supply chain teams in particular performed exceptionally well.\nWinter storms and resulting power outages in the Central and Southern United States affected oil-based product production and supply, including our third-party producers of resin and foam, while tight semiconductor supply, raw material shortages, and transportation disruption, and resulting cost increases, continue to present challenges to our businesses to varying degrees.\nHowever, the global reach of our supply network and our unique scale in the marine industry, together with our purposeful vertical integration, have so far enabled us to mitigate these challenges and keep our production plans on track for 2021.\nFinally, labor conditions remain tight in many locations in which we manufacture product, but our talent acquisition teams have been working hard and successfully to add manufacturing and other talent to our teams as we increase production.\nNext, I would like to review the sales performance of our business by region on a constant currency basis.\nFirst quarter sales increased in each region, with international sales up 42% and sales in the U.S. up 47%.\nInternational growth was very strong across all regions, with continued strength in Europe and Asia-Pacific contributing to growth in propulsion and P&A sales.\nCanada continued its trend from the back half of 2020 with significant sales growth in all three segments.\nThis table provides more color on the recent performance of the US marine retail market.\nAll boat categories reported retail gains in the first quarter, continuing the momentum from 2020.\nThe main powerboat segments were up 34% in the quarter, with Brunswick's unit retail performance ahead of market growth rates, especially in outboard boat categories.\nOutboard engine unit registrations were up 21% in the first quarter, with Mercury significantly outperforming the market and taking market share as I discussed earlier.\nAs we enter the primary selling season in the U.S., lead generation, finance applications, dealer sentiment and other leading indicators all remain very positive.\nIn addition, similar to our comments on previous calls, at the end of March, our percentage of dealer orders received with a customer name already attached is approximately three times the percentage from the same time last year.\nAll these factors give us high confidence in the continuing strength of the retail market as we move through 2021.\nOur first quarter results were outstanding.\nYear-over-year comparisons are not particularly helpful given the significant COVID impact starting in March of last year, but our performance in the quarter stands on its own against any quarter from the last two decades.\nFirst quarter net sales were up 48%, while operating earnings on an as adjusted basis increased by 116%.\nAdjusted operating margins were 17% and adjusted earnings per share was $2.24, each being the highest mark for any quarter for which we have available records.\nSales in each segment benefited from strong global demand for marine products, with earnings positively impacted by the increased sales, favorable factory absorption from increased production, and favorable changes in foreign currency exchange rates, partially offset by higher variable compensation costs.\nFinally, we had free cash flow usage of $23 million in the first quarter as we built inventory ahead of the prime retail selling season, which is very favorable versus free cash flow usages of $144 million in the first quarter of 2020 and $159 million in Q1 of 2019.\nRevenue in the Propulsion business increased 47% as each product category experienced strong demand and market share gains.\nAll customer channels showed growth in the quarter as boat manufacturers continued to ramp up production, and increased capacity enabled continued elevated sales to the independent OEM, dealer and international channels.\nOperating margins and operating earnings were up significantly in the quarter, benefiting from positive customer mix in addition to the factors positively affecting all our businesses.\nIn our Parts and Accessories segment, revenues increased 52% and adjusted operating earnings were up 83% versus first quarter 2020 due to strong sales growth across all product categories.\nAdjusted operating margins of 21.3% were 350 basis points better than the prior year quarter, with strong sales increases, together with favorable sales mix, driving the robust increase in adjusted operating earnings.\nContinuing the theme from 2020, this aftermarket-driven, annuity-based business is benefiting from more boaters on the water, which is being augmented by flexible work schedules allowing for more leisure time, with the OEM component of the business leveraging investments in technology to take advantage of strong demand from boat builders as they increase production.\nIn our boat segment, sales were up 44%, with 31% adjusted operating leverage resulting in 10.9% margins for the quarter.\nEach brand had strong operational performances and contributed to the successful results, with Lund and Boston Whaler leading the gains in the premium brands, and Bayliner having another strong quarter as a mid-tier value brand.\nAlthough it's only one quarter above our stated goal of double-digit margins, this is the third consecutive quarter of margins above 9%, and we believe that we can continue this trend throughout the year and beyond.\nOperating earnings were also positively impacted by the increased sales and the lower retail discount levels versus 2020.\nFreedom Boat Club, which Dave discussed earlier, contributed approximately two percent of the segment's revenue, at a margin profile that continues to be accretive to the segment.\nOur boat production continues to ramp consistent with our plans to produce in excess of 38,000 units during the year.\nDespite producing approximately 9,400 units in the quarter, which is up 16% from the 4th quarter of 2020, we only added a few hundred units to dealer inventories given the continued robust retail market.\nOur boat brands ended March with just under 19 weeks of boats on hand, measured on a trailing twelve-month basis, with units in the field lower by 41% versus same time last year.\nWe continue to believe that our current manufacturing footprint will support the production necessary to satisfy the anticipated 2021 retail demand, but we continue to work with our brands to unlock additional near-term capacity through automation, labor and select capital initiatives, including the capacity actions announced earlier in the year related to our Palm Coast, Reynosa and Portugal facilities, which will begin providing benefits by the end of the year.\nAs a result of historically low product pipelines and continued very strong boating participation, including in many northern regions in recent weeks due to the early Spring, production levels remain elevated across all our businesses to both satisfy retail demand and to rebuild product pipelines.\nThese factors, together with our strong pipeline of new products and outstanding operational performance, continue to provide enhanced clarity on our ability to drive growth in upcoming periods, resulting in the following guidance for full-year 2021.\nWe anticipate U.S. Marine industry retail unit demand to grow mid-to-high single-digit percent versus 2020; net sales between $5.4 billion and $5.6 billion, adjusted operating margin growth between 130 and 170 basis points, operating expenses as a percent of sales to remain lower than 2020, free cash flow in excess of $425 million; and adjusted diluted earnings per share in the range of $7.30 to $7.60.\nWe're also providing directional guidance regarding the second quarter, where we anticipate revenue growth of approximately 50% over the second quarter of 2020, with adjusted operating leverage in the low-20s percent.\nAs we look to the second half of the year, despite extremely challenging comparisons to 2020, we still believe that we will deliver top-line and earnings growth over the second half of last year.\nI will conclude with an update on certain items that will impact our P&L and cash flow for the remainder of 2021.\nThe only significant update relates to the working capital usage for the year.\nProjected increases in accrued expenses and accounts payable are exceeding anticipated increases in accounts receivable, resulting in a lower working capital build throughout the year.\nWe now estimate a working capital increase of $80 million to $100 million for 2021, which together with the higher anticipated earnings, results in a stronger free cash flow projection of $425 million.\nOur capital strategy assumptions, however, have been augmented in places to take advantage of our stronger, early year cash position.\nWe still plan to retire approximately $100 million of our long-term debt obligations, as we repaid $9 million in the first quarter and $60 million already in April.\nWe repurchased $16 million of shares in the quarter, and plan to continue our systematic approach throughout the year.\nWe anticipate spending $250 million to $270 million on capital expenditures in the year to support, and in some cases accelerate, growth initiatives throughout our organization.\nThis slightly increased spending will be directed to new product investments in all of our businesses, cost reduction and automation projects, and select additional capacity initiatives to support demand and future growth, primarily in the Propulsion business.\nWe are also raising our dividend, for the ninth straight year, to $0.335 cents a share, or a 24% increase, as our strong cash position enables us to raise our dividend earlier in the year than usual, and keep our payout ratio close to our target 20% to 25% range, and continue to provide strong returns to our shareholders.\nFinally, we've had a busy start to the year with M&A activity, primarily in expanding Freedom Boat Club as Dave discussed earlier.\nCompleted deals to date will have an immaterial impact on 2021 results, but we remain active in several areas including P&A, Freedom and ACES and intend to close additional deals throughout the year.\nAs we discussed on our January call, we felt that 2021 was setting up to be an outstanding year for all of our businesses and the first quarter did not disappoint.\nThe combination of robust consumer demand during the quarter and solid operational execution by our businesses has us squarely on track to deliver against our operating and strategic priorities.\nOur top priority for the Propulsion segment continues to be satisfying outboard engine demand from new and existing OEM customers and expanding market share, especially in the dealer, saltwater, repower and international channels.\nWe are continuing to invest heavily in new product introductions and industry-leading propulsion solutions that we project will enable top-line and earnings growth far into the future.\nOur Parts and Accessories segment remains focused on optimizing its global operating model to leverage its distribution and position of product strength in the areas of advanced battery technology, digital systems, and connected products in support of our ACES strategy.\nWe will continue to focus our M&A activity in this area as we look for opportunities to further build out our technology and systems portfolio.\nThe Boat segment will build on its first quarter successes by continuing to focus on operational excellence, improving operating margins, launching new products, executing capacity expansion plans, and refilling pipelines in a very robust retail environment.\nLastly, we remain keenly focused on accelerating the Company's ACES strategy, building on our connectivity and shared access initiatives, but also in the areas of autonomy, where we recently announced a new partnership with Carnegie Robotics, and in marine electrification, where we plan a portfolio of new products.\nWe will also continue to advance our ESG and DEI strategies across the company.\nAs we have done with past investor days, we have gathered our business leaders to provide you with an update to our 2022 strategy that was originally presented in February of 2020 in Miami, as well as to discuss certain longer-term initiatives that will grow and differentiate Brunswick through the next decade.\nWe will also hold a Q&A session for investors to ask questions of our management team on Monday, May 17th at noon Central Daylight Time.\nJust a reminder that while we will not be providing a full financial update during this event, Ryan will be providing an abbreviated update on our 2022 financial targets, which will include further details regarding the substantial increase of our 2022 earnings per share target to between $8.25 and $8.75 per share as announced today.\nYour hard work has enabled us to seamlessly execute our strategic plan and significantly outpace our initial growth and profit expectations.\n", "role": "user" }, { "content": "brunswick corp releases first quarter 2021 earnings.\noration releases first quarter 2021 earnings.\nfirst quarter gaap diluted earnings per share of $2.15 and as adjusted diluted earnings per share of $2.24.\nincreasing 2021 guidance, adjusted diluted earnings per share range of $7.30 - $7.60; free cash flow in excess of $425m.\nanticipate 2021 net sales between $5.4 billion and $5.6 billion.\nfor the q2, we anticipate revenue growth of approximately 50 percent.\nbelieve that h2 2021 comparisons will be more challenging due to potential inflationary pressures.\nbrunswick - believe h2 2021 comparisons will be challenging due to less favorable factory absorption comparisons, smaller benefits from forex rate changes.\nbrunswick - guidance assumes revenue and earnings growth in the second-half of the year versus second-half 2020.\nbrunswick - increase of 2022 earnings per share target to $8.25 to $8.75 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: Please keep in mind that our actual results could differ materially from these expectations.\nAll of these documents are available on our website at brunswick.com.\nOur businesses had another outstanding quarter.\nWe closed the first half of 2021 by delivering record results as a result of continuing strong retail demand, outstanding operational performance and success in mitigating material supply and labor challenges.\nAll of our businesses delivered exceptional growth during the quarter.\nOur Propulsion business continued to realize strong outward market share gains, leveraging the strongest product lineup in the industry.\nOur Parts and Accessories businesses continued to benefit from robust aftermarket demand, driven by elevated boating participation.\nAnd our Boat business posted its second consecutive quarter of double-digit adjusted operating margins despite significant supply chain, transportation and labor challenges.\nRobust retail demand for our products in the first half of the year has driven field inventory levels to the lowest level in decades at approximately nine weeks on hand.\nAnd we are progressing our efforts to efficiently increase capacity across several of our facilities to satisfy orders from our global customer base and begin to replenish the pipeline.\nAs many of you know, we've also had a busy few months on the M&A front.\nAt the end of the quarter, our Advanced Systems Group significantly expanded its product and brand portfolio by announcing the signing of a definitive agreement to purchase Navico, an industry leader in marine electronics.\nIn addition, we announced in early July that Freedom has expanded into Spain through the acquisition of Fanautic Club.\nI'll touch on both these exciting transactions later in our discussion.\nGiven the unique demand and inventory environment, together with continued strong boat usage through the prime season, which drives P&A sales, we have improved visibility on our ability to deliver against an extremely favorable outlook for the remainder of 2021.\nAnd consequently, we have increased our 2021 guidance.\nBefore we discuss the results for the quarter, I wanted to share with you some updated demographic insights through the first half of 2021 and comparisons with the favorable trends we experienced in 2020 versus 2019 in the industry.\nI'm happy to report that we are not seeing any change in the significant metrics we shared with you during our first quarter earnings call in April.\nBrunswick's average boat buyer age continues to be two years younger than the industry average.\nAdditionally, Brunswick's first-time boat buyers continue to be younger than our overall boat buyer demographic and three years younger than the industry.\nFirst-time boat buyers are trending more female than they did in 2020, and Brunswick over-indexes to the industry by approximately 800 basis points.\nIn Freedom Boat Club, the average Freedom member continues to be almost three years younger than our typical boat buying customer and female Freedom members make up approximately 35% of our member base.\nWe continue to outperform the industry in attracting younger and more diverse first-time boat buyers, positioning us for very strong growth in years to come.\nThese trends are an extremely important validation of our strategy to secure a healthy future for Brunswick and are also favorable for the entire marine industry.\nI also wanted to share with you some awards that Brunswick received during the second quarter that provide more strategic proof points.\nBrunswick received 6, 2021 boating industry top product awards, including for the Mercury Marine V12 600-horsepower Verado and the Sea Ray 370 Sundancer Outboard we highlighted recently, but also for our Bayliner Element M15 entry-level boat, BEP's Smart Battery Hub, Attwood's Sahara Mk2 automatic bilge pump, and MotorGuide's Xi3 Kayak Trolling Motor.\nBrunswick has also been recognized by Forbes for the second year in a row as one of the best employers for women and ranked second overall in the engineering and manufacturing category.\nThe winners were chosen based on a survey of 50,000 US employees working for companies employing at least 1,000 people in their US operations and only 300 companies made the final list from the thousands of companies that were considered for the honor.\nFinally, Brunswick recently had three employees and a Freedom Boat Club franchisee, Bev Rosella, honored with a Women Making Waves Award from Boating Industry Magazine.\nWe are very proud of these women leaders.\nAs you know, equal opportunity, inclusion and diversity are cornerstones of our culture.\nI'll now provide some second quarter highlights on our segments and the overall marine market.\nOur Propulsion business continues to gain significant retail market share in outboard engines, especially in the higher horsepower categories, where we have focused higher levels of investment in recent years.\nFor the first half of the year, Mercury has gained share in each horsepower category over 75-horsepower, with outsized gains in nodes in excess of 200-horsepower.\nI'm also pleased to announce that we began shipping the new 600-horsepower V-12 Verado engine in late June, and as anticipated, demand has been extremely strong.\nWe're essentially sold out of the V-12 production slots for the remainder of 2021.\nAnd we estimate that just during the back half of 2021, we will sell more outboard engines in this above 500-horsepower class that was sold in the entire prior history of the outboard industry.\nGiven the surging demand in the current environment and new product launches planned in the coming years, Mercury is accelerating additional capacity investments at its primary manufacturing center in Fond du Lac, Wisconsin, in order to maximize its ability to serve the market and capture further share.\nOur Parts and Accessories businesses experienced significant topline and earnings growth and significantly overdrove expectations in the quarter due to outstanding execution, robust aftermarket demand driven by elevated boating participation and favorable weather conditions in many areas.\nThe Advanced Systems Group, which has a larger OEM component to its business and also serves certain non-marine segments, benefited from prior year comparisons as a result of Q2 2020 customer COVID-related plant shutdowns.\nAs a result, ASG realized significant growth across all product categories and delivered strong operating margins that were accretive to the overall segment.\nFinally, as I mentioned earlier, in late June, our Advanced Systems Group strengthened its product and brand portfolio and significantly expanded its scale and capabilities by announcing the signing of a definitive agreement to purchase Navico.\nThis action will further accelerate our ACES strategy and will enhance our ability to provide complete innovative digital solutions to our consumers and comprehensive integrated systems offerings to our OEM customers.\nWe believe this transaction will close in the second half of 2021.\nOur Boat segment had another outstanding quarter, posting its second consecutive quarter of double-digit adjusted operating margins despite significant supply chain uncertainty, while delivering output consistent with our production plans for the year.\nWe ended the second quarter with historically low pipeline inventory levels due to consistent strong retail demand for our products.\nGiven the continued robust retail demand and our dealers' continued desire to take all available product, our 2021 production slots are now sold out for the calendar year, with five brands completely sold out through the 2022 model year.\nIn fact, the sum of our wholesale orders for 2022 model year product is already roughly equal to our projected 2021 full year wholesale Boat Group revenue.\nWe continue to hire additional new production employees at most facilities to maintain production consistent with our stated plan.\nWe remain on track with our plans to ramp up and staff the Palm Coast facility and expand our operations at Reynosa and Portugal.\nAdditionally, we've identified capital-efficient investment options to further raise capacity to approximately 50,000 annual production units by 2023, should this volume of product be required.\nFreedom Boat Club also continues to exceed our expectations, growing both organically and through acquisition with a young and diverse customer base.\nWith the recently announced acquisition of Fanautic Club and expansion into Spain, Freedom now has 314 locations and 44,000 memberships networkwide, and is closing in on 4,000 votes in the overall Freedom fleet, with an increasing percentage of Brunswick product.\nThe outstanding operational and financial performance I've been discussing has not been without some external challenges that our businesses continue to manage and mitigate sometimes on a daily basis.\nOur supply chain teams in particular, have performed extremely well.\nWinter storms in late first quarter and resulting power outages in Central and Southern United States disrupted the supply of oil-based resin and foam products throughout the second quarter, while tight semiconductor supply, raw material shortages and transportation disruption and resulting cost increases continued to present challenges, which we are actively managing.\nAs a result, our businesses have implemented price increases that are higher than normal, but we believe are generally at the lower end of those implemented across the industry.\nThe global reach of our supply network and our unique scale in the marine industry, together with our purposeful vertical integration, have so far enabled us to mitigate these challenges and keep our enabled us to mitigate these challenges and keep our production plans on track for 2021.\nFinally, labor conditions remained tight in many locations in which we manufacture product.\nBut our talent acquisition teams have been working hard and successfully to add manufacturing and other talent to our teams, as we increase production.\nNext, I'd like to review the sales performance of our business by region on a constant currency basis, excluding acquisitions.\nAs expected, all regions posted significant sales growth in the quarter versus both, 2020 and 2019.\nDomestic sales grew 55%, with international sales up 49%, versus prior year.\nWe are seeing strong performance across all international regions, with Asia Pacific still growing despite an extremely strong comparison in 2020.\nWe continue to experience robust demand around the globe, especially for propulsion products.\nAnd we'll be working through backlogs in certain product categories through the remainder of 2021 and into 2022.\nThis table provides more color on the recent performance of the U.S. marine retail market, comparing the first half of 2021 to same periods in 2020 and 2019.\nAs is usual for this time of year, there's significant noise in the month-to-month SSI data, but the positive market trends continue.\nAll boat categories reported retail gains in the first half of 2021 and continuing the momentum from 2020.\nDespite more difficult year-over-year comparisons in May and June, the main powerboat segments are still up 17% in the first half of 2021 versus 2020 and up 13% versus 2019.\nBrunswick's year-to-date unit retail performance is generally in line with market growth rates with strength in outboard boat categories.\nOutboard engine unit registrations were up 5% in the first half of 2021, when compared with the same time period in 2020.\nWith Mercury's first half growth more than doubling the market growth rate, resulting in significant market share gains, as I discussed earlier.\nAs we enter the second half of the year, U.S. lead generation, dealer sentiment and other leading indicators all remain very positive.\nApproximately 40% of the boats leaving our manufacturing facilities are retail sold, which is approximately three times historical averages.\nIn addition, five of our brands, including Whaler, have all model year 2022 production slots already sold.\nAll these factors give us high confidence in the continuing retail strength as we complete the 2021 selling season and move into 2022.\nI'm pleased to share with you the results from another fantastic quarter.\nTo provide perspective in the slides that follow, we have included comparisons in certain places to both the second quarters of 2020 and 2019 in order to highlight the outstanding performance in each of our businesses over the past few years.\nWhen compared with 2020, second quarter net sales were up 57%, while operating earnings on an as-adjusted basis increased by 126%.\nAdjusted operating margins were 17.1% and adjusted earnings per share was $2.52, once again setting new all-time highs for any quarter for which we have available records.\nSales and earnings in each segment benefited from strong global demand for marine products, with earnings also positively impacted by favorable factory absorption from increased production and favorable changes in foreign currency exchange rates, partially offset by higher variable compensation costs and increased spending in sales and marketing and ACES and other growth initiatives.\nFinally, we had free cash flow of $268 million in the second quarter, with a free cash flow conversion of 135%.\nFirst half comparisons are equally as favorable.\nNet sales through the first half of 2021 were up 53% when compared with the first half of 2020, and operating margins of 17% or a 520 basis point improvement from 2020.\nThis resulted in first half earnings per share of $4.76 and a very robust operating leverage of 27%.\nTurning to our segments, revenue in the Propulsion business increased 64% versus the second quarter of 2020 as each product category experienced strong demand and market share gains.\nConsistent with the theme from the first quarter, boat manufacturers continue to ramp up production in the second quarter and our increased capacity enabled continued elevated sales to the independent OEM and international channels.\nSales growth was also strong across all product categories when compared to the second quarter of 2019.\nOperating margins and operating earnings were up significantly in the quarter, benefiting from the factors positively affecting all of our businesses.\nIn our Parts and Accessories segment, revenues increased 42% and adjusted operating earnings were 46% up versus the second quarter of 2020, due to strong sales growth across all product categories.\nAdjusted operating margins of 23.2% were 60 basis points better than prior year quarter, with significant sales increases driving the robust increase in adjusted operating earnings.\nSales growth was also very strong across all product categories when compared to the second quarter of 2019.\nThis aftermarket-driven annuity-based business continues to benefit from more boaters on the water, which is being augmented by flexible work schedules allowing for more leisure time, with the OEM component of the business, leveraging investments in technology to take advantage of increased demand from both builders as they continue to increase production.\nAs anticipated, our Boat segment results benefited the most when compared with the second quarter of 2020 due to last year's COVID-related plant shutdowns and production ramp-up.\nSales were up 80% and operating margins were 10.5% for the quarter, the second straight quarter this segment has delivered double-digit margins.\nEach brand had strong operational performance, executed their aggressive production plan and contributed to the overall segment's success in the quarter.\nWhen compared to the second quarter of 2019, sales were up 22%, and operating margins were up 160 basis points, further illustrating the foundational improvements that have been made in this business.\nOperating earnings were also positively impacted by the increased sales and the lower retail discount levels versus 2020.\nFreedom Boat Club, which is included in business acceleration, contributed approximately 3% of the segment's revenue and a margin profile that continues to be accretive to the segment.\nTurning to pipelines, our boat production continues to ramp consistent with our plans to produce approximately 38,000 units during the year.\nDespite producing almost 10,000 units in the quarter, which is up 5% from the first quarter, retail outsold wholesale replenishment by more than 7,000 units, bringing dealer inventories to an all-time low of approximately 7,400 units.\nOur boat brands ended June with under 10 weeks of boats on hand, measured on a trailing 12-month basis, with units in the field lower by 50% versus same time last year.\nGiven our view that the industry retail market will be up high single-digit percent for the year, we believe that retail will outpace our production targets resulting in our year-end weeks on hand to be lower than year-end 2020 by several weeks.\nWe continue to work with our brands to unlock additional near-term capacity through automation, labor and select capital initiatives, including the capacity actions announced earlier in the year related to our Palm Coast, Reynosa and Portugal facilities, which will begin providing benefits by the end of the year.\n2021 is shaping up to be another year of robust earnings and shareholder returns, with pronounced margin increases and substantial free cash flow generation resulting from our outstanding operating performance in a healthy marine market.\nGiven the enhanced clarity on our ability to drive growth in upcoming periods, we are providing the following updated guidance for full year 2021.\nWithout including the potential benefits from the Navico acquisition, we anticipate the US marine industry retail unit demand to grow high single-digit percent versus 2020; net sales of between $5.65 billion and $5.75 billion; adjusted operating margin growth between 150 and 180 basis points; operating expenses as a percent of sales to remain lower than 2020; free cash flow in excess of $450 million; and adjusted diluted earnings per share of approximately $8.\nWe're also providing directional guidance regarding the third quarter, where we anticipate revenue growth of mid-teens percent and earnings per share growth of high single-digit percent.\nNote that we believe that the Navico transaction, once closed, will be earnings neutral to 2021 as we anticipate Navico's post-closing earnings to offset the incremental interest incurred as a result of the deal.\nNext, I'd like to provide some perspective on our 2021 performance against 2020 and 2019 by looking at first half and second half results.\nThe revenue cadence for 2021 will look more like 2019 and 2018 than it did in 2020.\nThe first half of every year has additional production days as the second half includes model changeover and holiday shutdowns.\nHowever, first half of 2020 was materially impacted by the COVID-related plant shutdowns.\nThis resulted in the first half of 2021 comparing very favorably to 2020 in all of our businesses due to higher production volumes, with additional earnings tailwinds from improved absorption, favorable foreign currency comparisons and favorable changes in customer mix in our Propulsion business.\nThese factors far outweighed the headwinds from supply chain challenges, inflationary pressures and higher variable compensation expenses experienced during the first six months of this year.\nOur first half performance this year also exceeded 2019 in every metric.\nAs we head into the second half of 2021, we will face more difficult comps to 2020 as the company recorded record-high earnings per share over the same period last year, and we will continue to be challenged with supply chain constraints and increasing input and freight costs.\nAlthough, we are taking price increases across our businesses, we also anticipate moderated sales mix with propulsion sales trending more toward core OEM customers, more typical seasonality in the P&A business and a higher percentage of overall growth in the Boat business; increased spending on ACEs and other growth initiatives; smaller benefits from currency and absorption; and a higher tariff impact.\nHowever, despite more challenging second half comparisons, this continues to be a growth story.\nWe anticipate expanding top-line in the second half by double-digit percent versus the second half of 2020, which will be more than 40% greater than 2019 with higher earnings as well.\nI will conclude with an update on certain items that will impact our P&L and cash flow for the remainder of the year.\nThe only meaningful update relates to our effective tax rate for the year.\nDue to some fantastic branch restructuring work by our tax team and business units, we now believe our effective tax rate for 2021 will be approximately 22%, which is slightly lower than our estimate from our April call.\nSimilarly, and putting aside the financing related to the Navico transaction, our capital strategy assumptions have not materially changed.\nIn the past few weeks, however, we have taken several steps to strengthen our overall liquidity and shareholder return profile.\nWe extended and expanded our revolving credit agreement, which is now in effect through July of 2026, which now provides for $500 million of borrowing capacity, an increase of $100 million.\nIn addition, our Board of Directors increased our share repurchase authorization earlier this month, and we now have over $400 million approved for repurchases, which we plan to systematically deploy consistent with our capital strategy.\nThese moves follow our substantial 24% dividend increase approved in April as we continue to balance desired increases in shareholder return and investment in growth initiatives.\nWe now anticipate spending $270 million to $300 million on capital expenditures in the year to support and in some cases, accelerate growth initiatives throughout our organization.\nThis slightly increased planned spending is primarily related to the Mercury capacity expansion that Dave discussed earlier.\nAt our April call, we felt that 2021 was setting up to be an outstanding year for all of our businesses.\nAnd the combination of continued robust retail demand during the first half of the year and solid operational execution by our businesses has us squarely on track to deliver against our operating and strategic priorities.\nOur top priority for the Propulsion segment continues to be satisfying outboard engine demand from new and existing OEM customers and expanding market share, especially in dealer, saltwater, repower and international channels.\nWe are continuing to invest heavily in new product introductions and industry-leading propulsion solutions that we project will enable top line and earnings growth far into the future.\nAnd we've also recently taken the decision to accelerate the introduction of incremental capacity.\nOur Parts and Accessories segment remains focused on optimizing its global operating model, to leverage its distribution and position of strength in areas of battery technology, digital systems and connected products in support of our ACES strategy.\nWe look forward to closing the Navico deal and beginning thoughtful integration into the ASG business.\nWe will continue to focus M&A activity in parts and Accessories, as we look for opportunities to further build out our technology and systems portfolio.\nThe Boat segment will build on its first half successes, by continuing to focus on operational excellence, improving operating margins, launching new products, executing capacity expansion plans and refilling pipelines, in the very robust retail environment.\nIn addition to the Navico and Freedom Boat Club transactions, and the start of shipments of the V-12 600-horsepower outboard, which I've already discussed, proof points in the quarter included, the launch of the My Whaler and Sea Ray+ apps for Apple and Android users, which advances the ACES Connectivity strategy by improving the boat ownership experience, reducing friction across the entire ownership journey.\nThe initial reception of these products is extremely promising, with more than 2,000 accounts created in the first few weeks and a star rating of 4.9 out of five.\nAnd the launch of the Heyday H22 Wake boat, a new leading-edge, wake-surf model, signaling a doubling down on this fast-growing brand appealing to a younger demographic.\nThis model is already sold out through mid-2022.\nWe're tracking well against all our Next Wave strategic goals, including the electrification initiatives outlined in May.\nYour hard work has enabled us to seamlessly execute our strategic plan and significantly outpace our initial growth and profit expectations.\n", "role": "user" }, { "content": "brunswick corporation releases second quarter 2021 earnings.\nfor q2 of 2021, reported consolidated net sales of $1,554.8 million, up $567.0 million from q2 of 2020.\nq2 gaap diluted earnings per share of $2.29 and as adjusted diluted earnings per share of $2.52.\nsees 2021 net sales between $5.65 billion and $5.75 billion.\nsees 2021 free cash flow in excess of $450 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Please keep in mind that our actual results could differ materially from these expectations.\nAll of these documents are available on our website at brunswick.com.\nOur businesses had another outstanding quarter.\nWe've now delivered our fifth consecutive quarterly record for adjusted operating earnings and earnings per share as a result of our robust operational performance, successful mitigation of supply chain challenges and active management of overall cost inflation throughout the enterprise.\nDespite challenging comparisons to last year, retail demand for our products remains extremely healthy.\nAnd we continue to take market share with our Mercury outboard engines in many of our boat brands.\nIn addition, Freedom Boat Club continues to grow its membership base as we rapidly expand this very successful and synergistic shared access participation model.\nRobust retail demand for our products has driven field inventory to the lowest level in decades at just over 10 weeks on hand.\nWe continue to increase production to meet demand across our businesses though in some cases, supply chain constraints are limiting our ability to overdrive our production plan.\nAs we close out 2021, we're focused on elevating production levels to meet demand and refill field inventory during the retail off-season, integrating Navico and our other acquisitions, progressing our strategic initiatives and closing the most successful year in Brunswick's history while laying the groundwork for the Next Wave of success in 2022.\nOur businesses are focused on closing out another year of robust earnings and shareholder returns with strong margin growth and substantial free cash flow generation, resulting from our outstanding operational performance in a healthy marine market, and we have increased our 2021 guidance accordingly.\nBefore we discuss the results for the quarter, I wanted to share with you just a few of the awards and award nominations that Brunswick received during the third quarter.\nFor the second time in three years, Brunswick and Mercury Marine were jointly presented with a Soundings Trade Only Most Innovative Marine Company award at the IBEX trade show in Tampa last month.\nThe panel of judges praise Brunswick and Mercury for a record setting 2021, filled with multiple industry-changing product launches such as the V-12 600-horsepower Verado outboard engine and the Sea Ray 370 Sundancer among others.\nAdditionally, Brunswick and Mercury were commended for committing to the health and safety of our employees and for our extraordinary efforts to continue meeting customer demand during the global pandemic.\nBrunswick has also been recognized for the second consecutive year by Forbes and Statista as one of the World's Best Employers.\nOf the thousands of companies eligible for this recognition, Brunswick was one of only 750 companies selected to receive the award, ranking in the top 10 companies in the world within the engineering and manufacturing category.\nBrunswick is also thrilled to be nominated for several other major awards, including a Consumer Electronic Show Best of Innovation Award, five STEP Ahead awards recognizing women in manufacturing, five Dame product design awards from METSTRADE, three international Best of Boats Awards, two European powerboat of the year awards and two IBI Boat Builder awards.\nOur commitment to democratizing and diversifying boating and the boating industry is central to our strategy and vital to ensuring our access to talent and to the continued growth of our customer base.\nIn past quarters, we provided updated demographic trends and insights around first-time and recurring boat buyers as well as demographic changes.\nI'm pleased that we are not seeing any pullback in the encouraging trends we experienced during 2020.\nWe're also continuing to see Freedom leading the way with these demographic shifts.\nSince 2019, Freedom has seen notable increases in the ethnic diversity of our members, which grew from around 10% in 2019 to 15% now and the percentage of women making up our total member base, which grew by 130 basis points to 35%.\nAlso, a particular note, the percentage of Hispanic Freedom members almost doubled to 8.4% in 2021 from 4.7% in 2018.\nWe're very encouraged by these trends that will help secure a healthy future for Brunswick and the entire marine industry.\nI'd also like to share with you some consumer insights gained through the polling of Brunswick's Ripl online boating community, which includes both new and seasoned boaters.\nOf those surveyed, approximately 60% worked remotely at least partially, and 44% of those polled have been able to fit boating into their work week this season, with more than 20% actually working from their boat at some time.\nMost people who fit boating into their work week during 2021 expect to continue doing so during 2022, which further supports our belief that persistent changes in the way people work will provide more opportunities for people to get out on the water and maintain boat usage at elevated levels versus pre pandemic.\nI'll now provide some third quarter highlights on our segments and the overall marine market.\nOur Propulsion business delivered another quarter of significant top line and earnings growth, with more favorable customer mix leading to stronger margins than anticipated.\nOver the last two years, Mercury has gained an extraordinary 310 basis points of U.S. retail market share with outsized gains in higher horsepower products, where a significant amount of investment has been made in recent years.\nOutstanding execution, robust aftermarket demand driven by elevated booking participation and favorable late season weather conditions in many areas resulted in our Parts and Accessories businesses overdriving expectations in the quarter.\nIn addition, our Advanced Systems Group announced the tuck-in acquisitions of RELiON Battery and SemahTronix during the third quarter to further complement its existing portfolio of lithium-ion batteries and to vertically integrate complex electrical wiring harnesses, respectively.\nThese acquisitions, along with the closing of the Navico acquisition earlier this month, will further strengthen our enterprisewide ACES strategy and enhance our ability to provide complete innovative digital solutions to consumers and comprehensive integrated systems offerings to our OEM customers.\nFinally, our boat business continues to deliver strong top line growth in a disrupted environment.\nDespite supply chain challenges, cost inflation and labor tightness at our suppliers and some of our own facilities during the quarter, we anticipate annual unit production of greater than 95% of our original production plan for the year, with shortages and delays primarily constraining additional upside.\nBy comparison, our Propulsion business is anticipated to produce approximately 110% of its original 2021 production schedule.\nFinally, Freedom Boat Club continues to expand rapidly while attracting a young and diverse customer base.\nFreedom is now approaching 320 global locations and 47,000 memberships networkwide with more than 4,000 boats in its overall fleet, including an increasing percentage of Brunswick boats and engines.\nNext, I'd like to review the sales performance of our business by region on a constant currency basis, excluding acquisitions.\nAs expected, all regions posted significant sales growth in the quarter versus both 2020 and 2019.\nExcept for Asia Pacific, we saw sales normalize slightly in the third quarter but still up 26% versus the same period in 2019.\nDomestic sales grew 14%, with international sales up 17% versus the prior year.\nThis table provides more color on the recent performance of the U.S. marine retail market, comparing the first nine months of 2021 to the same periods in 2020 and 2019.\nThe year has played out largely as we expected with easy comparisons through the first portion of the year, primarily due to the impact of COVID in 2020 and more difficult comps beginning in May.\nSince our July earnings call, the industry has experienced more pronounced supply chain disruptions than anyone anticipated, which, together with the more direct impact of the Delta variant, has led to a more significantly inventory-constrained retail environment.\nThe result is a reported 8% decline in main powerboat retail unit sales year-to-date when compared with the same period in 2020 but still 3% greater than the same period in 2019.\nBrunswick's year-to-date performance is generally somewhat ahead of the overall market with outsized market share gains in aluminum products.\nOutboard engine unit registrations were down 6% through the first nine months of 2021 when compared with the same period in 2020, with Mercury outperforming the industry.\nMercury's outboard engine unit registrations compared with the same period in 2019 are up more than double the industry's market growth rate, resulting in a significant market share gains we've experienced in recent years.\nIt's important to note that all indications are that retail declines are being driven by product availability and are not a result of declining consumer demand.\nU.S. lead generation, dealer sentiment and other leading indicators all remain very positive.\nFor example, all of our 2022 model year and 80% of our 2022 calendar year production slots are already sold out.\nAnd we continue to see a significant percentage of boats leaving our manufacturing facilities already retail sold.\nAll these factors give us high confidence in the continuing retail strength as we enter 2022.\nThis slide provides some perspective on the impact of inflation on our businesses, together with our ability to take price increases to mitigate the net impact.\nBased on our early view of price inflation in the third quarter, we implemented higher than normal annual price increases in July to mitigate the anticipated levels of input cost inflation in the back half of the year.\nHowever, input cost inflation has exceeded our estimates, so we've implemented additional price increases during October in both our Propulsion and Boat businesses to ensure that we cover inflation with pricing on a full year basis.\nBetween direct materials, labor and freight, we anticipate input cost inflation to be in the high single-digit percent range versus 2020 on a run rate basis, with a significant majority of the impact felt in the second half of the year.\nConsequently, we may need to take further mid-cycle increases and/or higher-than-normal increases in 2022.\nHowever, we believe the price increases we've implemented to date are generally at the lower end of those implemented across the industry and are not impacting raw demand.\nOur businesses delivered another outstanding quarter.\nWhen compared with 2020, third quarter net sales were up 16% with adjusted operating margins of 15.5%.\nOperating earnings on an as-adjusted basis increased by 9%, and adjusted earnings per share was $2.07, once again setting new all-time highs for any third quarter for which we have available records.\nSales in each segment benefited from increased volume due to strong global demand for marine products, market share gains and increased pricing with earnings positively impacted by increased sales and favorable changes in foreign currency exchange rates, partially offset by increased input costs and increased spending on sales, marketing and ACES and other growth initiatives.\nFirst nine month comparisons are also very favorable, with 2021 net sales up 39% when compared with the first nine months of 2020 and adjusted operating margins of 16.5%, a 290 basis point improvement from 2020.\nThis resulted in adjusted earnings per share for the first nine months of $6.82 and a very robust operating leverage of 24%.\nWe have generated almost $300 million of free cash flow through the first nine months of the year, which is a strong result considering the incremental working capital needed to satisfy increased needs for inventory as we elevate production levels and the $60 million increase in capital spending when compared to the same prior year period.\nTurning to our segments.\nRevenue in the Propulsion business increased 19% versus the third quarter of 2020 and was up 58% versus Q3 of 2019.\nStrong demand for all product categories, together with market share gains, drove higher sales, which continue to be enabled by increased production levels.\nOperating margins were flat versus 2020 but up 320 basis points versus Q3 of 2019 as pricing, favorable absorption and benefits from more favorable sales mix were able to offset higher manufacturing costs, primarily caused by material inflation.\nIn our Parts and Accessories segment, revenues increased 7%, and adjusted operating earnings were up 2% versus the third quarter of 2020.\nAdjusted operating margins of 22.2% were down 120 basis points when compared with the prior year quarter and were negatively impacted by the closure of a key manufacturing and distribution location in New Zealand for a significant portion of the quarter due to national COVID lockdowns as well as increased spending on growth-related investments.\nFavorable late season weather in many regions is allowing for increased boating participation, which should continue to drive aftermarket sales in Q4 and into 2022.\nIn our Boat segment, sales were up 22% and adjusted operating margins were down 230 basis points to 6.9% when compared with the third quarter of 2020.\nWhen compared to the third quarter of 2019, sales were up 45%, and adjusted operating margins were up 240 basis points.\nSales increased in all product categories with particular strength in aluminum freshwater, including our pontoon businesses.\nIncreased sales volume and pricing together with lower retail discount levels versus prior year were offset by material inflation, higher cost due to manufacturing inefficiencies and increased spending on growth initiatives, resulting in slightly lower segment operating earnings.\nFreedom Boat Club, which is included in Business Acceleration, contributed approximately 3% of the segment's revenue at a margin profile that continues to be accretive to the segment.\nAs Dave mentioned earlier, we believe our boat production will reach at least 95% attainment of our original production plan for 2021, a remarkable achievement given the current supply constrained environment we are working in.\nSupply chain challenges, including delays in receiving certain components, has resulted in the deferral of shipping certain nearly completed boats to subsequent quarters.\nAs a result, we wholesale sold approximately 8,200 boats during the third quarter, which was roughly the same number of units sold at retail and 16% greater than the number of units wholesale sold in the third quarter of 2020.\nThis keeps dealer inventories at an all-time low of approximately 7,400 units.\nOur boat brands ended September with just over 10 weeks of boats on hand, measured on a trailing 12-month basis, with units in the field lower by 27% versus the same time last year.\nAs we head into the fourth quarter, our businesses are focused on closing out another year of robust earnings and shareholder returns with strong margin growth and substantial free cash flow generation resulting from our outstanding operating performance in a healthy marine market.\nAlthough we continue navigating certain headwinds, including elevated supply chain, labor and transportation costs and challenges, we are confident that we can continue to drive growth and innovation as the clear leader in our industry.\nNow including the projected benefits from our closed acquisitions, including the acquisition of Navico, we are providing the following updated guidance for full year 2021.\nWe anticipate the U.S. marine industry retail unit demand for the full year to improve from reported year-to-date levels, ending at close to flat versus 2020, net sales of approximately $5.8 billion, adjusted operating margin growth between 150 and 180 basis points, operating expenses as a percent of sales to remain lower than 2020, free cash flow in excess of $425 million and adjusted diluted earnings per share of approximately $8.15, which represents a 61% increase over 2020.\nNote that we believe acquisitions will contribute about 10% of the fourth quarter's revenue growth but will be neutral on earnings per share after including the impact of additional interest costs related to the financing of the Navico transaction.\nI will conclude with an update on certain items that will impact our P&L and cash flow for the remainder of the year.\nThe only meaningful update relates to our effective tax rate for the year due to some favorability related to foreign branch income and certain state tax law changes, we now believe our effective tax rate for 2021 will be approximately 21.5%, which is slightly lower than our estimate from the July call.\nWe have also updated our guidance associated with working capital and intangible amortization associated with our completed acquisitions.\nSimilarly, our capital strategy assumptions have not materially changed with the execution of the financing for the Navico transaction, creating a slightly higher interest expense for the year, with approximately $25 million of additional debt retired as a result of the tendering of our 2023 and 2027 notes during the financing process.\nWe anticipate ending the year with debt leverage of 1.7 times on a gross basis and below 1.5 times on a net basis.\nAdditionally, our $43 million of share repurchases in the third quarter brings our total share repurchases for the year to just shy of $100 million, and we have adjusted our guidance to show that we anticipate reaching approximately $120 million worth of share repurchases by the end of the year.\nVery solid operational execution by our businesses has us squarely on track to deliver an outstanding 2021 as we execute against the operating and strategic priorities we've discussed throughout the year.\nOur top priority for the Propulsion segment continues to be satisfying outboard engine demand from new and existing OEM customers and expanding market share, especially in dealer, saltwater, repower and international channels.\nWe're continuing to invest heavily in new product introductions and industry-leading propulsion solutions that we project will enable top line and earnings growth far into the future.\nOur accelerated incremental capacity projects remain on track for completion by the second half of 2022 and we believe will allow us to gain additional customers who have already expressed their interest in being supplied by Mercury.\nOur Parts and Accessories segment remains focused on optimizing its global operating model to leverage its distribution and position of strength in areas of battery technology, digital systems and connected products in support of our ACES strategy.\nWe are keenly focused on our thoughtful acquisition integration activities for Navico, RELiON and SemahTronix.\nAnd we will continue to focus M&A activity in higher technology, systems and Parts and Accessories businesses as we review opportunities to further build out this increasingly large, high-margin recurring revenue portion of our business.\nThe Boat segment will continue to focus on launching new products, executing significant capital expansion plans, increasing its efforts to become more vertically integrated to help mitigate future supply chain issues and refilling pipelines in a very robust retail environment.\nFreedom also continues to expand its footprint with the recent acquisition of the Connecticut territory, which has seven locations and over 600 memberships.\nCombined with the purchase of the New York territory earlier this year, we can now take advantage of cost and other synergies in the Northeast U.S. region and can more quickly expand the number of locations.\nWe've already begun to see positive early returns from the completed Advanced Systems Group deals with RELiON winning new business from significant OEM and retail distribution customers.\nIn addition to the Connecticut acquisition early in the fourth quarter, Freedom Boat Club continued its international expansion plans with the acquisition of Fanautic Club in Spain during the third quarter.\nWe believe that our pace in rapidly expanding these future-orientated recurring revenue businesses will further distance us from potential competition.\nAs most of you are aware, we're also beginning to see the resumption of in-person boat shows like the Fort Lauderdale Boat Show that kicked off yesterday.\nAnd early in September, we participated in the Cannes boat show, one of the most important European events for our brands.\nThe feedback in Cannes from our channel partners and end consumers on the new V-12 600-horsepower Verado and our new boat models was extremely positive.\nMercury reported double the number of outboard engines at the show than its closest competitor and significantly more outwards on display than all other manufacturers combined.\nSea Ray also reported a 65% increase in its revenue versus the 2019 show, while all other Brunswick brands on display reported strong consumer interest and sales.\nWe have continued to launch new products at a rapid pace across the enterprise.\nOn the sustainability front, we also reached another important milestone during the third quarter, with the Land 'N' Sea Kellogg Marine distribution operation becoming the third Brunswick location to achieve a zero waste to landfill designation.\nAnd Mercury won an Association of Energy Engineers award for its newly installed solar array in Wisconsin.\nWe are working to further expand our sustainability initiatives, and we'll share more on this subject early next year.\nYour hard work has enabled us to seamlessly execute our strategic plan and significantly outpaced our initial growth and profit expectations.\n", "role": "user" }, { "content": "compname reports quarterly adjusted earnings per share of $2.07.\noration releases third quarter 2021 earnings.\nqtrly adjusted earnings per share $2.07.\nqtrly net sales $1,427.2 million up 15.7%.\nbrunswick - producing product generally inline with plans for year, with continued component shortages & delays preventing additional upside performance.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: My name is Kevin Maczka, I'm Belden's vice president of investor relations and treasurer.\nRoel will provide a strategic overview of our business and then Jeremy will provide a detailed review of our financial and operating results, followed by Q&A.\nAdditionally, during today's call, management will reference adjusted or non-GAAP financial information.\nAs a reminder, I'll be referring to adjusted results today.\nDemand trends continue to improve in the first quarter and I am pleased to report total revenues and earnings per share that exceeded the high-end of our guidance ranges.\nWe are benefiting from the ongoing recovery in the global economy and our leadership position and secular growth markets.\nSolid execution by our global teams resulted in meaningful growth and margin expansion.\nFirst quarter revenues increased 16% year-over-year to $536 million compared to our guidance range of $490 million to $505 million.\nOrganic growth is a key priority and revenues increased 8% year-over-year on an organic basis.\nThe upside relative to our expectations was broad-based, with contributions from both the Industrial Solutions and Enterprise Solutions segments.\nAs a reminder, in January, we completed the Bolton acquisition of OTN Systems, a leading provider of proprietary networking solutions tailored for specific applications in harsh mission critical environments.\nThis was our first Industrial Automation acquisition in years, and it's proven, switching devices and network management software are complementary to Belden's leading industrial networking offering.\nWe are very pleased with the integration and the performance of the business to date.\nIncoming order rates were solid during the quarter, increasing 24% year-over-year and 11% sequentially.\nThis resulted in a healthy book-to-bill ratio of 1.3 times.\nEBITDA increased 32% year-over-year to $80 million.\nEBITDA margins expanded 180 basis points from 13.1% in the year ago period to 14.9%.\nEPS increased 40% year-over-year to $0.94 compared to our guidance range of $0.60 to $0.70.\nWe are off to a great start in 2021, and we are increasing our full year guidance to reflect the better-than-expected performance in the first quarter and an improved outlook for the remainder of the year.\nFor the full year 2021, we are increasing the high-end of our revenue and earnings per share guidance ranges by $130 million and $0.50 respectively, largely due to strength in the Industrial Automation and broadband and 5G markets.\nBelden's senior leadership team and I are laser-focused on driving solid and sustainable organic growth.\nTo that end, we are pursuing a number of compelling strategic initiatives to capitalize on the opportunities in our markets and accelerate growth.\nI would like to briefly highlight a few of them for you now.\nFirst, we are significantly improving our portfolio and aligning around the favorable secular trends in our key strategic markets, including Industrial Automation, Cybersecurity, Broadband and 5G and Smart Buildings.\nWe think these markets are secular growers and we are uniquely positioned to win in each of them.\nIn our largest market, Industrial Automation, we are extremely bullish and we continue to see a number of compelling demand drivers.\nThe U.S. manufacturing PMI reading hit the highest levels in nearly four decades in March.\nSo market conditions are clearly improving.\nLonger-term, all roads lead to more automation whether it is the increasing cost of labor, increasing capacity requirements or the needs to pandemic-proof operations with social distancing protocols.\nBelden is extremely well positioned and highly differentiated in the marketplace and we expect to deliver solid growth in this market going forward.\nIn Broadband and 5G, we think the secular trends are undeniable.\nBroadband networks will need to be upgraded continuously to support high-definition video consumption, streaming, virtual reality, work from home, virtual learning, etc.\nDemand is only accelerating and there is clear momentum behind providing high-speed broadband access to every household.\nThere is no doubt that we have sustainable competitive advantages in this market and we are ideally suited to support both MSO and telco customers as they upgrade and expand their networks.\nAs part of our improving end market alignment, we have been taking significant steps to reduce challenged businesses -- to remove the challenged businesses from the portfolio and exit less attractive markets, and we are not done.\nAs you know, we initiated a process last year to divest approximately $200 million in revenues associated with certain undifferentiated copper cable product lines.\nThese are primarily stand-alone product lines that are low growth and low-margin, and we do not believe they can meet our growth or margin goals in the future.\nWe believe that exiting these product lines will further improve our end-market exposure.\nIn this case, we are essentially exiting the oil and gas markets and reducing our exposure to certain less attractive Smart Buildings markets.\nWe expect to complete multiple transactions in 2021 associated with these product line exits.\nWe remain on track and we look forward to updating you as we close these transactions.\nNext, we are committed to supporting our customers by driving innovation.\nAs a result, we are making targeted investments to strengthen our product roadmap.\nWe are particularly focused on driving innovation in our end-to-end industrial networking solutions and accelerating development of our best-in-class cybersecurity cloud platform.\nWe are also improving the software content of our offerings, including embedded software within various hardware products and developing fiber connectivity solutions to be used across a number of industrial and enterprise applications.\nThese innovations are important to our customers and our shareholders as they will further strengthen our product offering and enhance our competitive advantage.\nWe are also sharpening our commercial excellence in a number of important areas, such as solution selling, customer innovation centers, and digital transformation.\nBeyond individual product sales, Belden is uniquely positioned to offer differentiated solutions to our customers, including cable, connectivity, networking and software products and services.\nThrough our solution selling and strategic accounts programs, we are increasingly capitalizing on these opportunities by engaging with customers as one Belden, rather than separate businesses.\nOne of the ways we are doing that is through customer innovation centers or CIC's.\nCICs are newer initiative designed to improve customer intimacy and support solution selling.\nThis will allow us to not only support our customers but co-innovate with them, create solutions that solve their complex networking problems and deliver superior service and support.\nThe CIC model is unique to Belden and reflects our commitment to leading in our key markets.\nWe are very excited about the potential here.\nIn April, we announced the opening of a state-of-the-art CIC in Stuttgart, Germany.\nWe have plans to open other CICs around the world over the next 12 months to 18 months.\nWe are hosting a virtual grand opening of the Stuttgart facility on May the 12th, and I invite each of you the register for this event on our website to participate in a virtual-guided tour which will highlight our new capabilities.\nFinally, digital transformation is another important and ongoing initiative for many companies including Belden.\nWe want to improve the customer experience and make working with Belden as easy as possible, and we know that certain customers want to interact with us exclusively through digital and mobile means.\nWe are upgrading our capabilities in these areas and our teams have made significant progress.\nTo summarize, we are committed to driving improved organic growth rate, and I'm excited about the numerous opportunities we have to do that.\nI will now ask Jeremy to provide additional insight into our first quarter financial performance.\nI will start my comments with results for the quarter followed by a review of our segment results and a discussion of the balance sheet and cash flow performance.\nAs a reminder, I will be referencing adjusted results today.\nRevenues were $536 million in the quarter, increasing $73 million or 16% from $464 million in the first quarter of 2020.\nRevenues were favorably impacted by $33 million from currency translation and higher copper prices and $4 million from acquisitions.\nAfter adjusting for these factors, revenues increased 8% organically from the prior year period.\nIncoming order rates were solid during the quarter, increasing 24% year-over-year and 11% sequentially and accelerating as the quarter progressed.\nThis resulted in a healthy book-to-bill ratio of 1.3 times, with particular strength in Industrial Automation and Broadband and 5G.\nGross profit margins in the quarter were 36%, decreasing 90 basis points compared to 36.9% in the year ago period.\nAs a reminder, as copper costs increase, we raise selling prices, resulting in higher revenue with minimal impact to gross profit dollars, as a result, gross profit margins decreased.\nIn the first quarter, the pass-through of higher copper prices had an unfavorable impact of approximately 180 basis points.\nExcluding this impact, gross profit margins would have increased 90 basis points year-over-year that.\nThis exceeded our expectations for the quarter and we are especially pleased with the performance given the current inflationary environment.\nWe expect that inflationary pressures will likely persist throughout the year and we are proactively addressing through additional price recovery and productivity measures to support gross profit margins.\nEBITDA was $80 million, increasing $19 million or 32% compared to $61 million in the prior year period.\nEBITDA margins were 14.9% compared to 13.1% in the prior year period, an improvement of 180 basis points year-over-year.\nThe pass-through of higher copper prices had an unfavorable impact of approximately 70 basis points in the quarter.\nExcluding this impact, EBITDA margins would have increased 250 basis points year-over-year, demonstrating solid operating leverage on higher volumes.\nNet interest expense increased $2 million year-over-year to $16 million as the result of foreign currency translation.\nAt current foreign exchange rates, we expect interest expense to be approximately $61 million in 2021.\nOur effective tax rate was 19.9% in the first quarter, consistent with our expectations.\nFor financial modeling purposes, we recommend using an effective tax rate of 20% throughout 2021.\nNet income in the quarter was $42 million compared to $31 million in the prior year period.\nAnd earnings per share was $0.94, increasing 40% compared to $0.67 in the first quarter of 2020.\nI will begin with our Industrial Solutions segment.\nAs a reminder, our Industrial Solutions allow customers to transmit and secure audio, video and data in harsh industrial environments.\nOur key markets include discrete manufacturing, process facilities, energy and mass-transit.\nThe Industrial Solutions segment generated revenues of $310 million in the quarter, increasing 23% from $251 million in the first quarter of 2020.\nCurrency translation and higher copper prices had a favorable impact of $20 million year-over-year.\nAnd acquisitions had a favorable impact of $4 million.\nAfter adjusting for these factors, revenues increased 14% organically.\nWithin this segment, Industrial Automation revenues also increased 14% year-over-year on an organic basis, with growth in each of our primary market verticals.\nCybersecurity revenues increased 8% year-over-year in the first quarter, with nonrenewal bookings our best leading indicator of revenues increasing 74%.\nWe continue to secure large strategic orders with new industrial and enterprise customers and significantly expand our engagements with existing customers.\nIndustrial Solutions segment EBITDA margins were 16.6% in the quarter, increasing 250 basis points compared to 14.1% in the year ago period.\nThe year-over-year increase primarily reflects operating leverage on higher volumes.\nTurning now to our Enterprise segment.\nOur Enterprise Solutions allow customers to transmit and secure audio, video and data across complex enterprise networks.\nOur key markets include Broadband, 5G and Smart Buildings.\nThe Enterprise Solutions segment generated revenues of $226 million during the quarter, increasing 7% from $212 million in the first quarter of 2020.\nCurrency translation and higher copper prices had a favorable impact of $13 million year-over-year.\nAfter adjusting for these factors, revenues increased 1% organically.\nRevenues in Broadband and 5G increased 9% year-over-year on an organic basis.\nThe ever increasing demand for more bandwidth and faster speeds is driving increasing investments in network infrastructure by our customers.\nThis supports continued robust growth in our fiberoptic products, which increased 23% organically in the first quarter.\nRevenues in the Smart Buildings market declined 6% year-over-year on an organic basis consistent with our expectation.\nEnterprise Solutions segment's EBITDA margins were 12.4% in the quarter, increasing 80 basis points compared to 11.6% in the prior year period.\nOur cash and cash equivalents balance at the end of the first quarter was $371 million compared to $502 million in the prior quarter and $251 million in the prior year period.\nWe are very comfortable with our current liquidity position.\nWorking capital turns were 6.7 compared to 10.3 in the prior quarter and 5.6 in the prior year period.\nDays sales outstanding of 54 days compared to 50 in the prior quarter and 57 in the prior year period.\nInventory turns were 5.0 compared to 5.2 in the prior quarter and 4.6 in the prior year.\nOur debt principal at the end of the first quarter was $1.53 billion compared to $1.59 billion in the prior quarter.\nThe sequential decrease reflects current foreign exchange rate.\nNet leverage was 4 times net debt to EBITDA at the end of the quarter.\nThis is temporarily above our targeted range of 2 to 3 times, and we expect to trend back to the targeted range as conditions normalize.\nTurning now to Slide 8, I will discuss our debt maturities and covenants.\nAs a reminder, our debt is entirely fixed at an attractive average interest rate of 3.5%, with no maturities until 2025 to 2028, and we have no maintenance covenants on this debt.\nAs I mentioned previously, we are comfortable with our liquidity position and the quality of our balance sheet.\nCash flow from operations in the first quarter was a use of $42 million compared to a use of $52 million in the prior year period.\nNet capital expenditures were $11 million for the quarter compared to $19 million in the prior year period.\nAnd finally, free cash flow in the quarter with a use of $53 million compared to a use of $71 million in the prior year period.\nEnd market conditions are improving, and I am encouraged by a robust recent order rates and solid execution.\nWe are increasing our full year 2021 guidance to reflect better-than-expected performance in the first quarter and an improved outlook for the remainder of the year, while considering the continued uncertainty related to the global pandemic.\nWe anticipate second quarter 2021 revenues of $535 million to $550 million and earnings per share of $0.88 to $0.98.\nFor the full year 2021, we now expect revenues of $2.13 billion to $2.18 billion compared to prior guidance of $1.99 billion to $2.05 billion.\nWe now expect full year 2021 earnings per share to be $3.50 to $3.80 compared to prior guidance of $2.90 to $3.30.\nWe expect interest expense of approximately $61 million for 2021 and an effective tax rate of 20% for each quarter and the full year.\nThis guidance continues to include the contribution of the copper cable product lines that we are in the process of divesting, which contributed approximately $200 million in revenue and $0.20 in earnings per share in 2020.\nWe will update our guidance accordingly as we complete these divestitures.\nAgain, demand trends are improving, and our recent order rates are encouraging.\nAs a result, we are increasing our volume outlook for the year by $90 million.\nOur revised full year guidance implies consolidated organic growth in the range of 6% to 9% compared to our prior expectation of approximately 1% to 4%.\nRelative to our prior guidance, we expect higher copper prices and current foreign exchange rate to have a favorable impact on revenues of approximately $40 million in 2021, but a negligible impact on earnings.\nFor the full year 2021, the high-end of our guidance implies total revenue and earnings per share growth of 17% and 38%, respectively.\nBefore we conclude, I would like to reiterate our investment thesis.\nWe view Belden as a compelling investment opportunity.\nWe are taking bold actions to drive substantially improved business performance and you are seeing that in our better-than-expected first quarter performance and increased full year outlook.\nWe are positioning the company for accelerating organic growth and robust margin expansion.\nWe are also committed to delevering, enabled by strong free cash flow generation, and we intend to return to our targeted leverage range as soon as possible.\nI'm confident that we have the management team, strategy and business system to successfully execute our strategic plans and drive strong returns for our shareholders.\nStephanie, please open the call to questions.\n", "role": "user" }, { "content": "sees q2 adjusted earnings per share $0.88 to $0.98.\nsees fy adjusted earnings per share $3.50 to $3.80.\nq1 adjusted earnings per share $0.94.\nsees q2 revenue $535 million to $550 million.\nsees fy revenue $2.13 billion to $2.18 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: My name is Kevin Maczka.\nI'm Belden's Vice President of Investor Relations and Treasurer.\nRoel will provide a strategic overview of our business, and then Jeremy will provide a detailed review of our financial and operating results, followed by Q&A.\nAdditionally, during today's call, management will reference adjusted or non-GAAP financial information.\nAs a reminder, I'll be referring to adjusted results today.\nWe performed well again this quarter, and I'm pleased to report total revenues and earnings per share that exceeded the high end of our guidance ranges.\nOur end markets continue to recover, and our global teams are meeting the robust demand levels and successfully navigating the inflationary environment.\nThis resulted in meaningful growth and margin expansion during the quarter.\nSecond quarter revenues increased 42% year-over-year to $603 million compared to our guidance range of $535 million to $550 million.\nOrganic growth is a key priority, and revenues increased 28% year-over-year on an organic basis.\nThe upside relative to our expectations was broad-based, with contributions from both the Industrial Solutions and Enterprise Solutions segments.\nIncoming order rates were strong during the quarter, increasing 74% year-over-year and 18% sequentially.\nThis resulted in a healthy book-to-bill ratio of 1.19 times.\nEBITDA increased 90% year-over-year to $93 million.\nEBITDA margins expanded 390 basis points from 11.6% in the year-ago period to 15.5%.\nEPS increased 163% year-over-year to $1.21 compared to $0.46 in the year-ago period and our guidance range of $0.88 to $0.98.\nWe are increasing our full year guidance to reflect the better-than-expected performance in the second quarter and an improved outlook for the second half of the year.\nFor the full year 2021, we are increasing the high end of our revenue and earnings per share guidance ranges by 170 and $0.77 respectively.\nTurning now to our key strategic markets.\nWe had another great quarter in industrial.\nIndustrial Solutions revenues increased 32% organically with broad-based strength in each of our primary market verticals and regions.\nMarket conditions are clearly improving, and we continue to see a number of compelling longer-term demand drivers for automation solutions as industrial customers respond to increasing labor costs, increasing capacity requirements, the need to pandemic proof operations, and other factors.\nBelden is extremely well positioned and highly differentiated in the marketplace, and we expect to deliver solid growth in this market going forward.\nAs we shared with you previously, we are making targeted investments throughout the company to support our customers by driving innovation and strengthening our product roadmap.\nAs just one example of our recent innovations in industrial automation, we launched an expanded suite of advanced connectivity solutions during the second quarter called LioN-X.\nThe LioN-X solutions provide manufacturers with a faster and more reliable approach to transmitting sensor and actuator data in automated production environments.\nThis is a state-of-the-art future-ready connectivity solution that is core to providing secure communication from the sensor to the cloud in industrial environments.\nThese enhanced capabilities reflect our leadership position in this important growth market.\nWe are also sharpening our commercial excellence in a number of areas such as solution selling.\nBeyond individual product sales, Belden is uniquely positioned to offer differentiated solutions to our customers, including cable, connectivity, networking, and software products and services.\nI would like to highlight a recent success story in industrial automation that illustrates our capabilities in solution selling and resulted in a significant new business win.\nDuring the second quarter, we received a $6 million award for a project with a large investor-owned utility in the United States for the implementation of a critical communications network.\nThis is an important strategic win.\nOver the course of the project, we will be providing an expanded solution from the combined Belden and OTN Systems, which we acquired in January to a longtime Belden customer that previously purchased our industrial automation and cybersecurity offerings.\nIt showcases our product and commercial synergies and is a great example of the opportunities we are now positioned to secure in this market.\nThis is the first phase of the project and significant future expansion is expected beyond this initial award.\nBeyond this project, the continued upgrade of grid infrastructure by other utilities throughout the United States is expected to provide many other opportunities to deploy our technologies.\nWe also continue to make progress involving our portfolio and aligning with growth markets.\nDuring the second quarter, we completed the divestiture of our copper cable product lines serving the oil and gas market in Brazil, which we do not view as a strategic priority.\nThese products previously contributed approximately $15 million in annual revenue, with an immaterial contribution to EBITDA and cash flow, and we were pleased with the $11 million sales price.\nTurning now to Enterprise.\nEnterprise Solutions revenues increased 23% year-over-year on an organic basis in the second quarter.\nWithin the segment, revenues in broadband and 5G increased 13% organically.\nWe see strong secular trends in this market, driven by the increasing demand for high-speed broadband and the desire to provide access to every household.\nBroadband networks will need to be upgraded continuously to support high-definition video streaming, work from home, virtual learning, and many other applications.\nWe have sustainable competitive advantages in this market, and we are ideally suited to support both MSO and Telco customers as they upgrade and expand their networks.\nBroadband fiber revenues increased 28% organically year-to-date in 2021 after similar growth in 2020.\nWe expect further robust growth going forward as we continue to strengthen our patent-protected fiber R&D capabilities, add engineering resources and reduce our time to market for new offerings.\nRevenues in smart buildings increased 36% year-over-year on an organic basis, substantially exceeding our expectations.\nWe are very encouraged by the improvement we are seeing in this market and the strong execution by our teams.\nWe entered the year with an expectation that smart buildings revenue will decline in 2021, but we now expect to deliver solid growth in this market.\nWe are benefiting from commercial focus on growth verticals such as data centers and healthcare facilities.\nIn addition, our improved operational performance and superior lead times are enabling continued share capture.\nTo summarize, we had a great second quarter and first half of the year.\nWe are committed to driving robust organic growth in 2021 and beyond and are encouraged that our strategic initiatives are gaining traction.\nI will now ask Jeremy to provide additional insight into our second quarter financial performance.\nI will start my comments with results for the quarter, followed by a review of our segment results and a discussion of the balance sheet and cash flow performance.\nAs a reminder, I will be referencing adjusted results today.\nRevenues were $603 million in the quarter, increasing $178 million or 42% from $425 million in the second quarter of 2020.\nRevenues increased 28% organically compared to the prior year and 9% sequentially.\nImportantly, we have not seen material restocking by our channel partners.\nAnd so we believe this revenue performance is consistent with improving end demand.\nIncoming order rates were also very strong during the quarter, increasing 74% year-over-year and 18% sequentially.\nThis resulted in a book-to-bill ratio of 1.19 times, including 1.22 times in Industrial Solutions and 1.16 times in Enterprise Solutions.\nGross profit margins in the quarter were 35.7%, increasing 30 basis points compared to 35.4% in the year-ago period.\nAs a reminder, as copper costs increase, we raised selling prices, resulting in higher revenue with minimal impact to gross profit dollars.\nAs a result, gross profit margins decrease.\nIn the second quarter, the pass-through of higher copper prices had an unfavorable impact of 320 basis points.\nExcluding the impact of this pass-through, gross profit margins would have increased 350 basis points year-over-year.\nThis exceeded our expectations for the quarter, and we are especially pleased with the performance given the current inflationary environment.\nWe expect that inflationary pressures will likely persist, and we are proactively addressing this through price recovery and productivity measures to support gross profit margins.\nEBITDA was $93 million, increasing $44 million or 90% compared to $49 million in the prior year period.\nEBITDA margins were 15.5%, increasing 390 basis points compared to 11.6% in the year ago period.\nExcluding the impact of higher copper pass through pricing, EBITDA margins would have increased 510 basis points year-over-year, demonstrating solid operating leverage on higher volumes.\nNet interest expense was consistent with the year ago period.\nAt current foreign exchange rates, we expect interest expense to be approximately $62 million in 2021.\nOur effective tax rate was 18.2% in the second quarter as we benefited from incremental discrete tax planning items.\nWe expect an effective tax rate of approximately 19% in the third quarter and 19.5% for the full year 2021.\nNet income in the quarter was $55 million compared to $20 million in the prior year period.\nEarnings per share was $1.21 compared to $0.46 in the second quarter of 2020.\nWe were very pleased to deliver such robust growth and margin expansion in the second quarter.\nI will begin with our Industrial Solutions segment.\nAs a reminder, our Industrial solutions allow customers to transmit and secure audio, video, and data in harsh industrial environments.\nOur key markets include discrete manufacturing, process facilities, energy and mass transit.\nThe Industrial Solutions segment generated revenues of $335 million in the quarter, increasing 51% from $221 million in the second quarter of 2020.\nSegment revenues increased 32% organically.\nRevenues in industrial automation, our largest market, increased 36% year-over-year on an organic basis, with broad-based strength across each of our primary market verticals.\nRevenues for our integrated cybersecurity solutions also increased year-over-year for the second straight quarter.\nWe are pleased with the progress the team is making in advancing the product roadmap and identifying new commercial opportunities in industrial end markets.\nNon-renewal bookings increased 12% year-over-year in the first half of the year.\nIndustrial Solutions segment EBITDA margins were 16.9% in the quarter, increasing 500 basis points compared to 11.9% in the year-ago period.\nThe year-over-year increase primarily reflects operating leverage and higher volumes.\nTurning now to our Enterprise segment.\nOur Enterprise solutions allow customers to transmit and secure audio, video, and data across complex enterprise networks.\nOur key markets include broadband, 5G, and smart buildings.\nThe Enterprise Solutions segment generated revenues of $268 million during the quarter, increasing 32% from $203 million in the second quarter of 2020.\nSegment revenues increased 23% organically.\nRevenues in broadband and 5G increased 13% year-over-year on an organic basis.\nThe ever increasing demand for more bandwidth and faster speeds is driving increasing investments in network infrastructure by our customers.\nThis supports continued robust growth in our fiber optic products, which increased 21% organically in the second quarter.\nRevenues in the smart buildings market increased 36% year-over-year on an organic basis, substantially exceeding our expectations.\nMarket conditions improved significantly in the quarter, and our commercial engagement and strong operational performance are driving notable share capture.\nEnterprise Solutions segment EBITDA margins were 13.2% in the quarter, increasing 230 basis points compared to 10.9% in the prior year period.\nOur cash and cash equivalent balance at the end of the second quarter was $423 million compared to $371 million in the prior quarter and $360 million in the prior year period.\nWe are very comfortable with our current liquidity position.\nWorking capital turns were 7.6 compared to 6.7 in the prior quarter and 5.5 in the prior year period.\nDays sales outstanding of 53 days compared to 54 in the prior quarter and 60 in the prior year period.\nInventory turns were 5.1 compared to five in the prior quarter and 4.5 in the prior year, and our financial leverage improved significantly during the quarter.\nNet leverage was 3.3 times net debt-to-EBITDA at the end of the second quarter compared to four times in the prior quarter.\nWe now expect to trend back within the targeted range of two to three times by year-end 2021.\nTurning now to slide seven.\nI will discuss our pro forma debt maturity schedule.\nAs a reminder, our debt at the end of the second quarter was entirely fixed at attractive interest rates.\nWe have no near-term maturities and no maintenance covenants on this debt.\nSubsequent to quarter end, we took steps to further strengthen the balance sheet and extend our maturities.\nSpecifically, in July, we issued EUR300 million in new 10-year notes maturing in 2031.\nThe interest rate on these notes is 3.375%, which matches the lowest interest rate on 10-year notes in the history of the company.\nWe were very pleased to complete this transaction.\nWe intend to use the proceeds during the third quarter to redeem the full EUR300 million outstanding on our 2025 notes, so our total debt principal outstanding will be unchanged at the end of the third quarter.\nFollowing the redemption, our debt maturities will range from 2026 to 2031, with an average interest rate of 3.6%.\nThis provides significant financial flexibility as we execute our strategic plans.\nCash flow from operations in the second quarter was $68 million compared to $40 million in the prior year period.\nNet capital expenditures were $16 million for the quarter compared to $20 million in the prior year period.\nAnd finally, free cash flow in the quarter was $52 million compared to $20 million in the prior year period.\nWe are pleased with the year-to-date free cash flow generation, which is approximately $50 million better than the first half of 2020.\nEnd market conditions continue to improve, and I'm encouraged by our robust recent order rates and solid execution.\nWe are increasing our full year 2021 guidance to reflect better-than-expected performance in the second quarter and an improved outlook for the remainder of the year while considering the renewed uncertainty related to the global pandemic.\nWe anticipate third quarter 2021 revenues of $590 million to $605 million and earnings per share of $1.11 to $1.21.\nFor the full year 2021, we now expect revenues of $2.32 billion to $2.35 billion compared to prior guidance of $2.13 billion to $2.18 billion.\nThis $170 million increase to the high end of our guidance range includes approximately $140 million from improved operational performance and $30 million from higher copper prices and current foreign exchange rates.\nOur revised full year guidance implies consolidated organic growth of approximately 15% to 17% compared to our prior expectation of 6% to 9%.\nWe now expect full year 2021 earnings per share to be $4.37 to $4.57 compared to prior guidance of $3.50 to $3.80.\nOur revised guidance for the full year 2021 implies total revenue growth of 25% to 26% and earnings per share growth of 59% to 66%.\nWe expect interest expense of approximately $62 million and an effective tax rate of 19.5% for the full year 2021.\nNow before we conclude, I would like to reiterate our investment thesis.\nWe are taking bold actions to drive substantially improved business performance, and you are seeing that in our much better-than-expected first half performance and increased full year outlook.\nThis includes aligning around growth markets, developing innovative networking solutions, and enhancing our commercial capabilities.\nOur financial leverage improved significantly during the quarter, and we tend to return to our targeted leverage range by year-end 2021.\nI am confident that we have the management team, strategy, and business system to successfully execute our strategic plans and drive strong returns for our shareholders.\nStephanie, please open the call to questions.\n", "role": "user" }, { "content": "q2 adjusted earnings per share $1.21.\nsees q3 adjusted earnings per share $1.11 to $1.21.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Although we believe estimates reflected in these statements are based on reasonable assumptions, we cannot give assurances that the anticipated results will be achieved.\nSo as we begin our prepared comments, first and foremost, all of us at Brandywine sincerely hope that you and yours continue to be safe, healthy, and as engaged as possible during this challenging time.\nThis pandemic continues to disrupt all of our lives and as a result [Indecipherable] in a new landscape for everyone, including every business.\nThe duration of this crisis is increasingly unclear.\nOn our April 23rd earnings call, we did expect a return to the workplace environment by mid-summer.\nGiven the events of recent weeks, however, that timeline has been extended.\nWe are continually assessing COVID-19's impact on every element of our business and based on this detailed review, we remain confident in our ability to execute all components of our 2020 business plan.\nAdditional details on our approach to this crisis are outlined in our COVID-19 Insert, that is found on pages 1 to 5 of our supplemental package.\nSo during our prepared comments, as we always do, we'll review second quarter results and an update to our 2020 business plan.\nWe'll also review the announced joint venture of our -- on our One and two Commerce Square properties in the central business district of Philadelphia.\nTom will then summarize our financial outlook and update you on our strong liquidity position.\nSo I'm looking at the second quarter, we continue to execute on every component of our 2020 business plan.\nFor spec revenue, we are 99% complete, with only 69,000 square feet and $300,000 remaining to achieve our spec revenue target for the year.\nWe had good second quarter leasing activity that 400,000 square feet of both new and renewal activity, with strong rental rate mark-to-market of 19.4% on a GAAP basis and 10.3% on a cash basis.\nSame-store numbers had been tracking in line with our business plan, but the delayed opening of Philadelphia resulted in about a $2 million NOI decline from our parking operations for the balance of the year.\nOur parking operations are included in our same-store pool and as such, this NOI decline has reduced our cash and GAAP ranges by about 100 basis points each.\nOffice operations are progressing in accordance with our business plan.\nOur cash collection rates continue to be extremely good, and we have collected over 99% of our second quarter billings and our July collection rate tracks very well, also with about 98% collected as of yesterday.\nCapital costs were at the low end of our targeted range.\nAnd we have lowered our estimated full-year 2020 capital ratio by 100 basis points, down to a 11% to 12%, really reflecting the experience we're having with generating short-term extensions that require minimal capital at with outlays and I'll touch on that in a moment.\nRetention was only 37%, which was mainly driven by known -- the known move out of SHI in our Austin portfolio as they began occupying their newly owned building that we built for them at our Garza Ranch project.\nAs noted previously, we have backfilled 80% of their space, which will commence later this year at a 19% cash mark-to-market.\nAnd look, well, SHI was the primary driver in our occupancy decline, we had several other tenants expirations.\nAll of those move-outs were known and part of our plan.\nAnd of the known move-outs, a 183,000 or 51% has already been relet and will recommence in 2020.\nI should also note that about 70 basis points of our occupancy decline were due to removing Commerce Square from our same-store pool.\nMost importantly though, we do expect occupancy returning to our targeted range of 92% to 93% by the end of this year.\nWe did post FFO of $0.34, which is in line with consensus and Tom will amplify that in during his comments.\nAnd then looking at our 2020 business plan, as we talked about on our last call, this crisis really embodies both danger and opportunities for our company.\nOur clear priority has been to assess all elements of risk and institute plans to effectively mitigate and anticipate any adverse impact.\nWe do remain focused forward on opportunities to enhance our business plan execution, whether that'd be by lease, early lease renewals, margin improving, rebidding programs or working with institutional partners to seek investments where we can create growth opportunities.\nAnd just a quick recap of our COVID-19 key components.\nWe have maintained in accordance with all local, state and CDC guidelines, a door is open and lights on approach to our building operations.\nWhile it's a little bit difficult to quantify in some of our buildings.\nWe estimate the current occupancy range of our buildings is around 5% to 10% in CBD Philadelphia, up to about 20% our DC assets, Austin is around 10% with some pullback in that given the situation down there, and the Pennsylvania suburban operations seem to be around 15%.\nSecondly, the stability of our operating platform remains a top priority with particular attention on rent collections and rent deferrals, all of which were amplified on page one of our supplemental package.\nOne of our real top priorities has been a strategic outreach to all of our tenants.\nSo we are in extremely close touch with all of our tenants, understanding their concerns, listening to their transition plans and providing help wherever we can, so we fully understand their objectives.\nAs such as part of that program, while we've reached out to our entire tenant base, our particular focus has been on those tenants whose [Phonetic] spaces role in the next two years.\nThe results of those efforts are framed out on page three of our supplemental and have resulted in 73 active tenant discussions totaling about 950,000 square feet that to date have resulted in 28 tenants, totaling about 216,000 square feet, executing leases since March 15th.\nThese leases have an average term of 24 months with a 4.2% cash mark-to-market and a 5% capital ratio.\nOn the construction front, all of our markets are allowing construction activities.\nAnd we've not programmed any additional pull back in construction activity delays this year.\nOn a positive front, we are beginning to see downward pressure in select [Technical Issues] upon construction cost, hard construction costs, as well as some soft costs as the overall forward construction pipeline continues to shrink.\nOur leasing pipeline stands at 1.5 million square feet and we've actually had better than expected progression in that pipeline during the quarter.\nOnce again, our team has been in an extensive touch with every prospect and the breakdown of the 1.5 million [Phonetic] is as follows: deals progressing but execution uncertain -- timing of that uncertain and we're targeting in the next 90 days that 24% or 354,000 square feet.\nDeals progressing, but too early to tell when they would actually could execute it about 900,000 square feet or over 60% of the pipeline.\nAnd that's really the noticeable change.\nSince April's call, many more deals have advanced from the on-hold due to COVID, which right now comprises about 14% of that current pipeline into the deal progressing but too early to call.\nSo tenants are slowly beginning to refocus their attention on their office space requirements.\nOn the capital front, we're really delighted to announce a joint venture on our One and Two Commerce Square buildings in Philadelphia.\nThe joint venture is with an extremely high-quality global institutional investor, who is making their first office investment in Philadelphia, which from our perspective, further demonstrates the attractiveness of our Philadelphia market to institutional investors and really validates investors perception on Brandywine's ability to create value.\nOur investor has requested that we do not disclose their name and certain terms of the agreement at this point in time.\nBut the general framework of the venture meets many, many of our key objectives.\nIt's a $115 million preferred equity investment, which represents 30% of the venture's capitalization at a total value of $600 million or $316 per square foot, which we believe is exceptionally strong pricing.\nThe going-in cap rate is 5.1%, that cap rate improves based upon the rollover, but we really view that it's simply a data point due to the pending level of vacancy and the value creation opportunity.\nSo right now over 97%, that does drop to 70% over the next 18 months.\nAfter providing for payments for transitional leases and closing costs, Brandywine received over $100 million of net proceeds, which as Tom will amplify added to our excellent liquidity position.\nThe transaction is a 70-30 joint venture with shared control on decisions.\nAnd while we can't close some of the specific terms, we can share that our partners targeted rate of return on an all-in basis is in the very low-double digits.\nSo we view it as very effectively priced capital.\nIt provides for the same level of returns on preferred equity with a liquidation preference upon a capital event to our partner and in return for that preference, Brandywine receives a significant promote structure upon a capital in that [Phonetic].\nBoth Brandywine and our partner had each committed $20 million of incremental capital to reposition the properties and retenant known vacancies.\nWe will continue to manage and lease the property.\nFrankly, due to the leasing status and the price, the transaction will have minimal dilution, less than $0.01 a share on '20 [Phonetic] earnings primer and will improve our net debt-to-EBITDA ratio by approximately between 3 and 4 turns between now and the end of the year.\nThe transaction does reduce our Ford [Phonetic] rollover exposure by 1.8 million square feet in our wholly owned portfolio.\nAnd Brandywine will also recognize a gain of about $270 million on this transaction.\nVery important point to note in the structure, given the state of the debt markets and the near-term rollover profile of this property, we closed the venture with the existing $221 million mortgage in place at selling at 37% loan to value.\nAs leasing progresses and the debt markets continue their recovery, we plan to refinance at a higher LTV, thereby affording both Brandywine and/or partner and other opportunities to generate liquidity.\nAnd speaking of liquidity, the company is in excellent shape, as outlined on page four of our supplemental package.\nWe are projecting to have a $500 million line of credit availability at year-end 2020.\nAnd if we refinance rather than pay off an $80 million mortgage later this year, that liquidity increases to $580 million.\nWe have only one $10 million mortgage that matures in 2021.\nWe have no unsecured bond maturities until 2023.\nWe anticipate generating $55 million of free cash flow after debts and payments for the second half of '20.\nAnd our dividend remains extraordinarily well covered with a 56% FFO and 75% CAD payout ratio.\nSo with those items addressed, let me just spend a few moments on our development set.\nFirst of all, all of our production assets that's Garza and Four Points in Austin, 650 Park Avenue in King of Prussia and 155 in Radnor are all fully approved, fully documented, fully ready to go, subject to identifying pre-leasing.\nAnd as we've noted previously, these are near-term completions that we can complete within four to six quarters and there are individual cost range between $40 million and $70 million.\nAs you might expect, we didn't really make any significant advancement in our deal pipeline of almost 600,000 square feet during the quarter and frankly don't really anticipate any significant advancement of some of these major discussions until the crisis begins to abate and there is more focus on return to the workplace.\nAnd looking at our existing development projects on 405 Colorado, look, this exciting addition to Austin skyline remains on track for completion in the first quarter of '21, at a very attractive 8.5% cash-on-cash yield.\nWe have a pipeline of 125,000 square feet.\nBut frankly, as I noted on the production assets, we don't expect any significant decision-making to occur until after the crisis begins to abate.\nOn the board and building, delighted to report that's now been placed in service at 94% occupancy and 98% leased.\nThe property will stabilize on schedule in the fourth quarter of 2020.\n3000 Market Street is a 64,000 square feet life science renovation that we undertook and within Schuylkill Yards.\nAs noted last quarter, we did sign a lease with one of our existing life science tenant Spark Therapeutics who has taken the entire building on a 12-year lease.\nWe expect that lease will commence in the third quarter of next year and deliver a development yield slightly north of 9%.\nQuickly looking at Broadmoor and Schuylkill Yards.\nAt Broadmoor, we continue fully advancing our development plans on Block A, which is 360,000 square feet of office and 340 apartment units.\nAnd we've gotten through a final design in pricing and we'll be in a position to have all of that ready to go by the end of Q3 this year, subject to financing and pre-leasing.\nSchuylkill Yards, within Schuylkill Yards, we really continue a very, very strong life science push.\nThe overall master plan for Schuylkill Yards provides with at least 2.8 million square feet can be life science space.\nSo we really do view that we have a tremendous opportunity to establish a full ecosystem.\n3000 Market in the Bulletin Building conversions, I just mentioned, to life science really evidence is the first part of that pivot to create a life science hub.\nWe are also well into the design, development and marketing process for a 400,000 square foot life science building with the goal of being able to start that by Q2 '21, assuming market conditions permit.\nFinally, we are converting several floors within our Cira Center project to accommodate life science use that the aggregate square footage for that converted space is 56,000 square feet, and we have a current pipeline of 137,000 square feet for that space.\nSchuylkill Yards West, our residential office tower is fully approved to go and ready, subject to finalizing our debt and equity structure.\nWe have also modified the design of the office component to accommodate some level of life science use.\nAs I mentioned in the last quarter and I'll mention again this quarter, the COVID-19 crisis has clearly had a big impact upon the timing of moving forward this project and getting the financing in place.\nWe continue to work with our preferred equity partner, but the crisis clearly slowed the pace of procuring and finalize both at equity piece as well as the debt piece.\nWe do remain optimistic that we'll get this across the finish line as soon as the situation returns to some level of normalcy.\nIn general, we do continue to maintain a very active dialog with a broad cross-section of institutional investors and private equity firms.\nIn addition to our Commerce Square announcement, we continue to explore other asset level of joint ventures that will both improve our return on invested capital and continue to enhance our liquidity and provide growth capital for our development pipeline.\nThese discussions are active and ongoing and they certainly encompassed both our Broadmoor and Schuylkill Yards projects.\nBased on the current uncertain business climate, we will not provide that 2020 guidance as part of our third quarter call, but we do plan on issuing guidance no later than our fourth quarter earnings cycle.\nNow, I'll turn the mic over to Tom, who will provide an overview of our financial results.\nOur second quarter net income totaled $3.9 million or $0.02 per diluted share and FFO totaled $57.7 million or $0.34 per diluted share.\nSome general observations regarding the second quarter results.\nOperating results were generally in line with our first quarter guidance with a couple of items to highlight.\nOn our portfolio, operating income, we estimated 8 million -- $80 million in portfolio NOI [Phonetic] and we were $1.1 million higher than that.\nWhile we did have parking being about $1 million below our anticipated reduced parking level, primarily due to the transit and monthly parking.\nWe did have lower physical occupancy and therefore, sequential operating expenses were lower and we experienced higher operating margins in 2Q '20, offsetting the lower parking income.\nInterest expense improved by $0.8 million primarily due to lower interest rates than forecast.\nOur second quarter fixed charge and interest coverage ratios were 3.4 times and 3.7 times, respectively.\nBoth metrics were similar to the second quarter of 2019.\nAs expected, our second quarter annualized net debt-to-EBITDA increased, the increase to 7.0 times was primarily due to the lower anticipated sequential EBITDA outlined in the prior quarter.\nAdjusting for the Commerce Square transaction on a pro forma basis for the second quarter, that 7.0 were decreased to 6.7.\nTwo reporting items to highlight for the second quarter, cash collections, as reported, overall collection rate for the second quarter was a very strong 99.6% based on actual quarterly billings.\nHowever, if we did include the second quarter deferred billings, our core portfolio collections rate would still have been a very strong 97%.\nIn addition, cash same-store as outlined on page one of our supplemental, we have included $2.3 million of rent deferrals in our second quarter results.\nLooking then to third quarter guidance.\nLooking forward, we have portfolio operating income will total approximately $74 million and will be sequentially lower by $7.1 million.\nThis decrease is primarily due to Commerce Square JV.\nThe joint venture will result in deconsolidation of the property and that will lower the NOI by $7.5 million.\nOne good pick up on the other side, if there is $1.2 million of incremental income for the Bulletin Building, which has been placed into service in June and the building is now 94% occupied.\nFFO contribution from our unconsolidated joint ventures with total $6.5 million for the third quarter, which is up $4.1 million from the second quarter and that's primarily due to Commerce Square joint venture, which has been deconsolidated effective [Indecipherable] with our earnings yesterday.\nFor the full-year 2020, the FFO contribution is estimated to be $19 million.\nG&A for the third quarter will total 7.3 [Phonetic] and will be sequentially $1 million lower than this -- than the second quarter.\nThis is primarily due to lower compensation award amortization and it's pretty consistent with prior years.\nFull-year G&A expense will approximate $31 million.\nInterest expense will be $1.5 million sequentially compared to the second quarter and will total $18 million for the third quarter with 94.5% of our balance sheet debt being fixed rate at the end of the second quarter.\nThe reduction in interest expense is primarily due to the $100 million of net proceeds received from the Commerce Square joint venture paying off our line of credit at Commerce Square mortgage debt.\nAnd then also the Commerce Square mortgage debt will now be deconsolidated.\nCapitalized interest will approximate $1 million for the third quarter and full-year interest expense were approximately $76 million.\nWe extend -- we plan to extend our Two Logan mortgage beyond the August 1st maturity date, and we are looking to either pay that off or have an extended and we'll be working on that during this quarter.\nTermination and other fee income.\nWe anticipate terminations and other income totaling $2.2 million for the second -- for the third quarter and $10.5 million for the year.\nNet management, leasing and development fees will be $4 million and will approximate $10 million for the year.\nWe have no planned land sales and tax provisions of any significance.\nNo anticipated ATM or additional share buyback activity.\nAnd our guidance for investments, we have only the two -- the one property in Radnor, Pennsylvania that we will acquire for $20 million and that is scheduled for redevelopment.\nSo we know generating of earnings of any kind in 2020.\nLooking at our capital plan, as we outlined, we have two development projects in our 2020 capital plan with no additional developments plan for the balance of the year.\nBased on that, our CAD range will remain at 71% to 78%.\nAnd uses for this year will total $285 million, $67 million of development, $65 million of common dividends, retained -- revenue creating will be $25 million, revenue maintain will be $27 million, mortgage amortization of $1 million.\nWe are including the $80 million pay-off of the mortgage at Two Logan and the acquisition of 250 King of Prussia Road, sources for all those uses.\nOur cash flow from after interest payments $115 million [Phonetic].\n$100 million of net proceeds from Commerce Square joint venture, when you use the line of credit for $39 million, cash on hand of $21 million and land sales of $10 million.\nBased on the capital plan outlined, we are in excellent position on our line of credit and liquidity.\nWe also project that our net debt will range between 6.3 and 6.5.\nIt will likely be at the low end of that range as a result of the Commerce Square joint venture, which has reduced our leverage in the second quarter.\nIn addition, our net debt -- our debt to GAV will approximate 38%, which is down from 43%, primarily again due the joint venture improvement in that metric.\nIn addition, we anticipate our fixed charge ratio will continue to approximate 3.7 on an interest coverage basis and 4.1 -- 3.7 on a debt service coverage and interest coverage would be 4.1.\nWith that, wrapping up.\nAs we always do, we ask that in the interest of time you limit yourself to one question and a follow-up.\n", "role": "user" }, { "content": "q2 ffo per share $0.34.\nqtrly earnings per share $0.02.\ndo not plan on providing our 2021 guidance during q3 earnings cycle.\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, first and foremost we hope that you and yours continue to be safe, healthy and engages as we return the economy to normal, and well certainly the COVID-19 situation remains volatile with the daily news breaking.\nThere is much more optimism among our tenants as the economy trends toward a full reopening.\nWe're hearing that directly from both large and small tenants.\nOur portfolio occupancy as of late June increased to approximately 33%, which represents a significant increase from where we were in April where it reported between 15% and 20% occupancy levels.\nThe predominance of tenants returning to expanded beyond just small employers as occupancy for tenants 50,000 square feet and below is over 45%.\nDuring our comments today we will review our second quarter results, discuss progress on our 2021 business plan and update all of you on our recent capital activity.\nTom will then provide a financial overview, After that, Dan, Tom, George and I are available for any questions.\nFirst is the general update on the COVID-19 impact on our business.\nBased on an updated tenant survey that was completed in late June, we found a couple of interesting things.\nFirst is a growing need for space planning services, which as we expected, is I think a good sign, 48 tenants representing about 1.2 million square feet have requested assistance for more internal space planning team and we have engaged with them.\nWe also got a lot of feedback on an increased need for parking due to near-term public transportation concerns, which we certainly believe are short-term in duration, but about 103 of our tenants representing almost 3 million square feet expressed an interest in parking, and actually during the quarter we entered into 167 new monthly contracts and saw a 30% increase in our parking lot occupancies.\nFrom a portfolio management standpoint, we've been very much focused on tenants whose space expire in the next two years.\nThose efforts have been successful.\nWe have reduced our forward rollover exposure to an average of 6% over the next three years, and as noted on page 2 of our SEC to 7.1% from 2022 to 2024.\nSo, our forecast of rollover exposure is below 10% annually in each year through 2026.\nSo, over the last several quarters, we have significantly improved our intermediate term portfolio stability.\nRevenue and earnings growth remain a top priority.\nWe do believe we have some key near-term earnings drivers of first, we have, as you all know some several key vacancies that upon lease-up over the next 8 quarters will generate between $0.07 and $0.10 of additional revenue per share, that is in both our wholly owned and joint venture inventory.\nWe are also projecting that 405 Colorado and 3000 Market stabilize in 2022 as we bring those development projects online, and we're clear we're seeing trend lines of tenants requirements higher quality space, which we believe positions our portfolio extremely well, and that's really evidenced by what we're hearing, but also by a 23% increase in our development pipeline of Q2 over Q1.\nIn looking at the numbers for the second quarter, we posted FFO of $0.32 per share, which was in line with consensus estimates.\nWe made excellent progress on all of our 2021 business plan metrics, and during the quarter we had 20,000 square feet of positive absorption.\nGiven the increase in leasing visibility through the balance of the year, we did increase our speculative revenue target mid point by $500,000 and reduce the range --narrow the range rather from $18 to $22 million to $22 to $21 million, and as reported we are now 98% complete at that revised range.\nRent collections continued to be very strong, one of the best in the sector as we've collected over 99% of our second quarter rents.\nOur July receipts continue to track toward that same level.\nTenant retention was 58%.\nOur lease percentage remains within our business plan range.\nSecond quarter capital costs were 12.8% of generated revenues, slightly above our 10% to 12% business plan range, but average lease term was 8.5 years, which exceeded our 7-year business plan target.\nCash mark-to-market was a positive 14%, and our GAAP mark-to-market was also positive 22%.\nAll of those results are above our full year published ranges, however, as we mentioned last quarter, based on leases already executed commencing later this year with lower mark-to-market results, we will be within our business plan ranges.\nWe also expect that every region will post positive mark-to-market results on both a cash and GAAP basis for 2021.\nOur second quarter GAAP same-store NOI was up 0.5% and year-to-date is below our 2021 range of 0% to 2%.\nSecond quarter cash same-store NOI was 1.8%, again below our 2021 range of 3% to 5%.\nAgain, very similar to the mark-to-market dynamics tenant schedule take occupancy later this year will accelerate same-store growth and enable us to achieve our 2021 business plan range.\nWith the exception of our Met DC operation, all of our regions are expected to post positive same-store results, and our Met DC region will remain negative while 1676 International continues toward its lease up phase.\nWe are still forecasting 21 year and debt-to-EBITDA in the range of 6.3 to 6.5 as we've always cautioned that it does depend on the timing of future development starts for the balance of the year.\nJust a couple of comments on leasing velocity, because I know everyone is looking for recovery data points, just like we are, and we think there are some encouraging signs, at least what we've seen in the last quarter.\nYeah, a lot of tenant prospects with the pandemic one to virtually tour spaces before committing to an in-person tour.\nWe continue to see this trend evolve during the quarter.\nWe added total of over 1500 virtual tours with almost 800,000 square feet being targeted.\nThat lead to a 46% increase in physical tours over Q1.\nOur overall pipeline stands at a 1.4 million square feet with approximately 200,000 square feet in advanced stages of lease negotiations.\nOur overall pipeline increased by just short of 600,000 square feet during the quarter.\nAnd while these recovering points are encouraging we do believe it will take several quarters to assess the full impact on the office business from the pandemic.\nSo, to gain some insight we looked at our leasing metrics from the second quarter of 2019, so, pre-pandemic same quarters where we are now.\nThose data points we thought were also encouraging.\nOn a comparable set of properties, the pipeline today is up 7% compared to the second quarter of 2019.\nLeases that we executed this quarter are also up 13% from the second quarter of 2019.\nDeals at the proposal stage are up 20% including new and expansion proposals being up 13% over that comparative period.\nThere are two additional benchmarks we looked at that demonstrate that we're clearly still in the recovery phase, but overall we're surprisingly good compared to the second quarter of 2019.\nOur deal conversion rates, it was down 6% to 28% in second quarter of 2021 versus 34% in the second quarter of 2019.\nAs you might expect, given where we are in this recovery phase, the median deal cycle time is up 27 days to 104 days this past quarter versus 77 days in the second quarter of 2019.\nSo, we're hoping that as the economy continue to revere mostly convincing of that deal cycle time, and that's really is where the rubber meets the road in terms of revenue generation.\nIn looking at liquidity, we have maximized the liquidity and tends to having $460 million of line of credit availability by the end of the year.\nAs Tom will touch on we have no unsecured bond maturities until 2023 and have a fully unencumbered wholly owned asset base.\nOur dividend is extremely well covered at 57% of FFO and 81% of CAD at the midpoint of our guidance.\nOur 5-year dividend growth rate has been 5.3% versus the peer average below 4% and we have grown our CAD during that same 5-year period close to an 8% annual rate versus the peer average again below 4%.\nFrom a capital allocation standpoint, it was a fairly quiet quarter.\nWe continue to make progress on many fronts, and subsequent to quarter end as part of our land recycling program we did sell two small non-core land parcels and posted a small gain on that.\nLooking at development, as we always note, we have a number of production development projects that can be completed in 4 to 6 quarters that cost between $40 and $70 million.\nThe pipeline on those four production assets grew 40% since the first quarter, which is a good sign, again I think of tenants entering the market, but also looking for high quality space.\nAnd along those lines we did, so as the renovation program for 250 King of Prussia Road that is 169,000 square foot project located in the Radnor Submarket that we acquired for approximately $120 dollars per square foot as part of an overall transaction with Penn Medicine.\nWe designed that project to accommodate a significant life science component.\nThe renovation started in the second quarter and will be wrapped up within the next four quarters.\nThis project will be the first component of our Radnor Life Science Center, which will initially consist of this project, and our planned 155 Radnor ground up 150,000 square foot development, and these two projects will deliver more than 300,000 square feet of life science and office space to one of the region's best performing long term submarkets.\nIn looking at the existing development projects, Schuylkill Yard West is very much on pace and on schedule.\nThat's the life science residential and office project we commenced on March 1st.\nThe project will be built to a 7% blended yield and consists of 326 apartment units, a 100,000 square feet of life science space, 100,000 square feet of innovative office space and street level retail.\nIt still have an active pipeline comparable to last quarter.\nWe did close our 65% loan to cost construction loan at a floating rate equal to three quarters per cent.\nHowever, given the front loaded the equity commitment for both us and our partner, even with Brandywine $55 million equity commitment, of which 46.5 has already invested, the first funding of that construction loan won't occur until first quarter of 2022, but it does complete the capital stack for that project.\nLooking at our 405 Colorado project in Austin.\nThat project is now complete.\nWe're scheduling a grand opening in the fall.\nDuring the quarter, our lease percentage did increase to 24% and we currently have a pipeline of 527,000 square feet including about 40,000 square feet in final lease negotiations.\n3000 Market, is there a life science renovation within Schuylkill Yards.\nThat project is fully leased.\nThe construction will finish later this year and we're projecting the lease commencing in four quarter 2021 at a development yield of 9.6%.\nCira Labs, which we announced last quarter is a 50,000 square foot incubator that we are partnering with Pennsylvania Biotechnology Center.\nB Labs will open in the fourth quarter of 2021.\nSince the announcement we have entered the marketing pipeline and build a significant amount of interest with proposals outstanding for roughly 78% of that space.\nJust got a couple more updates on Schuylkill Yards and Broadmoor.\nWithin Schuylkill Yards the life science push continues as we've cited previously we can deliver about 3 million square feet of life science space, which we believe creates an excellent opportunity to establish an corollary research community to all the other great activity over here in University City.\n3151 Market Street, our dedicated life science building is fully designed and ready to go.\nWe have a leasing pipeline on that still in the 400,000 square foot range.\nIt is advancing, advancing slowly, but I think with a high degree of confidence, and our goal remains being able to start that later this year assuming market conditions permit.\nAt Broadmoor we are progressing with blockade in the first phase of Block F to recap, the scope of that 250,000 square feet of office and 613 apartment projects at a total cost of about $367 million.\nWe are a go-mode on all of those components.\nWe are moving forward through final documentation with our selected equity partner on Block A and Block F residential and is soliciting bids now on construction financing alternatives.\nWe anticipate third quarter closing date on both blocks A and F. Our plan remains to start the residential component of Block A, which is 341 units at $119 million cost in the fourth quarter of 2021, and on Block A office we are actively in the pre-leasing market and would plan to start that as market conditions permit.\nAs you may recall, we would normally provide 2022 earnings and business plan and FFO guidance during our third quarter 2021 earnings cycle.\nHowever, consistent with what we said we did in 2021 and based on the continued uncertain business climate, we will announce our 2022 guidance on our fourth quarter earnings call.\nSo, Tom will now provide a review of our financial results.\nThe first quarter net loss totaled $300,000 or less than one penny per diluted share and FFO totaled $55.9 million or $0.32 per diluted share and in line with consensus estimates.\nSome general observations regarding our second quarter results, while our second quarter results were in line, we had a number of moving pieces and several variances to the first quarter guidance.\nPortfolio operating income totaled $67 million, which was below our estimate by $1 million.\nResidential and parking revenue were below budget as a result of restrictions that were in place for most of the quarter in Philadelphia negatively impacting those results.\nInterest expense totaled 55.5 million and was below our first quarter forecast due to higher interest capitalization on our 405 Colorado project.\nTermination and other income totaled $2.7 million and was $1.7 million above our first quarter forecast, primarily due to two insurance claims generating approximately $1.1 million of other income.\nWe recorded no land gains and minimal tax provision compared to a $1.1 million dollar income guidance for the first quarter.\nTwo land sales were delayed from this quarter into the next quarter.\nOne transaction, as Jerry mentioned, is already closed subsequent to quarter end and we anticipate the second transaction closing later this quarter.\nG&A totaled $8.4 million or $200,000 above our $8.2 million first quarter guidance.\nThe increase was primarily due to employee and medical benefit cost.\nFFO contribution from unconsolidated joint ventures totaled $6.8 million or $1.3 million above our first quarter estimate.\nThe higher FFO contribution was primarily due to lower net operating cost from expense savings, and a $600,000 termination fee Commerce Square.\nOur second quarter fixed charge and interest coverage ratios were 4.0 and 3.8 respectively, both metrics decreased slightly from the first quarter.\nOur second quarter annualized net debt to EBITDA increased to 6.9 and is currently above our guidance range, an increased primarily due to the forecasted lower NOI.\nThe increase was forecasted and we expect this metric to improve during the second half of the year from higher forecasted NOI.\nAdditional reporting item on cash collections as Jerry mentioned, we had a very strong quarter of 99% and tenant write offs totaled less than $100,000 for the quarter.\nPortfolio changes, as we noted 905 is now completely out of all of our metrics as that building has been taken out of service related to our Broadmoor Master Plan.\nLooking at third quarter guidance, we anticipate the third quarter results to improve compared to the second quarter based on executing leasing activity and have some other assumptions, our portfolio operating income, we expect that to total $6.85 million and be sequentially higher during the second quarter.\nPart of that it will be due to the 107,000 square feet of forward leasing activity anticipated to commence during the third quarter and should generate a second consecutive quarter of positive absorption.\nFFO contribution from our unconsolidated joint ventures were totaled $5.8 million for the third quarter, a $1 million sequential decrease from the second quarter, primarily due to a non-recurring termination fee and incrementally higher net operating expenses, G&A for the third quarter will decrease from 8.4 to 7.5, the sequential decrease is primarily due to the annual equity compensation vesting during the second quarter that will not occur in the third quarter, we expect interest expense to approximate $16 million with capitalized interest of $1.5 million.\nTermination and other income, we expect to total $2.1 million for the third quarter.\nNet management and leasing will total $3.2 million and interest in investment income of $2 million.\nFor land gains, we expect about $2.3 million for the quarter based on the two previously mentioned closings and one additional non-core land sale generating total proceeds of $16.7 million.\nOur 2021 business plan also assumes no new property acquisitions or sales activity, no anticipated ATM or share buyback activity and no financing or refinancing activity.\nWe did close on the $186.7 million construction loan at Schuylkill Yards at the initial rate of 3.7%.\nWhile we have no other financing or refinancing activity in our 2021 plan we continue to monitor the debt markets ahead of our 2023 unsecured bond maturity.\nLooking at our capital plan, our second quarter CAD was 90% of our common dividend, which is above our stated range.\nThe increase was due to several large tenant allowance payments, which we anticipated occurring during 2021.\nSo, the timing of those payments were significant to the quarter, but anticipated for our full-year range, and our CAD range remains unchanged.\nOur second half 2021 capital plan is very straightforward and totals about $245 million with a $120 million of development, $65 million of dividends, $20 million of revenue maintain capital, $30 million of revenue create capital and $9 million of equity contributions to our joint ventures, primarily Schuylkill Yards.\nThe primary sources are cash flow after interest payments of $95 million, $82 million used of our line of credit, using the cash on hand, totaling $48 million, and again, $20 million roughly in land and other sales.\nBased on that capital plan outlined, our line of credit balance will be approximately $140 million, leaving $460 million of line availability.\nThe increase in the projected line of credit balance was partially due to the build-out of our incubator space as well as our development.\nWe still project our range to be 6.3 to 6.5, but as Jerry mentioned that will be predicated on how our development starts occur, and we still see that debt to GAV between 42% and 43%.\nIn addition, we anticipate our fixed charge coverage ratio to be approximately 3.7 and our interest coverage ratio to be about 4.0.\nSo, just in wrapping up, I think the key takeaways are our portfolio and operations are really in solid shape.\nWe have great team of people on both the operating, the leasing and the marketing front, and we really get excellent visibility into our tenant base.\nInformation has been key, so, the level of conversation with all of our customers has been significantly enhanced during this cycle.\nAnd I think we're very pleased that our annual rollover through 2024 is only 7% a year.\nI think that's a low watermark for the company in terms of portfolio role.\nLeasing pipeline continues to increase, certainly not as fast as we would like, and certainly, I know a lot of folks on the call are looking for more visibility as well, but tenants are returning to the workplace.\nWe think the green shoots we're seeing in terms of their space requirements are good signs, and we do expect a compression of decision timelines later this year and a continuation of positive mark-to-markets driven by improving market velocity, stable overall market conditions and escalating construction prices.\nSafety and health both in design and execution are really our tenants top priorities.\nWe are well positioned to meet their concerns, and we believe that new development in our trophy stock will benefit from this trend.\nAs I mentioned earlier, our development project pipeline increased by about 23% during the quarter.\nWe still are very excited about our forward growth drivers.\nWe have two fully approved mixed use master plan sites that can double our existing portfolio, diversify our revenue stream and drive significant earnings growth, and when you take a look at even it's Schuylkill Yards assuming a start of 3051 markets through with the other projects we have in operation or under construction, that will represent about 5% of our portfolio square feet.\nSo, a measurable contribution building from a diversification of our revenue stream.\nAnd, in addition to life science, our Schuylkill Yards and Broadmoor developments with existing approvals in place can accommodate about 5,000 multifamily units.\nAs Tom touched, we've had a very attractive CAD growth rate over the last 5 years.\nWe think we've created and established stability to a well covered and attractive dividend that we believe is poised to increase as we grow earnings.\nAnd from a financing standpoint, certainly given the continued dislocation the public marketplace, there's always a concern about the best way to finance these properties.\nWhat I can tell you is private equity is more than abundant, the debt markets as we've seen with the Schuylkill Yards West construction loan are extremely competitive.\nStrong operating platforms and well conceived projects like Brandywine continue to gain significant traction for project level investments, and we're confident that there is executable financing available for our entire development pipeline in today's marketplace.\nSo, as usual we'll end where we start in that we really do wish you are all doing well, enjoying the summer, and that you and your families are safe and engaged.\nWe add for the interest of time, you limit yourself to one question and a follow-up.\n", "role": "user" }, { "content": "compname reports q2 ffo per share of $0.32.\nq2 ffo per share $0.32.2021 speculative revenue range narrowed to $20.0-$21.0 million.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Although we believe estimates reflected in these statements are based on reasonable assumptions, we cannot give assurance that the anticipated results will be achieved.\nFirst and foremost, all of us at Brandywine sincerely hope that you and yours continue to be safe, healthy and engaged.\nThe pandemic continues to disrupt all of our lives and has resulted in a new landscape for everyone and certainly every business and its duration unfortunately remains unclear.\nAt the time of our Q2 earnings call in July, we did anticipate a return to the workplace commencing after Labor Day and into the fall.\nGiven the recent headlines over that timeline for many of our tenants has been extended into 2021.\nAnd as we noted in our SIP our portfolio is about 15% occupied with variances between the different operations but we can certainly provide more color on that during the Q&A.\nAdditional details on our approach to this crisis are outlined in our COVID-19 insert found on Pages 1 to 4 of the supplemental package.\nDuring these prepared comments we'll review third quarter results, an update to our 2020 business plan.\nTom will then summarize our financial outlook and update you on our strong liquidity position.\nAfter that Dan, George and Tom and I are certainly available to answer any questions.\nSo looking at the quarter, we continue to execute on every component of our business plan.\nWe're certainly pleased that most of our 2020 objectives have been achieved.\nWe are 100% complete on our speculative revenue target.\nAnd while the volume of executed leases was down a bit quarter-over-quarter, as you might expect, during the summer it -- regardless of the pandemic, our overall pipeline increased by over 330,000 square feet.\nFor the third quarter, we also posted very strong rental rate mark-to-market of 17.1% on a GAAP basis and 9% on a cash basis.\nIn addition, the core portfolio did generate positive absorption of 102,000 square feet, which includes 47,000 square feet of tenant expansions.\nAlso included in those absorption numbers was the full building delivery of our 426 Lancaster Avenue redevelopment in Pennsylvania suburbs, that was 55,000 square feet and 112,000 square feet of the occupancy backfilling of the SHI space again in Austin, Texas.\nWe did experience during the quarter 58,000 square feet of COVID-related terminations.\nThe primary one of that was Philadelphia Sports Club in our Radnor complex of 42,000 square feet and a couple other small hospitality and medical offices.\nOur full year 2020 same store numbers are tracking in line with our revised business plan.\nFor this quarter, the numbers were consistent with our business plan and were primarily driven, as you might expect, by the 9/30/2019 move out of KPMG in 183,000 square feet and the SHI move out on 3/31/20.\nCash collection rates continue to be among the best in the sector.\nWe've collected over 99% of our third quarter billings and our October collection rate continues to track very, very well with over 97% of office rents collected as of yesterday.\nOur capital costs were in line with our targeted range as we continue to experience very good success in generating short-term lease extensions that require minimal capital outlay.\nRetention was 60% and slightly above our full year range.\nAnd based on fourth quarter scheduled lease commencements we will be within our stated occupancy range.\nAs Tom will articulate in more detail, we did post FFO of $0.35 per share, which is in line with consensus estimates.\nAnd taking a broader look at our '20 business plan, as we mentioned in the last call, any crisis embodies a level of danger and opportunity.\nSo our first plan of attack was to fully assess risk to our business and we believe we have instituted plans to either mitigate or anticipate any adverse impacts.\nWe do remain focused on growth, whether that's through our early lease renewal program or margin improving rebidding programs, we're continuing to work with institutional sources of equity to seek investments and opportunities where we can create earnings and value accretion.\nBut just looking at the risk factors that we face as part of the pandemic, first, and consistent with all applicable state, local and CDC guidelines, we did maintain a doors open, lights on approach to our buildings during the entire breadth of the pandemic thus far.\nNow, certainly for a variety of factors primarily, public policy, employer liability concerns, mass transit, virtual schooling and other safety concerns most tenants in our portfolio, particularly the larger ones anticipate a phased return after the New Year.\nThat certainly remains fluid and we're tracking, but it seems like the larger tenants won't be phasing back in until next year.\nSecond, we focused on portfolio stability as a top priority with particular focus on these items, rent collections already talked about and I think we're doing fairly well.\nRent deferrals, we did frame that on Page 1 of our SIP we had a total $4.5 million of deferrals with $4.1 million scheduled to repay those deferrals within the next 18 months.\nNow interestingly, to-date we've already collected 14% or $536,000 of those deferrals, including a $100,000 of early prepayments.\nSo we certainly think that we're making some good progress there.\nAnother key focus for us is strategic tenant outreach.\nInformation, as you may expect is key right now, and we have an outstanding on-the-ground team of property and leasing professionals in all of our operations.\nTheir top priority is being in close touch with our tenants, understanding their concerns, their transition plans and seeing where we can provide help.\nAs such, we've reached out to our entire tenant base with a particular focus on those tenants whose spaces roll within the next two years.\nThe results of those efforts are framed out on Page 2 of the SIP and have resulted in 82 active tenant renewal discussions totaling over 920,000 square feet, that to-date have resulted in 45 tenants totaling 300,000 square feet executing renewals.\nThese leases had an average term of 24 months with about a 2.6% cash mark-to-market and a sub 5% capital ratio.\nWe certainly hope that as we get more clarity on the pandemic that over the next couple of months we can convert some of those ongoing discussions to executed renewals.\nFrom a construction standpoint, nothing really more to update from last quarter.\nWe continue to have construction activity in all of our markets.\nWe have not programmed any further construction delays in our numbers and we are beginning to see with the exception of lumber and pressure-treated wood some downward pressure on construction costs as we're starting to see an overall shrinkage of forward construction pipelines.\nAnd speaking of pipelines, our leasing pipeline stands at 1.6 million square feet including approximately 400,000 square feet in advanced stages of lease negotiations.\nAs I mentioned, the overall pipeline increased by 331,000 square feet.\nThis -- the expansion of the pipeline was driven by over 444,000 square feet of tours during the quarter, which as we noted is up 115% from last quarter.\nSo signs in the market reawakening a bit.\nFrom a liquidity and dividend standpoint, Tom will certainly talk about it some more detail, but the company is in excellent shape from a liquidity and capital availability standpoint as we've outlined on Page 3.\nAfter factoring in the full repayment of the Two Logan Square mortgage, we're still projecting to have about $530 million of our line of credit available by year end.\nWe're also anticipating paying off the small mortgage during the fourth quarter of $9 million.\nWe have no maturities in '21 and no unsecured bond maturities until '23 and have a very good 3.75% weighted average interest rate.\nDividend remains incredibly well covered with a 56% FFO and a 76% cap ratio.\nAnd given those mortgage prepayments, we do anticipate that by the end of this year we will have a completely unencumbered portfolio with no wholly owned secured mortgages and no wholly owned mortgages going into '21.\nNow to quickly look at our development investment opportunities.\nFirst of all, on the development front, all four of our production assets that's Garza and Four Points in Austin, 650 Park Avenue and 155 in Pennsylvania are all fully improved, fully documented, fully ready to go subject to pre-leasing.\nWe are still actively marketing those, we have a good pipeline on those production assets.\nAs you might expect, that's moving a bit slow, but tenants continue to look at new construction and upgrading their stock as part of their workplace return strategy.\n405 Colorado remains on track for completion in Q2 of next year at a very attractive 8.5% cash-on-cash yield.\nWe have a pipeline of almost 200,000 square feet on that project, again moving slow, but again we're pleased with the breadth of that pipeline.\nBut we really don't expect a lot of significant decision-making to occur until we get more clarity on what's happening with the pandemic.\n3000 Market, that's the 64,000 square foot life science conversion that we're doing within Schuylkill Yards, construction is under way.\nThat building will -- is fully leased to Spark Therapeutics on a 12-year lease commencing later in the second half of 2021 at a development yield of 8.5%.\nAnd looking at Broadmoor and Schuylkill Yards for just a moment.\nWe are advancing Block A, which is a mixed-use block consisting of a 350,000 square foot office building and 340 apartment units that's going through final design and final approvals from the City of Austin.\nAnd we expect all those have to be accomplished by year-end.\nWithin Schuylkill Yards, we continue a very strong push to the life science space.\nAs mentioned last quarter and we've outlined in more detail in the supplemental package, the overall master plan for Schuylkill Yards is we can do at least 2.8 million square feet of life science space, so we have an excellent long-term opportunity to really create a scalable life science community.\n3000 Market and the Bulletin Building were the first steps and their conversions to create a life science hub.\nWe are also well into the design development and marketing process for a 500,000 square foot life science building located at 3151 Market Street.\nWe have a leasing pipeline on that project totaling about 580,000 square feet and our goal is to be able to start that by Q2 '21 assuming of course market conditions permit.\nOur Schuylkill Yards West project, which is our life science, office and residential tower is fully approved and ready to go, subject to finalizing our debt and equity structure, that project consists of 326 apartments and a 100,000 square feet of life science and office space.\nWe currently have an active pipeline of over 300,000 square feet for those in commercial uses and based on this level of interest, we are contemplating starting that projects without a pre-lease.\nSimilar to our approach on 3000 where we looked at existing assets, we have commenced the construction and conversion of three -- floors three through nine within Cira Center to accommodate life science uses, that will be done in two phases.\nWe have 34,000 square feet already pre-leased and we currently have a pipeline of 125,000 square feet.\nAnother interesting point on both Schuylkill Yards and Broadmoor that we can't lose sight of is that based on current approvals and the master plans in place between those two sites, they can accommodate about 5,000 multi-family units.\nOn the equity financing front, we have an active ongoing dialog with a broad cross section of institutional investors and private equity firms.\nWe continue to explore other asset level joint ventures in sales to both improve our return on invested capital, generate additional liquidity and provide growth capital for our development pipeline and these discussions, as you might expect, encompass both Broadmoor and Schuylkill Yards but also some of our existing assets.\nLet me close on this one final point.\nAs you know our normal practice for many, many years was to provide next year guidance during our third quarter earnings call.\nBut these are not normal times, and as we discussed in our July call, we are not providing '21 guidance at this time.\nAlthough our Company's overall rent collections remained very strong, we have increasing visibility into our existing portfolio and even with the rent collections being the highest in the sector, we believe it's prudent to delay our '20 -- '21 earnings guidance and business plan until we have better visibility on the duration of the COVID-19 pandemic and its impact on the macro economy and in particular our markets.\nTom will now provide an overview of our financial results.\nOur third quarter net income totaled $274.4 million or $1.60 per diluted share and FFO totaled $60 million or $0.35 per diluted share.\nSome general observations regarding the third quarter results.\nThe results were generally in line with our second quarter guidance with the following highlights.\nCore -- property operating income we estimated $74 million, it came in slightly above that at $74.4 million, which was a good result.\nTermination and other income.\nWe expected that -- it ended up at 1.3 below projections, primarily due to the timing of certain anticipated transactions that we believe will occur in the fourth quarter.\nAnd then interest expense was also lower by $1.7 million over forecast, primarily due to the interest expense reduction from the loan assumption recapitalization of Two Logan Square, which resulted in a one-time non-cash reduction in interest expense totaling $2 million.\nOur third quarter fixed charge and interest coverage ratios were 3.5 and 3.8 respectively.\nMost met -- both metrics improved sequentially as compared to the second quarter, primarily due to the Commerce Square joint venture.\nBoth metrics exclude the one-time interest deduction -- reduction noted above.\nAs expected, our third quarter annualized net debt-to-EBITDA started to decrease to 6.7, was primarily due to the sequential EBITDA remaining similar to the second quarter and the reduced debt levels from the Commerce Square joint venture.\nTwo additional reporting items.\nAs Jerry mentioned, cash collections were 99%.\nAdditionally, if we included third quarter deferrals, our core portfolio would have been very strong 97%.\nCollections for October are currently 97% however, one vendor payment anticipated to be received in the next day or so will bring us up to 95% -- 99%.\nWrite-offs in the quarter were approximately $0.005 and primarily due to retail-related tenants.\nSame store, as outlined on Page 1 of our supplemental, we have included $1.1 million and $3.8 million of rent deferrals in our third quarter and year-to-date results.\nLooking at the fourth quarter guidance.\nWe have the following general assumptions.\nProperty level operating income will total about $74 million and will be sequentially lower by about $500,000.\nThe decrease is primarily due to the Commerce Square being in our numbers for part of the third quarter and they will not be in our numbers for the fourth quarter that totals about $1.5 million.\nOffsetting that decrease is a sequential increase in the portfolio, which will improve NOI by $1 million.\nFFO contribution from our unconsolidated joint ventures will total $7.5 million for the quarter, which is up $0.3 million from the third quarter, primarily due to the full quarter inclusion of Commerce Square, offset by reduced NOI at our MAP joint venture.\nFor the full year 2020, the FFO contribution is estimated to be about $20 million.\nG&A will be about $7 million for the fourth quarter and full year will be about $31 million.\nInterest expense will be sequentially higher by $0.8 million compared to the third quarter and will total $17 million for the fourth quarter.\nCapitalized interest will be $1.1 million for the fourth quarter and full-year interest expense will approximately $74 million.\nOf note, we repaid our mortgage at Two Logan during October.\nThe mortgage payoff was approximately $79.8 million.\nThat loan had an interest coupon of 3.98%.\nWe anticipate an early prepayment of a wholly owned mortgage at Four Tower Bridge with an effective interest coupon of 4.5%.\nWith those payoffs, we now have no maturities scheduled on our wholly owned books until 2023 -- 2022 for the term loan, I'm sorry.\nTermination and other income, we anticipate that to be $4.5 million for the fourth quarter.\nThat's up from $0.9 million in the third quarter.\nAnd net income leasing and development fees, quarterly NOI will be $2.6 million and will approximate $8.5 million for the year.\nThere will be $0.5 million in the fourth quarter as it relates to land sales while we -- our $272 million gain represented 100% of the gain for reporting purposes, we only recognized 30% of that gain for tax purposes, and with some tax planning, we will not require a special dividend in 2020.\nWe have no anticipated ATM, additional share buyback activity scheduled.\nFor the investments' guidance, no more incremental sales activity.\nWith the acquisition of the land parcel being anticipated fourth quarter, we only have the building acquisition located at 250 King of Prussia Road for $20 million.\nIt is scheduled to be acquired in the fourth quarter and held for redevelopment.\nNo NOI will be generated in 2020.\nLooking at our capital plan.\nAs outlined, we have two development, redevelopment projects in our 2020 capital plan with no additional plans scheduled for the balance of the year.\nBased on the above, our 2020 CAD will remain in a ratio of 71% to 76% as lower capital will offset deferred rent that is repaid beyond 2020.\nUses for the remainder of the year is $185,000, comprised of $25 million in development and redevelopment, $33 million of common dividends, $8 million in revenue maintaining capital, $10 million in revenue creating capital and the repayment of the mortgages at Two Logan and Four Tower Bridge as well as the acquisition of 250 King of Prussia Road.\nPrimary sources will be cash flow after interest of $45 million, use of the line of $68 million, use of our current cash on hand at the end over the quarter of $62 million, and $10 million in land sales.\nBased on the capital plan outlined above, our line of credit balance will be about $68 million.\nWe also project that our net debt-to-EBITDA will remain in a range of 6.3 to 6.5.\nIn addition, our net debt-to-GAV will approximate 38%, which is down sequentially from the 43% in the prior quarter primarily due to the Commerce Square joint venture.\nIn addition, we anticipate our fixed charge ratio will continue to approximate 3.9 on interest coverage and will be 4 -- 3.9 on debt service fixed charge and 4.1 on interest coverage.\nSo these are really not normal times as we all know.\nSo let us close with a couple of key takeaways.\nFirst, our portfolio and operations are in solid shape with really increasing visibility into our tenants, their thought process, and what they're thinking about in terms of their return to the workplace.\nSecondly, with -- our deal pipeline continues to increase as those tenants begin to really think about their workplace return and us staying in touch with those tenants is key.\nUs outreaching to a lot of existing or new prospects is also very much a key part of our business plan.\nSo we're happy to see our pipeline really increase during a pandemic and during the slow months of the summer.\nIn other observations, and we're hearing this directly from tenants both large and small, safety and health both in design and execution are rapidly becoming tenants' top priorities.\nAnd we believe that new development and our trophy-quality stock will benefit from that trend.\nAnd we're seeing the beginnings of that in the existing pipeline.\nLook, private equity and the debt markets have stabilized and are becoming increasingly competitive and strong operating platforms like Brandywine are really gaining significant traction for project-level investments.\nAnd then we'll end where we started, which is that we really do wish all of you and your families remain safe during these interesting times.\nAnd we ask that in the interest of time, you'll limit yourself to one question and a follow-up.\n", "role": "user" }, { "content": "q3 ffo per share $0.35.\nq3 earnings per share $1.60.99.5% of total cash-based rent due received from tenants during q3.\nthrough oct 20, about 97% of total cash-based rent has been received.\ndo not plan on providing 2021 guidance during q3 earnings cycle.\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 estimates reflected in these statements are based on reasonable assumptions, we cannot give assurance that the anticipated results will be achieved.\nWell, first and foremost, we hope that you and yours, continue to be safe, happy, healthy and engaged; and I think, looking at our business despite reopening delays related to the delta variant, the office market continues to improve, tour activity, lease negotiations and deal executions, remain on a positive trend line.\nOur portfolio occupancy has increased to approximately 35%, the predominance of tenants returning has though expanded beyond just small employers, as occupancy for tenants 50,000 square feet and below is now over 50%.\nDuring our prepared comments we'll review our third quarter results, discuss progress in our business plan and update you on our recent capital and development activity.\nTom will then also provide a financial overview and after that Dan, George, Tom and I are available to answer any questions you may have.\nFrom a portfolio management standpoint, we remain focused on reducing forward rollover and providing a solid platform for growth.\nThese efforts have been successful.\nWe have reduced our forward rollover exposure through 2024 to an average of 6.8%, a slight improvement over last quarter.\nOur forecasted rollover exposure is now below 10% annually, through 2026.\nRevenue and earnings growth remain a top priority.\nKey near-term earnings drivers for us are, as you all know, we have several key vacancies, that upon lease-up will generate between $0.07 and $0.10 per share of growth and we're delighted to report that we have now leased about 46% of that targeted square footage and achieved about 45% of that forward revenue growth, at an average mark to market of 12% cash and 19% GAAP and that income will be substantially in place by the third quarter of 2022, which can create a good growth opportunity for us.\nSome notable components of that during the quarter, the last 38,000 square feet vacated by [Indecipherable] in Austin has been leased and we've also signed a replacement lease for the 42,000 square foot tenant in Radnor, Pennsylvania.\nAnd lastly we did sign three new leases at Commerce Square, totaling just shy of 29,000 square feet.\nWe do see clear trend lines of tenants requiring higher quality space, which we do think positions our portfolio extremely well.\nFrom a financial standpoint, for the third quarter, we posted FFO of $0.35 per share, which is 1% per share above consensus estimates, which Tom will walk you through.\nWe've also made excellent progress in all the other components of our 2021 business plan.\nWe do anticipate about a 100,000 square feet of positive absorption during the fourth quarter, and we will achieve our year-end occupancy and lease percentage guidance ranges.\nAnd to reinforce our leasing progress to date, we are increasing our speculative revenue target by $500,000 from our mid-point range of $25.5 million to $21 million and we are over 99% complete on that revised target.\nIt's important to note that that $21 million target that we're now circling is about 15% above the bottom end of our original range and it does reflect ever improving office market conditions.\nLooking at some other operating statistics.\nWe've also posted great results there for the quarter as well, tenant retention was above our 2021 business plan range.\nOf the 59 new deals that we signed this year, the weighted average lease term is 7.8 years, 68% of those lease terms are longer than four years and our medium lease term has remained fairly consistent with what we are able to achieve in 2018, '19, and in 2020.\nThird quarter capital cost came in below 8% of generated revenue, so well within our business plan range.\nCash mark to market was a positive 12% and our GAAP mark to market was a positive 16%.\nOur year-to-date mark to market results are above our full year ranges.\nHowever, as we noted on last quarter's call, based on leases already executed and commencing this in the fourth quarter, with lower mark to market results, we will finish the year within our business plan ranges.\nWe also expect that every region will post positive mark to market results on both a cash and GAAP basis this year.\nOur third quarter GAAP same store NOI was 2% and year-to-date results were within our '21 range.\nOur third quarter cash same store NOI was 5.5% and above our 2021 range of 3% to 5%.\nBut again, similar to our mark to market dynamic, tenants scheduled to take occupancy later this year will accelerate same-store growth, will enable us to achieve our 2021 business plan ranges.\nWe are still forecasting a 21 year end debt to EBITDA in the range of 6.3 times to 6.5 times.\nAnd looking at leasing velocity we know that everyone is keenly focused on recovery data points and we have several encouraging signs to report.\nThe Philadelphia suburban market produced more than 350,000 square feet of leasing activity in the second quarter, it was at 42.7% increase quarter-over-quarter.\nThe CBD market also posted 181,000 square feet of leasing activity, and Philadelphia generally is making a strong recovery from the pandemic in comparison to a number of other major American cities.\nOur vacancy rate is lower than the national average and based upon a major brokerage report Philadelphia is in the top 10 of all American cities for pandemic recovery, as measured by recovery rates and employment, vaccination and leasing activity.\nDuring the quarter, we had a total of over 1,500 virtual tours and inspected over 758,000 square feet in line with second quarter results.\nPhysical tours were down slightly over the second -- from the second quarter and we attribute this really more to the summer months as third quarter physical tours outpaced first quarter tours by over 13%.\nOur overall pipeline stands at 1.6 million square feet, which increased by about 600,000 square feet during the quarter.\nAnother good sign of more tenants entering the marketplace.\nAnd while these recovery data points are encouraging.\nThey also do compare favorably to the pre-pandemic leasing trends.\nSo our pipeline today is 7% better than our third quarter '19 results.\nDeal conversion rate was on par with previous quarter results as well.\nNow as you might expect and we've reported last quarter, median deal cycle time continues to trail pre-pandemic levels by approximately 30 days.\nBut on a very positive note, during the quarter, we executed 464,000 square feet of leases, including 347,000 square feet of new leasing activity.\nWe also continue to see two favorable trends that we think positively impact our portfolio.\nFirst, quality product does matter, since the beginning of the pandemic approximately 100,000 square feet of deals have moved up in the Brandywine buildings versus lower quality competitors.\nSecondly, we have seen approximately 20 tenants expand their premises by approximately 122,000 square feet since the beginning of the pandemic.\nIn looking at our liquidity and dividend coverages, as Tom will report, we have excellent liquidity and anticipate having approximately $515 million available on our line of credit by the end of the year.\nWe have no unsecured bond maturities until 2023, have a weighted average effective rate of 3.73% as a fully unencumbered wholly owned asset base.\nOur dividend remains extremely well covered with a 54% FFO and 81% CAD payout ratio and as we noted, our five year dividend growth rate has been 5.3% while our five year CAD growth rate has been just shy of 8%, well in excess of our core peer averages.\nFrom a capital allocation standpoint, it was frankly another quiet quarter, but we continue to make progress on many other fronts.\nAs part of our land recycling program we did sell three non-core land parcels, generating just shy of $11 million of proceeds and at a $900,000 gain.\nAlso, as we noted in our supplemental package, during the quarter, at $50 million preferred equity investment in two office properties in Austin, Texas were redeemed.\nWe did record a $2.8 million incremental investment income during the quarter due to that early redemption, that $50 million preferred equity generated just shy of a 21% internal rate of return during the whole period.\nTaking a quick look at our development opportunity set.\n250 King of Prussia Road, which we note in our supplemental package, is a 169,000 square foot project under renovation in the Radnor Submarket, that was started in the second quarter and will be wrapped up by the second quarter of '22.\nThe project will accommodate heavy life science as well as office use.\nOur cost did increase quarter-over-quarter due to the additional -- some additional MEP [Phonetic] work to facilitate broader life science penetration, as well as this adding an additional generator for our redundant -- for power redundancy.\nThose two items did impact our targeted yields by reducing it about 20 basis points.\nThe project, as we noted before, is really the first delivery in our Radnor Life Science Center, which will consist of more than 300,000 square feet of life science space, and one of the region's best performing submarkets, our current pipeline for 250 King of Prussia Road totals more than 200,000 square feet, including 51,000 square feet in lease negotiations.\nLooking at Schuylkill Yards, our Schuylkill Yards west project is on time, on budget for Q3, '23 delivery.\nThat project will be delivered -- a 7% blended yield, as you may recall, it consists of 326 apartment units, 200,000 square feet of commercial and life science space and 9,000 square feet of street level retail.\nWe have an active pipeline continuing to build on that project and our $56.8 million equity commitment is fully funded.\nOur partners' equity investment is currently being made and the construction loan that we closed recently really will not have its first funding until the first quarter of 2022.\nLooking at 405 Colorado and Austin, Texas; this project is now complete.\nDuring the quarter we did increase our lease percentage from 24% to 44%.\nWe do have a growing an active pipeline now that that building has been fully delivered.\nWe did slide our stabilization date a couple of quarters to reflect the timing of these new lease signings, as well as the timing of our targeted pipeline.\nThe 522 space garage did open during the summer and is currently just shy of about 12% occupied and we have signed already 102 monthly contracts since we opened the garage.\n3000 Market Street in University City, Philadelphia, is a 91,000 square foot life science renovation as part of our Schuylkill Yards neighborhood, base building construction is complete.\nThe building is fully leased for 12 years at a development yield of 9.6%.\nThe redevelopment did include increasing the building size from 64,000 to about 91,000 by converting below grade space into labs.\nThis property was placed in the service on October 1st.\nCira Labs, which we announced a couple of quarter agos, where we partnered with PA Biotech Center to create a 50,000 square foot, 239 seat life science incubator, within the CIra Center Project, that will be completed later in the fourth quarter and will open January 1, 2022.\nSince we announced, we have had great leasing success announced and just shy of 50% -- about 49% leased, with 118 of that 239 seats leased and a pipeline with 17 additional proposals, aggregating more seats than we have available capacity.\nSo very excited about delivering that project on a substantially pre-leased basis.\nAnd just looking at some future development at Schuylkill Yards and Broadmoor, within Schuylkill Yards the life science push really continues.\nWe can develop that 3 million square feet of life science space.\nWe've already delivered 3000 Market, the Bulletin Building, 3151 Market, which is our 424,000 net rentable square foot life science building, is fully designed, ready to go and with a strong leasing pipeline, and our goal remains to be able to start that project in early 2022 [Technical Issues] assuming market conditions permit and the pipeline continues to build.\nAt Broadmoor, Block A, which consists of 363,000 square feet of office and 341 apartments at a total cost of $321 million, will be starting later in the fourth quarter.\nWe are finalizing documentation including construction financing with our partner.\nThe first phase of Block F, which is a 272 apartment units will be starting in the same venture format in Q1 of '22.\nAnd on the office leasing component, our leasing pipeline right now is slightly over 500,000 square feet with about an additional 1.5 million square feet of inquiries.\nJust one additional note related to our third quarter earnings cycle, as we outlined last quarter, we would normally have provided '22 guidance for earnings in our business plan and FFO during the third quarter cycle.\nHowever, consistent with what we did last year and based on the continued uncertain business climate, we will announce our '22 guidance on our fourth quarter earnings call.\nTom will now provide an overview of our financial results.\nOur third quarter net income totaled 900,000 or $0.01 per diluted share and our FFO totaled 61.1 million or $0.35 per diluted share and that was $0.01 above consensus estimates.\nSome general observations about the third quarter, while our results were above consensus, there were a number of moving pieces and several variances to our second quarter guidance.\nPortfolio operating income at $68.5 million was in line with our guidance for the second quarter.\nInterest and investment income totaled $4.5 million and was $2.5 million above our $2 million guidance number.\nAs Jerry mentioned this variance was due to the early termination of a $50 million preferred equity investment, which resulted in the acceleration of some fees, totaling about $1.5 million, and to make whole interest, on the investment income side of about $1.3 million, that's all was recorded in the third quarter.\nWe forecasted 2.3 million in land gains and tax provisions, which was $1.4 million below our actual results, two land sales were delayed and we believe they will both close in the fourth quarter.\nAs a result of those two that nets to a $0.01 increase to the reason we're above consensus.\nInterest expense of 15.2 was below our second quarter forecast, by $800,000 and that was primarily due to higher than anticipated capitalized interest on our 405 Colorado.\nTermination of other income totaled $1.8 million and was 400,000 above second quarter forecast, primarily due to the timing of some anticipated transactions, G&A was $7.1 million, 400,000 below our $7.5 million second quarter guidance.\nAnd that was primarily due to lower employee costs.\nOur third quarter, fixed charge and interest coverage ratios were 4.3 and 4.1 respectively, both metrics improved from the second quarter, primarily due to the higher investment income.\nOur third quarter annualized net debt to EBITDA decreased to 6.5 and is currently at the high end of our 6.3 to 6.5 guidance.\nThis metric also benefits from the increased investment income.\nOn the additional reporting, as we look at cash collections, they were over 99%, continue to be very strong.\nWe did have some net operating write-offs of tenants, that totaled about 700,000 and did lower our portfolio operating income for the quarter.\nFor portfolio changes 3000 Market, based on Brandywine completing our base building obligations 3000 Market will be added to our core portfolio during the fourth quarter as it's 100% life -- 100% leased life science to Spark Therapeutics [Phonetic].\nLooking at fourth quarter guidance for 2021, we anticipate the fourth quarter results to improve compared to the second -- to the third quarter and we have some of the following assumptions.\nPortfolio operating income will total $70 million and would be sequentially higher in the third quarter, that's due to the approximately 212,000 square feet that's going to be moving in during the quarter at a positive mark to market and will commence, and in addition to 3000 Market.\nFFO contribution from unconsolidated joint ventures will total about $6.1 million for the fourth quarter, relatively flat compared to the third quarter.\nG&A will total roughly $7.1 million again sequentially flat to the third quarter.\nInterest expense will be approximately 15.5 with approximately $2 million of capitalized interest.\nTermination fees and other incomes should total about $2.5 million.\nNet management fees will be about $3 million and interest in other -- interest and investment income about $400,000.\nWe do anticipate land sales and tax provision to be about $1.3 million mainly based on the slides from the land sales that didn't occur in the third quarter, and this will generate about $6 million in net cash proceeds.\nOn other business plan assumptions there will be no property acquisitions, we did note one JV sale in our all state portfolio, which should generate about $12 million of net cash proceeds, no anticipated ATM or share buyback activity, no financing or refinancing activity in the quarter and our share count will be about 73.5 million diluted shares.\nOn the financing front, as previously mentioned, we did close on our construction loan at Schuylkill Yards, which represents a 65% estimate to -- estimated cost -- loan to cost.\nInitial interest rate will be about 3.75% based on our current capital plan we will start drawing on that during the fourth quarter of 2022.\nWe plan to restructure and extend our current line -- our current loan, encovering our joint venture and 4040 Wilson [Phonetic] and that will lower our borrowing costs by about 100 basis points, generate minimal initial proceeds but allow for increased borrowings to complete the leasing of the vacant office space.\nWhile we have no other financing or refinancing activity in our plan, we continue to monitor the debt markets ahead of our 2023 secured bond maturity.\nLooking at our capital plan, our second quarter CAD was 65% of our common dividend and year-to-date coverage is within our range.\nOur fourth quarter 2021 capital plan is very straightforward at 140 million, and includes $70 million of development and redevelopment activity, $33 million of common dividends, $15 million of revenue maintained and $15 million of revenue create capital expenditures and contributions to our joint ventures totaling about $5 million.\nThe primary sources will be cash flow from interest payments of -- after interest payments of $38 million, $42 million used as the line of credit, $42 million cash on hand and cash -- other sales and land totaling about $18 million.\nBased on our capital plan, we will have about 558 available in line of credit.\nThe increase, in our projected line of credit, is partially due to the build-out of our incubator at Cira Center and we also project the net debt to EBITDA to fall within the 6.3 to 6.5 range with a big variable being this timing and scope of capital development payments that could reduce cash.\nOur net debt to GAV will be 39% to 40%.\nIn addition, we anticipate our fixed charge ratios to approximate 3.6 on interest coverage and will approximate 3.9% -- Sorry fixed charge of 3.6 interest coverage at 3.9 which represent sequential decrease, again primarily due to some of the investment income that we received in the thirrd quarter.\nSo the key takeaways, as we wrap up our prepared comments, the portfolio and operations are in excellent shape.\nWe've made some really good progress on both building the pipeline as well as beginning the process of significantly filling some of those larger vacancies we have, that will be a great growth throughout to look at over the next couple of years.\nAnd also the leasing pipeline certainly continues to increase as tenants return to the workplace, that pace is not as fast as any of us would like, but we certainly are seeing a lot of green shoots in terms of more tenancies coming into the market.\nAnd along those lines.\nWe actually do expect, as we're beginning to see now, a compression of decision timelines later in the year and into early '22 and we are certainly anticipating a continuation of positive mark to markets, driven by improving market conditions, as well as the necessity of having a higher rents based on escalating construction prices.\nSafety, health and amenity programs both in design and execution are remaining a top priority of all prospects, large and small, and based on that we really do believe that new development and our trophy inventory stock will remain in a very positive position.\nWe are very much focused on our two forward growth drivers, both delivering additional products within Schuylkill Yards, leasing up what we have under development and are delighted to be moving forward on the first phase of Broadmoor later this year and into the first quarter of '22.\nThe success we've had added 3000 Market, the Bulletin Building just reported results on Cira Labs, as well as a focus on starting 3151 early next year.\nWe'll have over a million square feet of life science space operating under construction, which starts to build that base of revenue diversification that we've talked about.\nWe certainly are very focused on continuing to grow cash flow and our attractive CAD growth over the last five years has really resulted in a well covered and attractive dividend that's poised to grow as we increase earnings.\nAnd then just a final comment on financing and capital availability, private equity remains readily available at very effective pricing as well as we all know with a very competitive and advantageously priced debt market.\nStrong operating and development platforms like Brandywine have significant traction for project level investments as certainly as evidenced by -- what we've demonstrated thus far Broadmoor and Schuylkill Yards, so we really do believe there is readily executable attractive financing available for our development at very attractive third party equity cost of capital.\nWe do ask that in the interest of time you limit yourself to one question and a follow-up.\n", "role": "user" }, { "content": "compname reports q3 earnings per share of $0.01.\nq3 earnings per share $0.01.\nq3 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: Although, we believe estimates reflected in these statements are based on reasonable assumptions, we cannot give assurance that the anticipated results will be achieved.\nWell, first and foremost, all of us at Brandywine sincerely hope that you and yours continue to be safe, healthy and engaged, and while we remain optimistic about the accelerating vaccine deployment and the path to recovery, the pandemic still continues to disrupt all of our lives and every business, and unfortunately duration of the recovery cycle still remains a bit unclear.\nOur portfolio remains about 15% to 20% occupied, which is comparable to our occupancy levels as of our October call.\nAnd as noted in the SIP, most of the jurisdictions where we have properties still have significant return to work restrictions in place.\nAdditional details on our COVID-19 approach are outlined on pages 1 to 5 of our Supplemental Package.\nDuring our comments today, we'll briefly review fourth quarter results, discuss our '21 business plan and provide color on our recent transactions and developments, Tom will then provide a brief review of 2020, discuss our '21 guidance, and update you on our strong liquidity position.\nAfter that, certainly, Tom, Dan, George and I are available for any questions.\nWe closed 2020 on a very strong note.\nMany of our revised '20 business plan objectives were achieved despite the protracted nature of the recovery.\nWe exceeded our speculative revenue target by $400,000, executed lease volumes increased quarter-over-quarter, and our pipeline increased by 229,000 square feet.\nFor the fourth quarter, we posted strong rental rate mark-to-market of almost 19% on a GAAP basis, and 11% on a cash basis.\nFor the full year '20, our mark-to-market was a very strong 17.5% on a GAAP basis, and 9.3% on a cash basis.\nIn addition, we had 59,000 square feet of positive absorption during the quarter, which included 33,000 square feet of tenant expansions with no tenant contractions.\nOur full year 2020 same-store number did come in below our revised business plan, primarily due to the JV sales activity that we'll discuss, several COVID-related occupancy delays, and parking revenues that were well below our original forecast due to the slower return to the workplace.\nOur tenant cash collection efforts continue to be among the best in the quarter, in the sector rather, and we have collected over 98% of fourth quarter billings, and our January collection rate continues to track very well with 98.5% of office rents collected as of yesterday.\nOur capital costs for '20 were better than our targeted range due to very good success in generating short-term lease extensions with minimal capital outlay.\nTenant retention came in at 52%, slightly above our full year forecast, and our core occupancy and lease targets were below our ranges simply due to pandemic-related delays and targeted move-ins, and lease executions and negotiations sliding into early '21.\nWe did post FFO of $0.36 per share, which was in line with most consensus estimates.\nA general update on COVID-19 impact is first, consistent with all applicable state and local CDC guidelines, we do remain in a doors open, lights on condition in all of our buildings.\nAs we noted, the set most large employers have yet to return to the workplace for a variety of factors, primarily public policy mandates, employer liability concerns, mass transit, virtual schooling and safety concerns.\nHowever, we're seeing more small and mid-sized companies beginning to return more employees to their various workspaces.\nPortfolio stability remains top of mind, and our progress on several key factors can be found on pages 1 to 3 of the SIP.\nWe do continue to stay in touch with our tenants to understand their concerns and their transition plans.\nA key priority of ours has been to work with those tenants whose spaces role in the next two years.\nThose efforts have resulted in 79 active tenant renewal discussions, totaling about 750,000 square feet and to date have resulted in 62 tenants, aggregating 500,000 square feet actually executing leases.\nThese leases had an average term of 30 months with a roughly 4% cash mark-to-market and 4% capital ratio.\nAn important point to note is that this early renewal activity, when we exclude the large known roll-outs at 2340 Dulles and the retirement of 905 Broadmoor, we've reduced our remaining '21 rollover to just 4.2%.\nSo looking at '21.\nWe are providing 2021 earnings guidance, frankly not an easy call, given the overall economic and pandemic picture.\nHowever, our early renewal efforts, expense control programs, near term visibility into our forward pipeline, and the recently executed transactions, we think have established a solid operating plan with a clear pathway to execution.\nThat plan is based on a gradual return to work environment beginning in the second quarter through the balance of the year.\nSo our approach was to be conservative, but as transparent as possible to frame at a defined operating plan with all key metrics quantified, and present the '21 earning guidance range as a platform to build from.\nAnd with the '21 plan set, we do remain focused on revenue and earnings growth, whether that be through accelerated leasing, margin improving cost controls, we're working with institutional partners to seek investments in capital structures where we can create value.\nThe '21 plan is really headlined by two key operating metrics that we think demonstrate excellent growth potential.\nOur cash mark-to-market range is between 8% and 10%, and our GAAP mark-to-market range is between 14% and 16%.\nFor 2021, we do expect all of our regions will post positive mark-to-market results on both the cash and GAAP basis.\nWe do have several larger blocks of space to fill, particularly at Barton Skyway in Austin, 1676 International in Tysons, and several others.\nBut looking forward, achieving our leasing objectives on those spaces can be significant revenue boosters, and our '21 plan only has about $1 million of revenue coming in from those larger spaces.\nOur GAAP same-store NOI growth of 0 to 2% and our cash same-store of 3% to 5% is primarily driven by Austin up about 8%, Pennsylvania suburbs close to 5% increase, and Philadelphia around 2%.\nOur Metro D.C. region will continue to be negative, while the 1676 International Drive continues through its reabsorption phase.\nWith that renovation now complete, our overall leasing activity has really accelerated, and our pipeline is up significantly to about 600,000 square feet this quarter versus around 370,000 square feet last quarter.\nAnd also, we will be retiring 905 Broadmoor permanently as part of our Broadmoor master plan development.\nOther key operating highlights.\nSpec revenue will range between $18 million and $22 million.\nWe have $14.7 million achieved or 74% achieved at this point.\nThis is the first time we're providing a spec revenue range versus $1 target, but given the lack of real forward visibility on the acceleration of leasing, we felt that it was warranted.\nOccupancy levels, we think, will be between 91% and 93% at year-end and with leasing percentages being between 92% and 94%.\nCapital will run about 11% of revenues, which is below our 2020 target range and we are forecasting a debt-to-EBITDA being between 6.3 and 6.5 times, and Tom will certainly talk about that.\nOur leasing pipeline has picked up.\nIt stands at 1.3 million square feet, including about 88,000 square feet in advanced stages of negotiations and as I mentioned before that pipeline is up about 230,000 square feet.\nInterestingly too knowing that physical tours have yet to fully return for a variety of pandemic-related reasons, we have launched a virtual tour platform for all of our availabilities and to date, we're generating close to 300 tours per month with over 500,000 square feet being inspected.\nSo we think that is early harbinger of tenants beginning to really look at their office space requirements going forward.\nFrom a liquidity standpoint, we're in great shape.\nWe anticipate having $562 million on our line of credit available year-end.\nWe have no unsecured bond maturities until 2023, and with the recent secured mortgage payoffs, we have a fully unencumbered wholly owned asset base.\nThe dividend remains extremely well covered with a 53% FFO and 68% CAD payout ratio.\nNow, looking at our investment and development opportunities.\nDuring the fourth quarter, we completed several investment transactions.\nWe did execute a joint venture with an institutional partner on 12 properties totaling 1.1 million square feet.\nThese properties are located in suburban Philadelphia and Rockville, Maryland.\nThe portfolio has added $193 million.\nWe retained a 20% ownership stake.\nIn addition to the $121 million first mortgage finance we put in place, we also elected to provide seller financing in the form of a $20 million preferred equity position that has a 9% current pay.\nAs a result of that, we did receive about $156 million of net cash proceeds and with all of our -- as with all of our ventures, we will generate an attractive fee stream by retaining property and asset management as well as leasing and construction management services.\nOn our previous calls, we had highlighted that we had about $250 million of remaining non-core assets in our wholly owned pool.\nThis portfolio had been our primary target and leaves us with very few assets that are not considered core holdings.\nThis partnership, similar to others we have done, did create a different capital structure that more than doubles our return on invested equity from a mid-single digit return to mid-teen return on our remaining invested capital and also avoids about a $20 million of direct capital investment by Brandywine.\nIt's interesting as well too, with this transaction, we now have over 80% of our revenue stream coming in from submarkets that are ranked A+ or A++ by Green Street's recent office Market Snapshot.\nWe had also made a preferred investment in 90% of lease to building portfolio, totaling 550,000 square feet in Austin, near the airport.\nThat preferred investment totaled $50 million, also has a 9% current pay, excellent cash coverage and a several year term, and this was similar to the type of transaction we did a number of years ago at Commerce Square here in Philadelphia.\nThis investment increases our revenue contribution from Austin toward our 25% goal and will enable us to take advantage of the market knowledge and position we have to create a structured well covered financial instrument.\nOur partner will have a 45% preferred interest in the joint venture with Brandywine holding the remaining 55% equity interest.\nThe project will be built with 7% blended yield that will consist of 326 apartment units, a 100,000 square foot -- feet of life science and 100,000 square feet of innovative office along with underground parking and 9,000 square feet of street level retail.\nWe do have an active pipeline totaling over 300,000 square feet for the life science and office space component of this project and based on this level of interest, we do plan a construction start in March of '21.\nWe are currently sourcing construction loan financing and plan to have a loan in place for the next 90 days at a targeted 55% to 60% loan-to-cost, and given the front-loading of the equity commitment of about $115 million assuming a 60% loan-to-cost construction financing.\nThe first funding of the construction loan wouldn't occur until April of '22.\nOur share of the equity will be about $63 million of which about $35 million is already invested.\nAnd looking at our production assets, they all remain ready to go subject to pre-leasing.\nAs we've noted every quarter, each of these projects can be completed within four to six quarters and cost between $40 million to $70 million.\nThe pipeline on those production assets is around 450,000 square feet and we are continuing actively our marketing efforts along those lines to hopefully get some pre-leasing done there as the market recovers.\nAnd looking at the two existing development projects, 405 Colorado is on track for a Q1 '21 completion.\nWe have a pipeline that has built since our last call that approaches 360,000 square feet, including 53,000 square feet in advanced discussions.\nTo be conservative, given the pace of the recovery in the market, we have extended the stabilization until Q1 '22.\nWe've increased our cost by approximately $6 million, primarily due to additional TI and leasing commissions, a bit longer absorption schedule, which has resulted in our targeted yield being reduced to 8%.\n3000 Market construction is under way on this building, which will be fully occupied by Q4.\nThe building is fully leased for 12 years and will deliver a develop yield of 9.6%.\nThe commencement date did slide one quarter due to COVID-related construction delay, but we have increased our yield on the project by 110 basis points due to some design scope modifications and success on the buyout.\nCouple other quick comments on Schuylkill Yards and Broadmoor.\nWe do continue our strong life science push at Schuylkill Yards.\nThe overall master plan is about 3 million square feet, it can be life science space, so we can really build on the work we've done at 3000 Market, The Bulletin Building, and now Schuylkill Yards West.\nPlans for 3151, which is our 500,000 square foot life science dedicated building is well under way.\nWe do have a leasing pipeline of over 500,000 square feet for that project and the goal would be to start that later this year, assuming if pre-leasing market conditions permit.\nWe have started constructing to convert several floors within Cira Centre to life science use and that program is moving along per our plan.\nIn Broadmoor, we are advancing Blocks A and F, which is a total of 350,000 square feet of office and 870 apartments.\nBlock A had $164 million, 350,000 square foot office as part of that phase, along with 341 multi-family units at a cost of $116 million.\nWe are heavily engaged in joint venture partnership selection process.\nThat process is going very well with discussions well under way with several parties and we hope to be able to start the residential component of Block A by the third quarter of '21.\nTom will now provide an overview of our financial results.\nOur fourth quarter net income totaled $18.9 million or $0.11 per diluted share and our FFO totaled $61.4 million or $0.36 per diluted share.\nSome general observations regarding the fourth quarter results.\nThey were generally in line with a couple of exceptions.\nPortfolio operating income fell about $75.5 million and exceeded our $74 million previous estimate, primarily due to lower operating costs benefited by lower tenant physical occupancy.\nTermination and other income totaled $1.6 million or $3 million below our third quarter guidance.\nThe results were negatively impacted by several one-time transactions that we anticipated occurring in the fourth quarter, that are now anticipated to close in the first half of 2021.\nFFO contribution from unconsolidated joint ventures totaled $6.3 million or $1.2 million below our third quarter guidance number primarily due to some co-working tenant write-offs, and that was slightly offset by the JV announced at the end of the year.\nOur cash and GAAP same-store results came at 126[Phonetic] basis points lower, again due to lower parking revenue and some tenant leasing slides, all of which have commenced.\nOur fourth quarter fixed charge and interest coverage ratios were 3.8 and 4.1 respectively.\nBoth metrics improved as compared to the third quarter.\nOur fourth quarter annualized net debt-to-EBITDA decreased to 6.3 at the lower end of our 6.3 to 6.5 range.\nThe ratio is benefited from improved operating income and higher than expected year-end cash balances due to our recent fourth quarter transactions.\nTwo additional points on cash collections.\nOur overall collection rate continues to be very strong above 38 -- 98%.\nAdditionally, our fourth deferred billings were less than $100,000.\nSo our core collection rate would essentially remain unchanged for those deferrals and our write-offs in the fourth quarter on the wholly owned portfolio were minimal.\nFor cash same-store is outlined on Page 1 of our Supplemental.\nLooking at '21 guidance.\nAt the midpoint, net income will be $0.37 per diluted share and FFO will be $1.37 per diluted share and that includes roughly $0.04 of dilution related to the fourth quarter transactions we announced.\nOur '21 range was built with the following general assumptions.\nPortfolio operating income, our property level GAAP income will be roughly $285 million or a decrease of about $30 million compared to 2021 due to the following items.\n2340 Dulles Corner and the retirement of 905 Broadmoor will generate about $10 million reduction from '20 to '21.\nThe Mid-Atlantic portfolio JV results in another $17 million decrease.\nThe full year effect of Commerce Square results in a $19 million decrease, those are partially offset by the full year effect of one Drexel park and Bellet Building being about $4 million, the 2021 completions of 405 Colorado and 3000 Market for about $3 million and about $3 million increase in our same-store portfolio GAAP NOI.\nFFO contribution from our unconsolidated joint ventures will total $20 million to $25 million.\nThat increase is primarily due to the full year effect of Commerce Square as well as the transaction with the Mid-Atlantic portfolio.\nG&A will be between $31 million and $32 million.\nInvestments, there is no new property acquisition or sales activity in our guidance.\nInterest expense will decrease to approximately $67 million to $68 million, that's primarily due to the payoff of our two remaining mortgages as higher interest rates.\nCapitalized interest will approximate $4 million as we complete the 405 Colorado building but also commence Schuylkill Yards West.\nInvestment income will increase to $6.5 million, primarily due to the new structured finance investment in -- at Austin, Texas.\nLand sales and tax provision will net to about $2 million as we anticipate selling some non-core land parcels.\nTermination and other income totaling $7.5 million, which is above the 2020 amount primarily due to one-time items, and again, were being moved from the fourth quarter of 2020 into the first half of '21.\nNet management leasing and development fees will be $16 million, which is just above our 2020 actual due to the full year effect of Commerce Square and the JV for the Mid-Atlantic properties.\nIn addition, we anticipate that we will get some development fees from Schuylkill Yards West once we commence operation there with the development.\nNo anticipated ATM or share buyback activity.\nLooking close -- more closely at the first quarter, we anticipate portfolio of property NOI totaling about $70 million and will be about -- sequentially about $5.5 million lower primarily due to 2340 Dulles as well as the Mid-Atlantic JV.\nFFO contribution from our unconsolidated joint ventures will be $6.5 million.\nG&A for the first quarter will increase from $6.3 million to $8 million.\nOther sequential increases consistent with prior years and primarily timing of compensation expense recognition.\nInterest expense will approximate $16 million, capitalized interest will be roughly $1.5 million, termination and other income, we continue to anticipate that to be $4 million with some of those transactions moving to '21.\nNet management fee and development fee income will be $4.5 million with investment income being $1.6 million.\nWe expect some land gains potentially in the first quarter of about $0.5 million.\nOur capital plan is very straightforward and totals to $350 million.\nOur 2020 CAD ratio is between 75% and 81%, the main contributors to the lower coverage ratio is going to be the property level NOI reductions, as well as anticipated lease up in upcoming -- with the upcoming rollovers.\nUsing that as a guide, our uses in 2021 will be $145 million of development and redevelopment.\nThat does include the additional cash that is going to be necessary to complete our equity contribution into Schuylkill Yards West, $130 million of common dividends, $35 million of revenue maintain and $40 million of revenue creating capex.\nThe primary sources will be $185 million of cash flow after interest payments, $99 million use of the line, $46 million of using the cash on hand and roughly $20 million in proceeds from land in other sales.\nBased on the capital plan outlined, our line of credit balance will be 5 -- roughly $500 million.\nWe have projected that our net debt-to-EBITDA range of 6.3 to 6.5 with the main variable being timing and scope of our development activities.\nIn addition, our net debt-to-GAV will approximate 14%.\nIn addition, we anticipate our fixed charge ratio and -- to be 3.7 and our interest coverage ratio to be 3.9.\nSo a couple of key takeaways.\nOur portfolio and operations are really in solid shape.\nWe have excellent visibility into our tenant base, all signs at this point is evidenced by the numbers we've presented, our markets seem to be holding up fairly well.\nOur leasing pipeline continues to increase as tenants think about their workplace return.\nLook, safety and health, both in design and execution, are really and rapidly becoming tenants' top priorities and we do believe that new development and/or trophy-class stock as well as its extensive capital maintenance programs we had in place over the years will really benefit from that trend.\nThe private equity and debt markets are extremely competitive and strong operating platforms like Brandywine are gaining, I think, significant traction for project-level investments as certainly is evidenced by our recent activity.\nI think our recent investment activity further improved our liquidity and created additional frameworks for growth for our shareholders.\nAnd our partnership with Schuylkill Yards West I think really reinforces the increasing attractiveness of the emerging life science sector in Philadelphia and I really think, does create an excellent catalyst to accelerate the overall pace of the Schuylkill Yards development.\nSo we'll end where we started, which is that we wish you were all doing well and your families are safe.\nWe do ask in the interest of time you limit yourself to one question and a follow-up.\n", "role": "user" }, { "content": "brandywine realty trust - qtrly net income allocated to common shareholders; $18.9 million, or $0.11 per diluted share.\nbrandywine realty trust - qtrly funds from operations (ffo) of $61.4 million, or $0.36 per diluted 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 will also discuss non-GAAP financial measures regarding our performance.\nUnless otherwise specified, all comparisons will be on a year-over-year basis versus the relevant period.\nWhen we refer to the base revenues, were referring to our total revenues less our COVID diagnostic testing revenues, which include COVID-related revenues from Veritor, BD MAX and swabs.\nWhen we refer to base margins, we are adjusting for estimated COVID diagnostic testing profitability and the related profit we have reinvested back into our business.\nWhen we refer to any given period referring to fiscal period, it must be noted as a calendar period.\nFinally, when we refer to NewCo during todays call, were referring to the planned spinout of our Diabetes Care business into an independently public traded company following the effective trade date of the spin, which was announced on the second quarter earnings call.\nRemainCo refers to BD post separation.\nAs a reminder, this transaction is subject to market, regulatory and other conditions, including final approval by BDs Board of Directors and the effectiveness of a Form 10 registration statement that will be filed with the SEC.\nOn todays call, I will provide highlights of the quarter and discuss the continued strong progress we have made on our BD 2025 strategy.\nOn behalf of the Board of Directors, the leadership team and the company, I want to express my gratitude to Chris for his leadership and service to BD.\nIm confident the CFO transition ahead will be seamless, and his leadership and experience will make him an excellent director for NewCos Board.\nNow lets jump into our results.\nWe were very pleased with our third quarter performance, powered by strong growth and momentum in our base business across all three segments.\nRevenues totaled $4.9 billion, and our adjusted earnings per share was $2.74, both ahead of our expectations.\nTotal revenues were up 26.9% on a reported basis and up 22% on a currency-neutral basis.\nResults included COVID diagnostic testing revenues of $300 million, which contributed 4.8% to growth.\nExcluding COVID testing revenues, our base business revenues were up 17.6%, better than we expected across most business units.\nThe strong growth reflected the anniversary of the initial COVID wave and the temporary halting of elective procedures and its impact on medical device utilization in the year ago quarter.\nBut Q3s result also reflects the continued momentum driven by the successful execution of our BD 2025 strategy.\nExcluding COVID diagnostic revenues, base business revenues in Q3 fiscal 21 increased 3.9% relative to our pre-pandemic third quarter fiscal 2019 on a currency-neutral basis, which includes the impact of the Alaris ship hold.\nIf you exclude the U.S. infusion systems business, our total revenues would have increased 6.6% relative to our prepandemic third quarter fiscal 2019.\nOur Pharmaceutical Systems and Urology and Critical Care franchises continue to be standout performers, where revenues are up 17% and 11%, respectively, over 2019 levels.\nBioscience revenues were up 9%.\nSurgery and Peripheral Intervention revenues are both up 8%.\nElsewhere, we see opportunities for improvement ahead in fiscal 22 and beyond.\nFor example, our MDS revenues are up about 2% versus 2019 levels, reflecting the continued impact of COVID as well as the impact of China volume-based purchasing.\nAs hospital utilization improves, we should see further improvements here.\nAlso, as I mentioned, Medication Management Solutions revenues are impacted by the Alaris ship hold, and we expect our revenues to improve once we receive our 510(k) clearance for our BD Alaris system.\nWhile Im pleased with how we are accelerating our revenue performance and profile, Im equally pleased with the process were making in improving our working capital and cash flows.\nCash flow performance has been a key focus for us since I became CEO, and that is evident in our working capital metrics.\nYear-to-date, cash flows from operations totaled $3.7 billion, an increase of 80% from the prior year period.\nThis improvement in our cash flows allowed us to advance our more balanced capital allocation strategy this quarter, which included the repurchase of $1 billion in BD stock at an average price of approximately $242.\nThis marks the first time we have repurchased shares since 2017 and the largest amount we have repurchased since 2012.\nEven with this repurchase activity, we ended the third quarter with nearly $3.2 billion in cash and an adjusted net leverage ratio of 2.4 times.\nOverall, Im really pleased with our performance in the quarter, particularly with the continued positive momentum in our base business.\nThis gives us the confidence to raise our base revenue assumption.\nWe now expect our base business to grow approximately 7.5% to 8% on an FX-neutral basis.\nThis is higher than our previous expectation of mid-single-digit growth.\nWe continue to expect COVID diagnostic testing revenues of $1.8 billion to $1.9 billion, with more revenues coming from international markets than we previously anticipated.\nWe now expect currency-neutral revenue growth overall of approximately 14%.\nOur positive base business momentum and a lower tax rate allows us to raise our adjusted earnings per share guidance by $0.10 while continuing to reinvest in our business and overcome lower COVID testing profits, including a provision for excess and obsolete COVID testing inventory.\nWe now expect our full year adjusted earnings per share range to be $12.85 to $12.95.\nChris will provide you further details on our financial outlook later in the call.\nNext, I want to provide an update on our BD Alaris pump remediation, which remains my number one priority.\nLast week, we announced to our customers a positive step in our remediation efforts.\nWorking with the FDA, we are now initiating remediation of existing Alaris system devices in the field by updating the software to version 12.1.\n2 following submission of the 510(k), which includes this software version.\nThis new software version is intended to remediate the issues identified in the February 4, 2020, recall notice and provide programming, operational and cybersecurity updates to affected devices.\nHowever, the software update has not been reviewed or cleared by the FDA.\nTo address the question on Alaris clearance timing, we remain confident in our submission and the process we are undertaking, including working closely with the FDA.\nAs Chris will later discuss, we believe it is responsible to not definitively predict the FDA clearance in our FY 22 outlook.\nWe believe this is a prudent approach given the inherent difficulty in predicting FDA clearance time lines.\nNext, I want to update you on our BD 2025 strategy of grow, simplify and empower.\nFirst, Id like to focus on our growth pillar.\nWe continue to strengthen our market leadership positions in our durable core business while purposely investing in new innovations that help accelerate and shape irreversible trends that we see transforming global health now and in the decade ahead.\nIve spoken about these three innovation and growth focuses before.\nAnd weve been purposely shifting more of our R&D and tuck-in M&A investments into these spaces, which are growing over 6%.\nThrough this, we aim to lift our weighted average market growth rate and performance over time.\nAnd this year, weve launched several innovative products and solutions across the continuum of care, across our business units and across the globe.\nAnd after completing our strategic portfolio review last month, I can share with you that our pipeline is very deep and wide across our businesses.\nIts been further enhanced by our acquisitions over the past 18 months.\nAnd youll hear much more about our innovation pipeline at our Investor Day on November 12.\nBut let me highlight a few of our organic innovations that were advancing in the near term.\nIn our Life Sciences business, Im pleased that we will start shipping our BD MAX and BD Veritor combination flu COVID assays this month, in time for the upcoming respiratory season.\nOur BD Veritor combination test can detect and distinguish between COVID, flu A and flu B in a single rapid test with a digital readout.\nWe see the combination test becoming the standard of care moving forward, advancing our strategy to enable better outcomes in nonacute settings.\nAnother innovation area Id like to highlight is our Biosciences business.\nBiosciences has been a strong performer this year, and we expect the unit to deliver high single-digit growth for the full year.\nIn June, we launched our new e-commerce site, bdbiosciences.com, which is an entirely new and innovative digital marketplace designed to provide a best-in-class online purchasing experience for our flow cytometry customers.\nEarly feedback has been outstanding, and were already seeing excellent traction and early adoption.\nWe also have an exciting wave of new product introductions this summer, with the launch of our FACSymphony A5 SE, which is our first BD spectral analyzer, and provides an even higher cellular parameter analysis.\nWeve launched our FACSymphony A1 as well, which offers high-end technology and a cost-effective bench top design.\nIn addition to these launches, we have a healthy innovation pipeline of modular, scalable new instruments and next-generation dyes that will allow our customers to fully leverage our complete and integrated solution suite of instruments, reagents, informatics, single-cell multiomics and scientific support services.\nOur products and solutions are being used to uncover new insights on the immune system and develop treatments for many related chronic diseases.\nYou can hear more about our Life Sciences strategy from Dave Hickey, our Executive Vice President of BD Life Sciences; and Puneet Sarin, our Worldwide President of BD Biosciences, at the upcoming UBS Genomics 2.0 and MedTech Innovation Summit on Wednesday, August 11.\nNext, lets turn to our inorganic innovations that weve added to our portfolio.\nAs you know, we continue to be focused on tuck-in M&A as a means of adding innovative products and solutions that leverage our core market leadership positions and advance us into higher-growth adjacencies.\nYear-to-date, weve completed seven tuck-in acquisitions.\nWhile at the same -- at the time of the acquisitions, these individual deals were not meaningful from a revenue perspective.\nAs we integrate these transactions into our portfolio, we expect them to strengthen our growth profile.\nOur three most recent transactions, Velano Vascular, Tepha, Inc. and ZebraSci are good examples of our M&A strategy.\nLet me begin with Velano Vascular, which is being added to our MDS business.\nVelano has an innovative needle-free technology that enables high-quality blood draws from existing peripheral IV catheter lines, eliminating the need for multiple needle sticks.\nThis technology will help customers transform the patient experience through the vision of a 1-stick hospital stay.\nVelanos PIVO device will be integrated into our sales teams bag of broader catheter solutions initially in the U.S.\nThis is a great example of how were expanding and strengthening our base business.\nThe second transaction is Tepha, Inc., a leading manufacturer of a proprietary resorbable biopolymer technology.\nOver the past several years, through our long-standing relationship, weve been commercializing this platform via our Phasix resorbable hernia mesh platform.\nThe acquisition benefits are twofold.\nFirst, it provides us with a vertical integration strategy for our current Phasix platform.\nBut more importantly, it provides us with exciting new opportunities to expand our horizon into new high-growth areas of tissue repair, reconstruction and regeneration.\nLastly, we acquired ZebraSci, a pharmaceutical services company.\nThis acquisition provides the opportunity to expand our Pharmaceutical Systems business beyond injectable device design and manufacturing to include best-in-class testing for drug device combination products.\nZebraSci allows us to further engage and collaborate with biopharmaceutical companies and particularly smaller companies, where a large amount of the pipeline is, to support the transition of their molecules into prefilled combination devices.\nNext, I want to update you on our Simplify initiatives, which are advancing well.\nThrough Project Recode, we are optimizing our portfolio, optimizing our plant network and simplifying our business processes.\nProject Recode remains on track to achieve $300 million of cumulative savings by the end of FY 24.\nWe are also continuing the rollout of our BD production system, which is a standardized BD approach to driving the next level of lean processes and continuous improvements across our plants.\nThe BD production system is already helping to drive improvements in quality and reductions in our inventory days.\nWe also continue to advance Inspire Quality, our quality, regulatory and risk mitigation program.\nThe last pillar of our BD 2025 strategy is empower, which represents the changes in our culture and capabilities that were driving to empower our strategy.\nIn Q3, we completed our Voice of Associates survey with over 86% participation.\nAnd what stood out was that our associates said were making strong progress with improvements in 95% of the metrics since our last survey in 2018.\nAnd most notable were improvements in our focus areas of growth mindset, strong teams, quality and excitement about the future of BD.\nWere also advancing our 2030 sustainability strategy, which addresses a range of challenges in our industry while helping to make a difference on relevant issues that affect society and the planet.\nOur strategy will ensure we remain focused on shared value creation, meaning how we address unmet societal needs through business models and initiatives that also contribute to the commercial success of BD.\nNext, I want to provide a brief update on the progress of our proposed diabetes spin-off, which remains on track for the first half of calendar 2022.\nWe are making steady progress with our separation activities.\nWe recently announced that two directors from BDs Board will be appointed as future directors of the Diabetes NewCo.\nRetired Lieutenant General David Melcher will serve as the Non-Executive Chairman of the Board.\nAnd Dr. Claire Pomeroy will serve as a director.\nTheir appointments will be effective upon the completion of the spin, at which point they will transition from the BD Board to the Board of NewCo.\nLieutenant General Melcher brings extensive experience in spin-offs, having served as the CEO of Exelis following its spin-off from ITT.\nAnd under his leadership, Exelis spun off its mission systems business as a separate public company.\nDr. Pomeroy brings broad experience in healthcare delivery, administration, medical research and public health.\nIm confident their combined experience, along with future planned board members, will help to set NewCo well on its path to becoming a successful independent publicly traded company focused on growth.\nWhile continuing to evaluate additional Board members, we are also continuing to build a new Diabetes Care leadership team through a combination of current BD leaders and new hires, including Dev Kurdikar, who will be NewCos CEO; Jake Elguicze, who will be CFO, and most recently, Jeff Mann.\nJeff Mann joined our Diabetes Care organization and will be General Counsel and Head of Corporate Development for NewCo.\nJeff brings more than two decades of experience in M&A and transactions, securities law and corporate governance.\nMost recently, he served as General Counsel and Secretary of Cantel Medical group.\nWe are also progressing with the Form 10, which will have the carve-out financials, and we expect it to be publicly available around the end of the calendar year.\nBefore turning it over to Chris, I will leave you with some key thoughts.\nFirst, our base business momentum and our recovery from COVID continues, and it is broad-based.\nWe expect that momentum to carry into fiscal 22 and beyond.\nAs Chris will share with you, todays results underscore our confidence in strong mid-single-digit top line growth for our base business next year.\nSecond, we are executing well against our innovation-driven growth strategy, which includes our internal R&D as well as advancing our tuck-in M&A strategy.\nAnd third, Im proud of the substantial progress in advancing our BD 2025 strategy and how that will unleash our growth potential in the years to come.\nWell deliver innovations for our customers, empower our associates and create value for you, our shareholders.\nIve been with BD for 20 years, and Ive never been more excited.\nWe just completed our annual strategic review process, as I said, and the road ahead is looking more exciting than it did a year ago.\nWe look forward to sharing our BD 2025 strategy in greater detail at our November 12 Investor Day.\nWe hope you can join us.\nIm also very pleased with our overall performance in the quarter, particularly with the base business, which showed continued strong momentum.\nThird quarter revenues of $4.9 billion increased 26.9% on a reported basis and 22% on a currency-neutral basis and were ahead of our expectations.\nOur current quarter results also include $300 million in COVID diagnostic testing revenues, compared to $98 million in the prior year period.\nExcluding COVID diagnostic revenues in both periods, our base business revenues increased 17.6%.\nOur base business reflects continued strong performance as the market continues to recover from the COVID pandemic, the impact from which was most acute in Q3 of last year.\nThe BD Medical segment revenues totaled $2.4 billion and were up 7.7% versus the prior year.\nMDS revenues increased 24%, reflecting a strong recovery in the U.S., led by strong growth in catheters and vascular care devices.\nAdditionally, worldwide revenues included $18 million from COVID vaccination devices.\nIn MMS, the double-digit increase in our dispensing revenues was more than offset by the expected declines in our infusion solutions.\nAs you may recall, when the pandemic started, we saw a higher level of demand for infusion pumps and sets globally.\nDiabetes Care benefited from an easy comparison to the prior year, the timing of sales and slightly better-than-expected market demand.\nPharm Systems continued to deliver strong growth with revenues up 12%, driven by demand for our prefilled devices.\nBD Life Sciences revenues totaled $1.4 billion and were up 43%.\nThis included the $300 million in COVID diagnostic testing revenues, $212 million related to our BD Veritor system, with the remaining $88 million from BD MAX collection, transport and swabs.\nYear-to-date, COVID diagnostic testing revenues were over $1.6 billion.\nDespite lower average selling prices, driven in part by geographic mix, we are still on track to deliver on our target of total worldwide revenues of $1.8 billion to $1.9 billion for the fiscal year.\nExcluding COVID diagnostic testing revenues, our Life Sciences segment grew revenues 27%, driven by strong performances in both Integrated Diagnostic Solutions and Biosciences.\nIDS revenues increased 49%.\nExcluding COVID diagnostic testing, IDS revenues increased 27%, driven by strong double-digit performance across specimen management and microbiology.\nBiosciences increased 27%, driven by both research and clinical solutions.\nWe continue to see strong demand for research reagents and instruments as lab activity is returning to normal levels.\nWe also continue to see steady demand for research reagents globally, fueled by COVID research activities related to vaccines and variants, especially from academic research and biopharma companies.\nBD Interventional sales totaled nearly $1.1 billion and were up nearly 35%, reflecting the COVID anniversary impact on elective procedures.\nSurgery revenues increased 68%, and Peripheral Intervention increased 32%.\nBoth businesses saw the greatest recovery in the U.S. and Western Europe, which experienced the greatest impact on elective procedure volumes in the prior year quarter.\nWe saw sequential improvement in both surgery and peripheral intervention.\nHowever, in the last several weeks, we are seeing some impact from the COVID delta variant on elective surgeries in certain U.S. states.\nUrology and Critical Care revenues were up approximately 14%, driven by continued growth in our PureWick and Targeted Temperature Management franchises.\nNow turning to our P&L.\nAs we expected and have communicated, our gross margins this year are being negatively impacted by COVID-related expenses, manufacturing variances and FX headwinds, which are more acute in the second half of the year.\nAlso, as expected, our gross margin declined sequentially.\nOur gross margin was 51.5%.\nHowever, this included a net negative 90 basis point impact from COVID testing and reinvestments.\nThe 90 basis point impact includes a negative 140 basis point impact from an inventory provision related to COVID testing.\nAdjusting for the net impact of COVID testing and reinvestments, our underlying base business gross margin was 52.4%.\nOn a sequential basis, our base business gross margin declined from our second quarter rate of 53.7% due to three factors: 70 basis points of incremental FX headwinds; 40 basis points from inflationary pressures, including higher raw material costs and inbound freight as these costs roll through our inventory; and 20 basis points of other expenses, including Alaris quality remediation.\nNow turning to SSG&A.\nOur total SSG&A spending increased 21% on a currency-neutral basis to $1.2 billion or 25.2% of revenues.\nAs a reminder, in the third quarter of fiscal 2020, we implemented several cost-containment measures in response to the COVID pandemic.\nIn addition, we are continuing to see higher shipping costs.\nThis quarter also included higher expenses related to our COVID profit reinvestment initiatives.\nAs a reminder, the COVID testing reinvestments we made in FY 21 will not reoccur.\nOur R&D spending totaled $321 million, an increase of 31.1% on a currency-neutral basis.\nThe higher R&D reflects the timing of project spending, including a higher spending related to the BD Innovation and Growth Fund.\nOur R&D spending was 6.6% of revenues, which is higher than our long-term target of 6%.\nOn a currency-neutral basis, our operating income increased 26.5% as compared to our revenue growth of 22%.\nOur operating margin of 19.8% was slightly below our guidance of below 20%.\nThe inventory provision related to COVID testing I referenced earlier negatively impacted operating margins by approximately 150 basis points.\nInterest and other expenses were essentially flat year-over-year at $98 million.\nThe adjusted tax rate was 5.8%, lower than we previously expected due to discrete tax items that occurred this quarter.\nThe lower tax rate essentially offsets the impact from the COVID diagnostic inventory provision in the quarter.\nThe average diluted share count used to calculate our earnings per share in the quarter was 291.9 million.\nWe repurchased a total of 4.1 million shares for a total of $1 billion at an average price of approximately $242.\nOur adjusted earnings per share increased 24.5% over the prior year to $2.74 on a reported basis and were up 25.9% on a currency-neutral basis.\nNow Id like to turn to guidance for the balance of the fiscal year.\nOur guidance continues to assume no major widespread hospital restrictions on elective procedures related to the COVID pandemic.\nHowever, we did start to see some impact on elective procedures from the COVID delta variant in the last one to two weeks in certain U.S. states and have assumed some continuation of this in our guidance.\nThat said, given the continued positive momentum of the base business, we are pleased to be able to cover this and still raise our currency-neutral revenue growth to about 14%, up from our previous range of 10% to 12%.\nOur revised revenue range would incorporate a base business currency-neutral growth assumption of 7.5% to 8%.\nFurther, we reaffirm our previously communicated COVID diagnostic test revenue range of $1.8 billion to $1.9 billion.\nWe now expect a favorable 250 to 300 basis point impact from currency.\nThis brings our total reported revenue growth to approximately 16.5% to 17.5%.\nFor the full year, we now expect our fiscal 2021 adjusted earnings per share to be in the range of $12.85 to $12.95.\nThis higher guidance reflects the positive base business momentum and a lower tax rate.\nThese benefits allow us to continue to invest while offsetting the COVID testing inventory provision and lower COVID selling prices.\nNext, I want to share with you our expectations for gross operating margins for full year fiscal 21 and provide you with an estimate of the net impact of COVID testing and the related reinvestments of profits on our margins.\nWe expect our full year adjusted gross margins to be in the range of 53.5% to 54%, and this range includes a net neutral to slight positive impact from COVID testing reinvestments.\nWe expect our full year adjusted operating margin to be in the range of 23.5% to 24%.\nThis range includes a 200 basis point contribution from the net impact of COVID testing and reinvestments.\nFinally, Id like to address FY 22.\nWe plan to provide our specific fiscal 2022 guidance on our November earnings call, but we wanted to provide some directional color today.\nTo give you a sense as to what a floor could look like in fiscal 22, we have taken the following approach: As you know, there is a great deal of uncertainty around the level of COVID testing.\nTherefore, we have not modeled any testing revenue beyond the typical flu season.\nWith the continued momentum we are seeing, we have increased confidence in our ability to deliver strong mid-single-digit revenue growth in fiscal 22 over our fiscal 21 base revenues, which, as a reminder, adjusts for COVID diagnostic testing revenues.\nWith respect to Alaris, our filing is comprehensive and more complex than most submissions.\nAs we have previously stated, it is possible that the review could be in line with past pump time lines.\nHowever, as we have also mentioned, it was more likely to take longer for the FDA to review and ultimately grant clearance.\nIt is inherently difficult to predict clearance timing.\nWe are not assuming Alaris 510(k) clearance.\nIt is difficult to predict how things will play out as shipments are only being made under the medical necessity process.\nAt this time, we have incorporated the assumption that revenues associated with Alaris will be approximately similar to FY 21.\nWe believe it is prudent and responsible not to definitively predict FDA clearance time lines.\nThat said, we remain confident in our submission and the process we are undertaking, including working closely with the FDA to obtain comprehensive 510(k) clearance.\nWe expect to drive base business gross and operating margin expansion.\nWe expect the operating margins for our base business to expand more than our traditional annual target of at least 50 basis points and translate into double-digit operating income growth.\nFor reference, we expect our base business operating margins to be between 21.5% to 22% in fiscal 2021.\nWith these assumptions, we expect an adjusted earnings per share floor of at least $12.\nThis represents approximately low teens growth over our expected base business earnings in fiscal 2021.\nNow before opening it up for Q&A, I want to take a moment to comment on todays announcement of my upcoming retirement.\nWith our strong base business momentum, our strengthened balance sheet and improved cash flows, which is evident by the increased number of tuck-in acquisitions that weve been doing and the restart of our share buyback program for the first time since 2017, I feel that now is the right time for the transition as the company is well positioned to continue to drive shareholder value and impact the lives of patients around the world.\nI look forward to helping to ensure a seamless transition to the new CFO.\nAnd Im very excited about the value-creating opportunities ahead for NewCo and helping to ensure this success as a member of their Board.\nAnd Kristen, I think its -- we should open up the -- operator, open up the line to Q&A.\n", "role": "user" }, { "content": "q3 adjusted earnings per share $2.74.\nq3 revenue $4.9 billion versus refinitiv ibes estimate of $4.51 billion.\nexpects fy 2021 revenues to grow about 16.5% to 17.0% on a reported basis, an increase from the prior guidance of 12% to 14%.\nexpects fiscal year 2021 currency-neutral revenue growth of about 14.0% versus its prior guidance of 10% to 12%.\nexpects fy 2021 adjusted diluted earnings per share to be between $12.85 and $12.95, an increase from the prior guidance of between $12.75 and $12.85.\nbd- in recent weeks co saw impact on elective procedures from covid delta variant in some u.s. states & assumes some continuation of this in 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: These statements are not guarantees of future performance and therefore, undue reliance should not be placed upon them.\nWe refer you to B&G Foods most recent annual report on Form 10-K and subsequent SEC filings for a more detailed discussion of the risks that could impact our Company's future operating results and financial condition.\nBruce will then discuss our financial results for the first quarter as well as expectations for 2021.\nAssessing our results for the quarter my overall comment is that the quarter played out much as we expected.\nIn total, we achieved record first quarter net sales of $505.1 million, a 12.4% increase from Q1 2020.\nNet sales in our base business, which excludes the Crisco acquisition completed in December, were approximately $447 million, virtually flat versus first quarter 2020 at a modest 0.6% decline.\nWithin that number, US base business net sales were up 2.1% while international base business net sales were down 31.8%.\nVirtually all of that Green Giant sales in Canada due to severe allocation of the brands there.\nCompared to fiscal 2019 our base business net sales, which for purposes of the two-year comparison also exclude Clabber Girl and Farmwise net sales increased $16.6 million or 4% for the quarter.\nOur $447 million of base business net sales were supplemented by the $58 million of Crisco net sales, bringing our total net sales up to the $505 million figure.\nAdjusted EBITDA for the quarter also set a first quarter record at $92.9 million a 15.2% increase, a result of solid base business volume and earnings and a fulsome Crisco benefit in our first few months of ownership.\nThose are the highlights.\nAs Dave just discussed, we had very strong financial performance during our first quarter, delivering Company record first quarter net sales and adjusted EBITDA.\nWe reported net sales of $505.1 million in the first quarter, an increase of $55.7 million or 12.4% compared to the prior year first quarter and an increase of nearly $95 million or 22.4% compared to the first quarter of 2019.\nAs you know, the Crisco acquisition closed on December 1, 2020 providing us with a full quarter of net sales in the first quarter.\nCrisco generated approximately $58.1 million in net sales for the quarter, which is slightly ahead of our internal model.\nBase business net sales, which excludes the benefit of Crisco, were essentially flat to last year's first quarter, were down 0.6%.\nExcluding the benefit of Crisco, net sales were up approximately $34.4 million or 8.3% from Q1 2019, approximately $17.7 million of which was due to the May 2019 acquisition of Clabber Girl and the February 2020 Farmwise acquisition and approximately $16.7 million of which was due to base business net sales growth.\nWe generated adjusted EBITDA before COVID-19 expenses of $95.8 million in the first quarter of 2021, an increase of $15 million or 18.5%.\nDuring the first quarter of 2021, we incurred approximately $2.9 million in incremental COVID-19 costs at our manufacturing facilities, which primarily included temporary enhanced competition for our manufacturing employees, compensation we continue to pay the manufacturing employees while in quarantine, and expenses related to the precautionary health and safety measures.\nAs discussed in our fourth quarter and full year 2020 call, we expect to see a continued reduction in these costs, which averaged $1.5 million per month during the height of the pandemic.\nInclusive of these costs, we reported adjusted EBITDA of $92.9 million which is an increase of $12.2 million or 15.2% compared to last year's first quarter.\nAdjusted EBITDA before COVID-19 expenses as a percentage of net sales was 19% in the first quarter of 2021.\nAdjusted EBITDA as a percentage of net sales was 18.4%.\nAdjusted EBITDA before COVID-19 expenses as a percentage of net sales and adjusted EBITDA as a percentage of net sales were 18% in the first quarter of 2020 as COVID-19 expenses did not fully kick in until the second quarter of 2020.\nWe reported $0.52 in adjusted diluted earnings per share in the first quarter of 2021 an increase of $0.06 per share or 13% compared to the prior year first quarter.\nLeading our brand performance were Spices & Seasonings.\nNet sales of our spices and seasonings including our legacy brand such as Ac'cent and Dash and the brands we acquired in 2016 such as Tone's and Weber were up by $30 million or 41.2% for the quarter.\nNet sales of spices and seasonings were up by $17.1 or 20% compared to the first quarter of 2019.\nNet sales of spices and seasonings reached $397.7 million for the 12 months ended March 2021.\nThe retail side of this business continues to show a momentum that began last summer as more and more Americans began to fully embrace cooking and seasoning their meals at home, a trend which continues in 2021.\nThe foodservice side of this business has also begun to show some momentum with a budding recovery in the away from home channel as many Americans have begun to emerge from a year or more of lockdowns and shelter at home safety precautions.\nDespite the recovery, foodservice net sales of spices and seasonings remain below pre-pandemic levels for the quarter, but did have an increase for the month of March.\nOther major brands contributing to the net sales growth include Maple Grove Farms, Las Palmas and Ortega.\nMaple Grove Farms generated approximately $20.7 million in net sales during the first quarter of 2021 an increase of $2.3 million or 12.1% compared to Q1 2020, and an increase of $2.8 million or 15.5% compared to Q1 2019.\nLas Palmas generated $10.7 million in net sales during the first quarter of 2021, an increase of $0.2 million or 1.8% compared to Q1 2020 and an increase of $1.3 million or 14.4% compared to Q1 2019.\nOrtega generated $39 million in net sales during the first quarter of 2021, an increase of $0.2 million or 0.4% compared to Q1 2020 and an increase of $1.7 million or 4.6% compared to Q1 2019.\nGreen Giant, which was one of the largest beneficiaries of COVID-19 pandemic buying of the past year in our portfolio had approximately $639 million in net sales during fiscal 2020, an increase of $112.2 million or 21.3% compared to the prior year.\nAs we discussed during our last earnings call, Green Giant, as well its competitor brands will have supply constraints until we reach the new pack season later this year.\nAs a result, we were forced to make tough decisions and place the brand on allocation with our customers, which will limit sales of Green Giant products until this year's third quarter, so that we don't sell out before the pack season.\nPrimarily as a result of those decisions, Green Giant net sales were just $132.5 million in the quarter, a decrease of $25.9 million or 16.4% compared to the prior year quarter.\nHowever demand for Green Giant remained strong and we expect a strong second half of the year and we expect full year net sales of Green Giant products to exceed the brand's fiscal 2019 net sales of approximately $525 million.\nWhile demand has remained strong, and that sales have generally remained elevated when compared to fiscal 2019, many of our other brands were unable to surpass Q1 2020 net sales.\nCream of Wheat for example generated $18.2 million in net sales during the first quarter of 2021, a decrease of $0.7 million or 4% compared to Q1 2020, but an increase of $0.8 million or 4.3% compared to Q1 2019.\nClabber Girl generated $17.4 million in net sales during the first quarter of 2021 a decrease of $1.3 million or 6.8% compared to Q1 2020, but significantly greater than the estimated $15 million or so of net sales generated during the Q1 2019 period under prior ownership.\nOur gross profit was $117.8 million for the first quarter of 2021 or 23.3% of net sales.\nExcluding the negative impact of approximately $5.5 million of acquisition divestiture related expenses, the amortization of acquisition related inventory, fair value step up, and non-recurring expenses included in the cost of goods sold, our gross profit would have been $123.3 million or 24.4% of net sales.\nGross profit was $104.9 million for the first quarter of 2020 or 23.3% of net sales.\nExcluding the negative impact of approximately $2.3 million of acquisition divestiture related expenses and non-recurring expenses included in cost of goods sold, our gross profit would have been $107.2 million or 23.9% of sales.\nAs discussed on our fourth quarter and full year call, we are certainly seeing inflationary pressures in 2021.\nSo far this year, the first quarter has largely played out as expected with low to mid single-digit inflation on a blended basis across our basket of goods with significant increases in agricultural products and commodity relate input costs, as well as corrugated steel and aluminum.\nWe are also seeing meaningful increases in freight costs and COVID-19 related customer fines.\nOur procurement policy has led us to be somewhat aggressive when covering costs in a rising environment and we have locked in costs for many of our inputs through the first three quarters of the year.\nWe have also continued to be aggressive with our cost-cutting initiatives and we are taking revenue enhancing actions across many of the brands that have been impacted by cost inflation when appropriate in attempt to maintain margins.\nSelling, general and administrative expenses for the year were $50.4 million or 10% of net sales.\nThis compares to $40 million or 8.9% for the prior year.\nThe dollar increase in SG&A is primarily composed of an incremental $4 million investment in consumer marketing, $1.9 million in incremental acquisition related costs, and non-recurring expense, which primarily relate to the acquisition and integration of the Crisco brand and $4.1 million in increased warehousing costs.\nThe increase in warehousing costs was primarily driven by the Crisco acquisition and COVID-19 related customer funds.\nGeneral and administrative expenses increased by $1.3 million.\nThese costs were partially offset by decreased selling expenses of $0.9 million.\nAs I mentioned earlier, we generated $95.8 million dollars in adjusted EBITDA before COVID-19 expenses and after the inclusion of $2.9 million of COVID-19 expenses adjusted EBITDA of $92.9 million.\nThis compares to adjusted EBITDA before COVID-19 expenses of $80.8 million in Q1 2020 and $75.8 million in Q1 2019.\nWe generated $0.52 in adjusted diluted earnings per share in the first quarter of 2021 compared to $0.46 per share in Q1 2020 and $0.44 per share in Q1 2019.\nWe remain very encouraged by these trends.\nWe had another strong quarter of cash from operations, although it was impacted by the timing of one of our semiannual interest payments and the payout of increased incentive compensation related to the Company's 2020 performance.\nNet cash provided by operating activities was $26 million during the first quarter of 2021 compared to $57.6 million during Q1 2020.\nThe majority of the decrease was driven by the timing of an approximately $24 million interest payment for 2025 notes on April 1, which happened to fall into our first quarter for this year and our second quarter last year.\nThe remainder of the decrease was driven by a $12.6 million increase in incentive compensation paid in cash as a result of the Company's very strong performance in fiscal 2020 relative to the prior year.\nOur consolidated leverage ratio, as defined by our credit agreement, and which is calculated on a pro forma and net debt basis, was 5.23 times and remains within our long-term leverage target of 4.5 to 5.5 times and well below our credit agreement covenant threshold of 7 times.\nWe are reaffirming our 2021 sales guidance that we provided in March as we continue to expect Company record net sales of $2.05 billion and $2.1 billion in fiscal 2021 inclusive of the benefit of a full year of the Crisco acquisition.\nFrom a pacing perspective, we knew that we had a head start in the first quarter of this year with exceptional performance in the months of January and February that would be coupled with a final month of March that would come in well short of last year when we were at the beginning of the COVID-19 shutdown and related pantry loading.\nAnd that is exactly how the quarter played out.\nCrisco is purely incremental for us at this stage and is performing in line with our expectations.\nFor the second quarter we expect something similar with our base business net sales to trend much closer to our 2019 net sales than our 2020 net sales, may be low to mid single-digit percentage points higher than what we experienced in 2019.\nCrisco will again be purely incremental for us in the second quarter.\nHistorically, Crisco generated about 20% of its full year net sales in the April to June period.\nAnd as we discussed earlier, we expect 2021% to present us with a different set of challenges and opportunities than we had last year.\nDemand for our products remain elevated, but not quite as high as during the pandemic.\nWith the exception of Green Giant and certain of our other brands, we are also in a much better position from a supply standpoint across most of our portfolio than we were late last year, which should enable us to meet much of this demand.\nWe highlighted our concerns about inflation during our last earnings call and these concerns are certainly proving out as we are seeing inflation across a number of key input costs, including certain agricultural products, other commodity products such as oils as well as packaging and freight.\nAs in prior years, our experience and expectation is that we will manage these costs through a combination of revenue enhancing initiatives including pricing and trade spend optimization where appropriate, as well as certain cost saving activities to preserve our margin profile and our cash flows.\nAs a result, we expect to generate adjusted EBITDA as a percentage of net sales of approximately 18% to 18.5%, which is generally consistent with our performance in the recent fiscal years.\nAs I said at the beginning of the call, the quarter played out much as we expected with substantial sales gains in the first 10 weeks and then tough comparisons in the last few.\nThe last two weeks of Q1 2020 essentially saw four weeks of normal sales volume compressed into two as COVID-19 driven panic buying commenced.\nNearly all of our brands benefited from this phenomenon as consumers loaded their pantries with anything and everything and our case especially canned goods and frozen vegetables.\nSo it is no surprise that the most challenging comparison we have for the quarter is in the canned goods brands.\nAs Bruce described, the largest dollar decline we saw in quarter-to-quarter sales was in Green Giant, down 16.4%.\nVirtually all of that happened in the final two weeks of the quarter, making total brand sales for the full quarter similar to the first quarter of 2019.\nAn additional handicap is that we have supply constraints on the canned side of the Green Giant brand due to unprecedented demand late last year, but even with those constraints we expect brand sales to continue to track to 2019 levels until the new crop arrives.\nExcluding the Green Giant brand and the remarkable swing in that brand, net sales for the remainder of our base business increased by 8.1% over first quarter 2020.\nSales remained broadly strong, especially in areas such as baking and spicing and seasonings.\nFoodservice sales strengthened as well helping the overall performance.\nFirst quarter was our first full quarter of ownership of the Crisco brand and we were very pleased with its performance.\nAt $58.1 million in net sales it is tracking to our expectations and margins were accretive to our overall results.\nWe do face temporary cost challenges with the brands as the cost of oils used in the products has more than doubled since this time last year.\nBut we view these very high levels as an anomaly that the market will work through over time.\nMeanwhile we own what we see as an iconic brand that fits well with our portfolio of products related to baking at home and revitalize consumer behavior.\nWith the addition of Crisco, we estimate that our baking at home brands will be approximately 20% of our net sales.\nWhile much of our businesses started shifting back to more normal performance, one area where we see continuation of new consumer behavior is in e-commerce.\nWhile there are no complete or precise measures of net sales through this means, we are able to estimate that retail sales of our brands these various e-commerce venues grew by over 60% to $50 million in the first quarter.\nAt this point we estimate that e-commerce retail sales for the full year will continue to grow at that rate and reach $275 million this year.\nI should emphasize that this is not necessarily growth in our factory sales, but instead a noteworthy shift in how consumers are buying our products.\nWe are investing significantly in this area to ensure that we are well represented in the phenomenon which shows no signs of leveling off in the near future.\nIf anything, retailers are upping the ante with one recent article citing plans for two-hour delivery of orders to consumer's homes.\nOur household penetration has grown substantially in the past year and is up almost 10 percentage points versus 12 months ago.\nAt the same time, consumer purchase frequency and size has also grown.\nOur job is to retain these new and revitalized consumers as the pandemic eases.\nWe believe the potential to do that exists, primarily because work from home is here to stay in one form or another.\nOur own experience as we return to normalcy is that employees want flexibility in their schedules and work days.\nGiven that, we are orienting our marketing to reinforcing behavior adopted during the pandemic.\nAn example is, the new website integrated for our baking demands, bakingathome.com where consumers can find a wealth of recipes and baking tips, many of course featuring B&G Foods brands.\nSimilar efforts will be taking place across the business as we use the efficiency and cost effectiveness of social media to reach consumers.\nAlthough encouraging as first quarter results are, there are certainly risks and unknowns to deal with for the remainder of 2021.\nRising costs are a significant issue and one that will not be resolved anytime soon.\nAs Bruce noted, freight costs have increased steadily.\nCapacity issues in the trucking industry in both labor and equipment will continue for the foreseeable future.\nPackaging and raw materials have seen widespread cost increases as well.\nWe have insulated ourselves in many cases with forward buying positions, but even with these in place, we have also had to announce pricing and manage our trade spending to compensate for these cost pressures.\nSome of these increases are already in effect and others will take effect of shortly.\nOn the positive side, we are seeing reduced expenses related to COVID-19 as vaccination of our workforce expands.\nWhile this was a $2.9 million negative in the first quarter, we should save much of the $13.3 million we spent on COVID-19 related measures in the last three quarters of 2020.\nAs we continue to grow larger, we are investing more resources toward meeting our responsibilities as a corporate citizen.\nThe Corporate Social Responsibility Committee of the Board of Directors is charged with the overall direction of these efforts and has initiated a broad array of efforts in diversity, equity, and inclusion, as well as environmental and sustainability.\nDuring the first quarter we worked with the Culinary Institute of America to establish a scholarship program for diverse students.\nThe program will fully support tuition for five students as they pursue careers in the food industry.\nThis effort joins the extensive work B&G Foods is already doing with St. Jude Children's Research Hospital.\nWe are also developing further programs around environmental and sustainability goals at our manufacturing facilities and distribution centers and are working toward increasing our public disclosures regarding our environmental and sustainability programs and goals.\nWith the pandemic easing, we are working hard to return to the B&G Foods of old, a company that delivered steady reliable results on a regular basis with exceptional margins and strong free cash flow.\nThat is the model that has served our shareholders well over the years and delivered superior returns.\nI stated started my remarks by stating that the first quarter played out much as we expected and that's very encouraging, but we do expect second quarter to be the most challenging quarter of the year and the largest unknown.\nOur net sales increased by 38% in the second quarter of 2020 over 2019, reflecting the height of the pandemic pantry loading.\nWe obviously won't match that increase, but we believe that our business will perform favorably versus fiscal 2019 and continue to produce solid results.\nWe are all looking forward to welcoming Casey here and I hope to return over a company that is raring to go when he arrives.\nWith that, we will conclude our remarks and we would like to begin the Q&A portion of the call.\n", "role": "user" }, { "content": "compname reports q1 adjusted earnings per share $0.52.\nq1 adjusted earnings per share $0.52.\nq1 sales $505.1 million versus refinitiv ibes estimate of $526.4 million.\nnet sales guidance reaffirmed at a range of $2.05 billion to $2.10 billion.\nexpect our base business net sales for q2 to trend much closer to our 2019 net sales than our 2020 net sales.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Before we get started, I want to let you know that we have slides to accompany our discussion.\nReconciliations of non-GAAP measures to the most directly comparable GAAP financial measures are posted on our website as well.\nSo turning to the agenda on Slide three.\nI'll start with some highlights of the second quarter before handing it over to John, who will go into more detail on our performance.\nLet's start with an overview of the quarter, turning to Slide four.\nWe're very pleased with how we've managed our operations as well as our earnings at risk with the appropriate level of discipline.\nWe also helped our customers navigate and manage through the volatility of this quarter that came from weather issues, domestic and international supply chain challenges and other complexities in the current environment.\nTurning now to our segment performance.\nResults in Agribusiness were down versus a very strong quarter last year but exceeded our expectations as the team effectively managed trade flows and capacity utilization.\nWe set quarterly and year-to-date records in soy crush volume, capacity utilization and lower unplanned downtime.\nAdditionally, we reduced power consumption to an all-time low in our European rapeseed crush operations.\nWhile we faced complexities in the quarter related to freight, transportation and other areas that affected many other companies and industries, our results clearly demonstrate that with our commercial and industrial teams working closely together, we have built resilient supply chains that allow us to be successful through a range of macro environments.\nResults in Refined and Specialty Oils improved in most regions, with particular strength in North America.\nIn the U.S., we saw foodservice demand come back stronger and faster than and anticipated, and we're experiencing a greater impact from renewable diesel demand than we expected.\nIn response to the higher demand for Refined and Specialty Oils, we've been working to find greater efficiencies to increase supply.\nWe've also worked with our food customers to help them manage their risk as well as reformulate products where it makes sense.\nThe multiple drivers behind the strength in edible oils gives us confidence there are significant growth opportunities ahead of us.\nI also want to highlight that this was a strong quarter for our noncore Sugar JV.\nAs we've noted in the past, we continue to assess our strategic options regarding this business, but we're very pleased with the improvement over the last year.\nTaking into account our year-to-date results and based on what we can see now in the forward curves, we are increasing our outlook for the year and expect to deliver adjusted earnings per share of at least $8.50 for the full year 2021.\nDespite the global volatility, we have confidence in our ability to deliver in the back half of the year, based on the business already committed, the crush outlook and the demand for Refined and Specialty Oils.\nAs we look ahead, we're confident that the performance of our operating model and market trends provide support for a higher mid-cycle earnings.\nSo in our June 2020 business update, we outlined our earnings baseline of $5 per share.\nWith the changes we've made in our business as well as the fundamental shifts in the marketplace, we're taking that baseline earnings per share up to $7, and that's a $2 increase.\nAnd consistent with last time, this reflects our existing portfolio only and does not include any future growth investments.\nI'll now hand the call over to John to walk through the financial results, the 2021 outlook and additional detail on the updated earnings baseline.\nI'll then close with additional thoughts on some of the trends we're seeing.\nLet's turn to the earnings highlights on Slide five.\nOur reported second quarter earnings per share was $2.37 compared to $3.47 in the second quarter of 2020.\nOur reported results include a negative mark-to-market timing difference of $0.24 per share.\nAdjusted earnings per share was $2.61 in the second quarter versus $1.88 in the prior year.\nAdjusted Core segment earnings before interest and taxes for EBIT was $550 million in the quarter versus $564 million last year, reflecting lower results in Agribusiness partially offset by improved performances in Refined Specialty Oils and Milling.\nIn processing, higher results in North America and Argentina were more than offset by lower results in Europe and to a greater extent in Brazil, which reflected a decreased contribution from soybean origination due to an accelerated pace of farmer selling last year.\nIn merchandising, improved performance was primarily driven by higher results in ocean freight due to strong execution and positioning in our global corn and wheat value chains, which benefited from increased volumes and margins.\nIn Refined and Specialty Oils, the outstanding performance in the quarter was largely driven by higher margins and record capacity utilization in North American refining, which benefited from strong foodservice demand and increased demand from the growing renewable diesel sector.\nImproved results in South America were due to the combination of higher margins and lower costs, more than offsetting lower volumes.\nEurope benefited from increased volumes and margins from higher capacity utilization and product mix.\nIn Milling, higher volumes, lower costs and good supply chain execution in South America were the primary drivers of improved performance in the quarter.\nResults in North America were comparable with the last year.\nThe increase in corporate expenses during the quarter was primarily related to performance-based compensation accruals, a portion of which was not allocated out to the segments as was done in previous years.\nThe increase in Other was related to our captive insurance program.\nImproved results in our noncore Sugar and Bioenergy joint venture were primarily driven by higher ethanol volume and margins.\nPrior year results were negatively impacted by approximately $70 million in foreign exchange translation losses on U.S. dollar-denominated debt of the joint venture due to significant depreciation of the Brazilian real.\nFor the six months ended Q2, income tax expense was $242 million compared to an income tax expense of $113 million in the prior year.\nThe increase in income tax expense is due to higher year-to-date pre-tax income, partially offset by a lower estimated effective tax rate for 2021.\nNet interest expense of $48 million was below last year, primarily driven by lower average variable interest rates, partially offset by higher average debt levels due to increased working capital.\nHere, you can see our continued positive earnings trend adjusted for notable items and timing differences over the past four fiscal years, along with the most recent trailing 12-month period.\nThis improved performance not only reflects a better operating environment, but also the increased coordination and alignment of our global commercial, industrial and risk management teams due to our new operating model.\nSlide seven compares our year-to-date SG&A to the prior year.\nWe have achieved underlying addressable SG&A savings of $20 million, of which approximately 80% is related to indirect costs.\nThrough our team's disciplined focus on costs, we were able to continue to achieve savings even when compared to last year, which was already lower as a result of the pandemic and the actions we took to reduce spending.\nLooking ahead, we are monitoring cost inflation in many markets, especially in Brazil, and we'll be working to offset this impact where we can while still making the necessary investments in our people, processes and technology.\nMoving to Slide eight.\nFor the most recent trailing 12-month period, our cash generation, excluding notable items and mark-to-market timing differences, was strong with approximately $2 billion of adjusted funds from operations.\nThis cash flow generation was well in excess of our cash obligations over the past 12 months, allowing us to strengthen our balance sheet.\nShortly after quarter end, we closed on the sale of our U.S. grain interior elevators, receiving additional cash proceeds of approximately $300 million and another $160 million for net working capital.\nSlide nine details our year-to-date capital allocation of adjusted funds from operations.\nAfter allocating $76 million to sustaining capex, which includes maintenance, environmental, health and safety and $17 million to preferred dividends, we had approximately $800 million of discretionary cash flow available.\nOf this amount, we paid $141 million in common dividends and invested $57 million in growth and productivity capex, leaving over $600 million of retained cash flow.\nAs you can see on Slide 10, readily marketable inventories now exceed our net debt with the balance of RMI being funded with equity.\nFor the trailing 12 months, adjusted ROIC was 18.4%, 11.8 percentage points over our RMI adjusted weighted average cost of capital of 6.6%.\nROIC was 13%, seven percentage points over our weighted average cost of capital of 6% and well above our stated target of 9%.\nThe spread between these return metrics reflects how we use RMI in our operations as a tool to generate incremental profit.\nMoving to Slide 12.\nFor the trailing 12 months, we produced discretionary cash flow of approximately $1.7 billion and a cash flow yield of nearly 24%.\nAs Greg mentioned in his remarks, taking into account our strong Q2 results and our outlook, we have increased our full year adjusted earnings per share from $7.50 to at least $8.50, above last year's record of $8.30.\nOur outlook is based on the following expectations.\nIn Agribusiness, full year results are expected to be up modestly from the previous expectations but still down from a very strong 2020.\nIn Refining and Specialty Oils, we expect full year results to be up from our previous outlook and significantly higher compared to last year due to our strong first half results and positive demand trends in North America.\nWe continue to expect results in Milling and Corporate and Other to be generally in line with last year.\nIn noncore, full year results in our Sugar and Bioenergy joint venture are expected to be a positive contributor.\nAdditionally, the company expects the following for 2021: an adjusted annual effective tax rate in the range of 17% to 19%, which is down from our previous outlook of 20% to 22%; net interest expense in the range of $220 million to $230 million, which is down $10 million from our previous expectation; and capital expenditures in the range of $450 million to $500 million, which is up $25 million from our previous forecast; and depreciation and amortization of approximately $420 million.\nShifting to our updated mid-cycle baseline.\nThe waterfall chart on Slide 14 shows the areas and magnitude of increased earnings being primarily driven by what we see as a structural improvement in the oilseed market fundamentals.\nThis is due to increased vegetable oil demand by the renewable diesel industry and greater benefits as a result of the change in our operating model to a global value chain approach.\nTurning to Slide 15 and the drivers behind these increases.\nConsistent with our approach in June 2020, we introduced -- when we introduced our $5 baseline, we were defining our long-term average oilseed crush margin range by using the weighted average of our footprint over the past four years plus the trailing 12 months.\nThis increases our average soy crush margin by $1 a metric ton to a range of $34 to $36 per metric ton and, more significantly, it increases our average softseed crush margin, which is more sensitive to oil demand, by about $10 a metric ton to a range of $48 to $52 per metric ton.\nWe feel these ranges reflect more reasonable normalized numbers in the go-forward structural market environment.\nWe have also increased the normalized earnings of our oilseed origination and distribution businesses and our merchandising subsegment, reflecting the more coordinated and aligned approach within the value chains from our new operating model.\nThe approximate 30% increase in Refined and Specialty Oils earnings is driven by a higher capacity utilization in North American refining and increased contribution from specialty oils due to improvement initiatives that are underway.\nImportantly, we assume that margins in North American refining normalize back to historical averages as we expect in time that the renewable diesel industry will add pretreatment capabilities to their facilities.\nThere are no changes from our prior baseline in Milling.\nCorporate and Other are down primarily due to higher performance-based compensation from the increase in our baseline.\nThere is no change in the assumed contribution from our Sugar and Bioenergy JV.\nNet interest expense is reduced by approximately $25 million compared to the $5 baseline, reflecting debt paydown from strong cash flow in 2021 and normalized working capital.\nGiven potential tax policy changes in the future, we are increasing our estimated effective tax rate by two percentage points.\nIt's important to note that our earnings baseline of $7 is not earnings powered.\nAside from upside that may come from higher-margin environment, we have a number of opportunities that we are pursuing that can drive earnings upside as summarized on Slide 16.\nStrengthening our Oilseeds platform with targeted acquisitions is a top priority.\nExpanding our industry-leading Refined and Specialty Oils position to serve new and existing customers with differentiated products and services is an area of opportunity.\nWe're also excited about the growth and demand for renewable feedstocks and plant-based proteins.\nAnd finally, we're continuing to invest in technology that will drive increased efficiency throughout our global operations.\nTurning to Slide 17.\nAt a $7 per share baseline, we should generate approximately $1.4 billion of adjusted funds from operations.\nAfter allocating capital to sustaining capex and preferred and common dividends to shareholders, we should have about $800 million of discretionary cash available annually for reinvestment in the business or returns to shareholders.\nThis is an increase of approximately $200 million of cash per year from our $5 baseline.\nWith that, I'll turn things back over to Greg for some closing comments.\nBefore opening the call to Q&A, I want to offer a few closing thoughts.\nFrom where we sit, it's clear there's a structural shift underway in the consumer demand for sustainable food, feed and fuel.\nThe conversations we've been having with existing and new customers are significantly different than they were even just six months ago.\nWe're pleased with our position to help support meaningful change.\nAnd with our global platform, we have the ability to do so at scale.\nConsumers have demonstrated they will pay more to get what they care about, and it's our job to provide these alternatives to our customers.\nTo meet this demand, we work with customers on sourcing sustainable alternatives under -- or helping them reformulate.\nWe help food and feed customers source ingredients to minimize the carbon impact of moving them, and we work with fuel customers to source and transport feedstock for renewable fuels.\nImportantly, we do all of this with the goal of driving value back to farmers to allow them to invest in stewardship, to support regenerative agriculture and to encourage production in optimal locations, which means getting the highest production per acre using the least amount of inputs.\nWe're really excited about the role we can play in this accelerating shift.\n", "role": "user" }, { "content": "bunge sees fy adjusted earnings per share at least $8.50.\nq2 gaap earnings per share $2.37.\nsees fy adjusted earnings per share at least $8.50.\nsees 2021 capital expenditures in range of $450 to $500 million.\nqtrly adjusted earnings per share $2.61.\nin agribusiness, results are expected to be modestly up from previous outlook, but still forecasted to be down from 2020.\nnow expects 2021 capital expenditures in the range of $450 million to $500 million.\nupdating mid-cycle earnings baseline with $2 per share increase reflecting structural changes in oilseed market environment.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Before we get started, I want to let you know that we have slides to accompany our discussion.\nReconciliations of non-GAAP measures to the most directly comparable GAAP financial measure are posted on our website as well.\nTurning to the agenda on Slide 3.\nI'll start with some highlights of the third quarter, and how we're thinking about the remainder of the year before handing it over to John, who will go into more detail on our performance.\nLet's start with an overview of the quarter turning to Slide 4.\nTheir ability to remain focused on execution, helped us deliver our eighth consecutive quarter of earnings growth.\nIn the second half of 2021, we've seen a shift in the challenges created by the COVID operating environment.\nWe've moved away from having to adjust to the fluctuations that came from lockdowns, like the change in demand from foodservice to food processors.\nInstead, we're adapting to an environment that is driven by an uneven global recovery.\nThis dynamic demand is driving increases in commodity and energy prices, and creating many supply chain challenges.\nOur team has remained agile and I'm proud of how we've navigated this market shift.\nWe also responded well to unforeseen disruptions like the great work our team did managing the impact from Hurricane Ida in North America.\nWe also continue to set high watermarks across a number of our key operating metrics.\nWe've done this all while continuing to prioritize the safety of our team, their families and communities, as COVID remains with us.\nIn addition to solid operational execution, our positioning and approach to risk management allowed us to capture opportunities quickly when the market conditions changed.\nThis was especially true as crush margins improved over the late-summer when oil seed prices dropped and oil values expanded due to tightening supply.\nThe strength of our global platform and footprint continue to provide benefits.\nIn the face of broad logistical disruptions, our integrated value chains and owned ports have helped us to continue supporting customers at both ends of the supply chain.\nThis quarter, and our results over the last 1.5 years have shown the power of our global network and operating model.\nLooking ahead, we continue to see a dynamic set of factors and we're more confident than ever in our ability to react and manage well to capture market opportunities.\nAs part of our work to continue positioning Bunge for the structural shift we are seeing in the consumer demand for sustainable fuel, in September, we announced our proposed joint venture with Chevron.\nAs a key step, we will increase production of renewable feedstocks by nearly doubling the combined capacity of two soy crush facilities that will be contributed to the JV.\nChevron recognizes our expertise in oil seed processing and farmer relationships, as well as our commitment to sustainable agriculture, and we recognize Chevron's expertise in refining and distribution.\nPartnering with a global leader in energy is a significant step forward in building the capability to make change at scale, to help reduce carbon in our own and our customers' value chains.\nThis partnership will establish a reliable supply from farmer to Chevron's downstream production and distribution to the infuel consumer.\nIt also allows us to better serve our farmer customers by accessing demand in the growing renewable fuel-sector.\nIt will also enable us to pursue new growth opportunities together in lower carbon intensity feedstocks as well as consider feedstock pre-treatment investments.\nIn addition to the Chevron JV transaction, we announced an agreement to sell our wheat mills in Mexico to Grupo Trimex.\nAs part of continuously looking for ways to improve our portfolio, we concluded the business was not in line with our long-term strategic goals, and we're pleased with the outcome of selling to a well-respected wheat miller.\nWe expect the sale to be completed in 2022.\nTurning to our segment performance.\nResults in Agribusiness were driven by strong execution and better than expected market environment.\nIn processing, we benefited from higher margins in soy and soft crush in the Northern Hemisphere.\nMerchandising results were better than expected and very strong compared to prior year.\nResults in Refined & Specialty Oils improved in all regions, with particular strength in North America, driven by strong demand from foodservice and renewable diesel.\nWe're also seeing continuous improvement in our innovation pipeline, which enabling us to launch exciting new products to the market.\nI'd like to congratulate our team for their efforts to help customers with creative solutions.\nThis innovation capability as well as our skill at solving supply chain issues have helped create a step change in many long-term customer collaborations and commitments.\nOur team is also making measurable progress, improving sustainability across our operations and investments.\nFollowing the launch of the Bunge sustainable partnership in Brazil earlier this year, we've already improved the visibility into our indirect supply in high priority regions to approximately 50%, and that's exceeding our 2021 target of 35%.\nAnd while we still have work to do, having this insight into our supply chain will help us meet our industry leading non-deforestation commitment.\nAnd finally, regarding our non-core businesses.\nI want to call out the role our sugar JV has had in our year-over-year improvement.\nWe're pleased that this business has been performing well in a challenging weather market.\nAdditionally, Bunge Ventures had a successful quarter as a result of the Benson Hill IPO.\nAnd John will give you more details on the impact of that investment in the quarter.\nWe also repurchased $100 million in shares and our Board authorized a new $500 million repurchase program, demonstrating our confidence in the business.\nThis reflects our balanced approach to capital allocation, where the return of capital to shareholders is always evaluated along with other investment opportunities.\nAnd before handing the call over to John, I wanted to note, we've increased our outlook for 2021, reflecting our strong third quarter results and continued favorable market trends.\nFor the full year, we now expect to deliver adjusted earnings per share of, at least, $11.50, and we expect the strong momentum to carry over into 2022.\nLet's turn to the earnings highlights on Slide 5.\nOur reported third quarter earnings per share was $4.28 compared to $1.84 in the third quarter of 2020.\nOur reported results included a negative mark-to-market timing difference of $0.22 per share and a $0.78 per share gain on the sale of our U.S. interior grain elevators, which closed back in early July.\nAdjusted earnings per share was $3.72 in the third quarter versus $2.47 in the prior year.\nAdjusted core segment earnings before interest and taxes or EBIT were $698 million in the quarter versus $580 million last year, reflecting higher results in Agribusiness and Refined & Specialty Oils.\nIn processing, high results in North America, European softseeds, and our Asian-European destination soy value chains, all benefited from improved margins.\nThese were partially offset by lower results in South America, where margins were down from a strong prior-year.\nIn merchandising, improved performance was primarily driven by higher results in ocean freight, due to strong execution and our global vegetable oil value chain, which benefited from increased margins.\nIn Refined & Specialty Oils, the strong performance in the quarter was primarily driven by higher margins and volumes in North American refining, which continued to benefit from the recovery in foodservice and increased demand from the renewable diesel sector.\nHigher margins in Europe, largely driven by favorable product mix, also contributed to the improved performance.\nResults in South America and Asia were slightly higher than last year.\nIn milling, lower results in the quarter were driven by Brazil where higher volume and lower unit costs were more than offset by lower margins.\nResults in North America were comparable with last year.\nThe increase in corporate expenses during the quarter was primarily related to performance-based compensation accruals.\nThe gain in other was primarily related to our Bunge Venture's investment in Benson Hill, which went public during the quarter.\nImproved results for our non-core sugar and bioenergy joint venture were primarily driven by higher prices and sales volumes of ethanol and sugar.\nFor the quarter, GAAP basis income tax expense was $92 million compared to $38 million for the prior year.\nThe increase in income tax expense was due to higher pre-tax income.\nNet interest expense of $38 million was below last year, resulting from higher interest income related to the resolution of an historical value added tax matter.\nHere you can see our continued positive earnings per share and EBIT trend, adjusted for notable items and timing differences over the past four fiscal years, along with the most recent trailing 12-month period.\nThis is an exceptional performance, and I echo Greg's appreciation of the amazing execution by our global team.\nSlide 7 compares our year-to-date SG&A to the prior year.\nWe achieved underlying addressable SG&A savings of $25 million, of which approximately 75% was related to indirect cost.\nLooking ahead, we are monitoring cost inflation globally and we will be working hard to offset this impact where we can, while still making the necessary investments in our people, processes and technology.\nMoving to Slide 8.\nFor the most recent trailing 12-month period, our cash generation, excluding notable items and mark-to-market timing differences were strong with approximately $1.9 billion of adjusted funds from operations.\nThis cash flow generation was well in excess of our cash obligations over the past 12 months, allowing us to continue to strengthen our balance sheet.\nTurning to Slide 9.\nDuring the quarter, we received two credit rating upgrades.\nMoody's raised us to Baa2 and Fitch upgraded us to BBB, both with stable outlooks.\nThis now puts us at our target rating of BBB, Baa2 with all three rating agencies.\nThe chart on this slide details our year-to-date capital allocation of adjusted funds from operations.\nAfter allocating $137 million to sustaining capex, which includes maintenance, environmental health and safety, and $25 million to preferred dividends, we had approximately $1.1 billion of discretionary cash flow available.\nOf this amount, we paid $215 million in common dividends, invested $102 million in growth and productivity capex and repurchased $100 million of common shares, leaving approximately $725 million of retained cash flow.\nOur pace of capex spend this quarter was below our expectations due to supply chain related delays, which we don't see improving by year end.\nAs a result, we are reducing our 2021 capex forecast by about $100 million and we'll be rolling over these projects into next year.\nIn addition, we have a nice pipeline of growth and productivity investments that are under consideration which we will likely -- which will likely lead to a higher than baseline spend for the next couple of years.\nWe will provide more details on our outlook during our Q4 earnings call in February.\nThe $100 million of share repurchases in the quarter completed our $500 million authorization.\nAs Greg mentioned earlier, Bunge's Board has authorized a new $500 million program.\nEarlier this year, we increased our quarterly common dividend by 5%.\nIn May of next year, we will again review our dividend with consideration for the recent increase in our earnings baseline from $5 per share to $7 per share, and the success in strengthening our balance sheet.\nSo as we have been demonstrating, we will continue to take a balanced and disciplined approach to capital allocation.\nAs you can see on Slide 10, by quarter end, readily marketable inventories exceeded our net debt by approximately $1.1 billion, a significant change from a year ago.\nFor the trailing 12 months, adjusted ROIC was 19.4%, 12.8 percentage points over our RMI adjusted weighted average cost of capital at 6.6%.\nROIC was 13.7%, 7.7 percentage points over our weighted average cost of capital at 6% and well above our previously stated target of 9%.\nThe spread between these metrics reflects how we use RMI in our operations as a tool to generate incremental profit.\nMoving to Slide 12.\nFor the trailing 12 months, we produced discretionary cash flow of approximately $1.6 billion and a cash flow yield of 21.6%.\nThe decline in cash flow yield from the prior year reflects a growth in book equity of the Company.\nAs Greg mentioned in his remarks, taking into account our strong third quarter results and favorable market trends, we've increased our full year adjusted earnings per share from $8.50 to $11.50.\nOur outlook is based on the following expectations.\nIn Agribusiness, results were expected to be up from our previous outlook and now forecasted to be higher than last year.\nIn Refined & Specialty Oils, results are expected to be up from our previous outlook and well above last year.\nWe continue to expect results in milling to be generally in line with last year.\nExcluding Bunge Ventures, corporate and other is expected to be lower than last year, driven by higher performance-based compensation, a portion of which was historically allocated to the segments.\nAdditionally, the Company now expects the following for 2020.\nAn adjusted annual effective tax rate in the range of 15% to 17%.\nNet interest expense in the range of $200 million to $210 million.\nCapital expenditures in the range of $350 million to $400 million, and depreciation and amortization of approximately $420 million.\nIn non-core, full year results in the Sugar and Bioenergy joint venture are now expected to be up considerably from the prior year.\nWith that, I'll turn things back over to Greg for some closing comments.\nBefore opening the call to Q&A, I want to offer a few closing thoughts.\nAs John and I noted, we expect a strong close to 2021, driven by Agribusiness and Refined & Specialty Oils.\nLooking ahead, we expect favorable market conditions to continue and we're confident in our ability to capture the upside from opportunities while minimizing the downside.\nBased on what we can see right now, we would expect earnings per share to be well above our baseline for the next couple of years, driven by higher than baseline assumptions for refined and specialty oils and soft seed crushing.\nAnd we'll continue to deploy cash we generate to create value by investing in growth projects with strong returns and returning capital to shareholders.\nIn closing, we're very pleased with our team's strong performance and our revised outlook.\nIn today's environment, we're right where we need to be, a key participant in the global food and agricultural network.\nWe're excited about our role in the accelerating shift in demand for sustainable food, feed and fuel and the growth we have ahead of us.\n", "role": "user" }, { "content": "compname reports q3 gaap earnings per share $4.28.\nq3 gaap earnings per share $4.28.\nsees fy adjusted earnings per share at least $11.50.\nqtrly adjusted earnings per share $3.72.\nqtrly agribusiness results driven by strong execution and better than expected market environment.\nincreasing full-year adjusted earnings per share outlook to at least $11.50 based on strong q3 results and favorable market trends.\nbunge board authorized new $500 million program.\nexpect favorable market trends to continue.\nare well-positioned to help our customers across supply chain address challenges in meeting increasing consumer demand.\nin agribusiness, fy results are expected to be up from our previous outlook and now forecasted to be higher than last year.\nin non-core, full-year results in sugar and bioenergy joint venture are now expected to be up significantly from prior year.\nin refined and specialty oils, fy results are expected to be up from our previous outlook and well above last 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: Before we get started, I want to let you know that we have slides to accompany our discussion.\nReconciliations of non-GAAP measures to the most directly comparable GAAP financial measures are posted on our website, as well.\nTurning to Slide 3, you'll see the agenda for today's call.\nI'll start with some highlights of our 2020 accomplishments and a look into 2021 before handing over to John, who will go into more detail on our outstanding performance and outlook.\nLet's start with an overview of the year, turning to Slide 4.\nWhen we started the transformation, we had a specific plan for turning the Company into the highly functioning successful organization we all knew it could be.\nThe team has embraced the process, driving operational performance, optimizing our portfolio, and strengthening our financial discipline.\nAnd they did it during one of the most challenging environments in recent history.\nAs we go through the results for the year, you'll see the power of the new Bunge.\nOne significant change we made was transforming our operating model to improve visibility, and speed to act.\nAs a result, the commercial and industrial teams are better coordinated, helping us to maximize our assets.\nIn 2020, outside of Argentina, we processed record volumes in soy and soft seed crush.\nOur commercial teams ensured our plants had the supplies they needed, and our industrial teams reduced unplanned downtime at the facilities, by more than 30% year-over-year in soy, and approximately 20% year-over-year in soft seeds.\nThis improved capacity utilization, brought immediate financial benefits without a significant additional use of capital.\nThis is just one example of how this more global approach has improved our network efficiency.\nWe were also better able to capitalize on market and customer opportunities, as they arose throughout the year.\nAs COVID lockdowns changed consumer eating habits, we quickly adjusted our production to help some of the world's leading brands continued to keep their products on the store shelves.\nWe also worked closely with our food service customers, as they continued to adapt to the changing demand patterns.\nAgility is also critical, as we continue to look at how our vital work can be done more sustainably.\nWe're proud to be an industry leader in protecting the environment in areas where we operate.\nWe are a leading supplier of certified deforestation-free soy from Brazil.\nAnd as we work to reduce greenhouse gas emissions in our operations, we're converting more facilities over to wind and solar power.\nFor instance, our corn and soybean processing plants in Kansas run on wind today, and we recently announced a deal to use renewable energy at our Fort Worth, Texas packaging facility.\nAs we look at our assets, we've now announced all of the significant portfolio optimization actions we originally identified.\nWith these major changes behind us, we can now shift our focus to continuous improvement in growth opportunities.\nIn the immediate future, we know that COVID will still be with us.\nWe continue to remain focused on our top priority of protecting our team, their families and communities.\nOur global and regional COVID crisis teams continue to meet regularly to make sure our operations have the resources and tools needed to keep our employees safe, so we can continue to serve our customers.\nNow, let's turn to our results on Slide 5.\nWith our strong team and unmatched platform, we've created a resilient model for moving forward.\nThis quarter and the full-year really highlighted the earnings power of that platform, benefited from improving trends throughout the year, and we're able to move quickly to capture the opportunities they've presented themselves in markets around the world.\nDuring the year, we saw demand-led markets with higher volumes, volatility and prices.\nAnd with our platform and operating model, including our industry-leading risk management, we captured upside well above our earnings baseline.\nIn the fourth quarter, agribusiness benefited from a better-than-expected market environment, with particularly strong results in our North American operations, driven by higher oilseed crush and elevation margins.\nIn edible oils, we realized exceptional margins in our Brazilian consumer business, and also benefited from increasing demand from biodiesel in South America, and renewable diesel in the US.\nWe continued to innovate to deliver solutions that benefit our customers on both ends of the supply chain, consumers and farmers.\nA great example of this is Karibon, a Shea-based substitute for cocoa butter, we launched in the fourth quarter; a sustainably sourced ingredient that also benefits the communities in Africa, where we sourced Shea.\n2020 also demonstrated the power of our approach to risk management.\nThere will always be volatility in this industry.\nBut our approach to risk management allows us to capture the upside of that volatility, and protecting its most of the downside.\nWhile we won't always manage it perfectly, this approach is what makes our model unique and powerful.\nThe strength will be critical, as we look ahead into 2021.\nMany of the conditions that helped drive our success in 2020 remain in place today, but we don't have clear visibility into the second half of the year.\nAnd while we don't expect all of the conditions that existed in 2020 to repeat in 2021, we do expect to deliver adjusted earnings per share of at least $6 per share.\nOur team will be closely watching the key factors that could impact our forecast, including changes in demand, crop production, and a post-COVID recovery.\nAnd with that, I'll hand the call over to John to walk through the financial results in detail, and we'll then close with some additional thoughts on 2021.\nLet's turn to the earning highlights in Slide 6.\nOur reported fourth quarter earnings per share were $3.74, compared to a loss of $0.48 in the fourth quarter of 2019.\nAdjusted earnings per share was $3.05 in the fourth quarter versus $1.69 in the prior year.\nOur reported results included a net gain of $0.59, primarily related to our previously announced sale of our Brazilian margarine and mayonnaise assets, as well as the impact of an indirect tax credit related to the favorable resolution of a tax claim.\nFor the full-year, 2020 rates per share was $7.71 versus a loss of $9.34 in 2019.\nAdjusted full-year earnings per share was $8.30 versus $4.76 in the prior year.\nAdjusted core segment earnings before interest and taxes, or EBIT was $637 million in the quarter versus adjusted EBIT of $467 million in the prior year, driven by strong performances in our agribusiness and edible oil segments.\nAgribusiness closed out an excellent year with a very strong fourth quarter.\nHigher oilseeds results were primarily driven by soft seed processing, where earnings were higher in all regions, driven by robust veg oil demand and record capacity utilization.\nSoy processing results were in line with the prior year.\nThese improvements in our North American and Asian operations were offset by South America and Europe.\nIn Grains, higher results were primarily driven by our North American operations, which benefited from strong export demand and exceptional execution of logistics.\nResults also benefited from favorable risk management and optimization in our global trading and distribution business.\nIn South America, earnings decreased largely due to lower origination volumes, as farmers have accelerated sales earlier in the year, in response to the spike in local prices.\nEdible oils finished up and turned out to be an excellent year, with very strong results of $113 million, up $38 million compared to last year, primarily driven by higher margins in our consumer business in Brazil, as a result of tight supply and strong demand.\nHigher results in North America were largely due to increased demand for renewable diesel sector, and higher contributions with our key customers.\nResults were also higher in Asia, driven by lower costs.\nEarnings declined in Europe due to lower margins.\nIn Milling, lower results in the quarter were driven by North America, which was impacted by lower volumes and margins, as well as the loss of earnings from our rice milling operation, which was sold during the quarter.\nResults in South America were in line with last year, as higher volumes were offset by lower margins.\nFertilizer also had a strong quarter, with results of $32 million, similar to 2019 finishing off a very strong year.\nTotal adjusted EBIT for corporate and other for the quarter was comprised of a negative $81 million from corporate, and $2 million from other.\nThis compares to a negative $95 million from corporate and negative $60 million from other for the prior year.\nThe decrease in corporate expenses during the quarter was primarily related to the timing of performance-based compensation accruals in the prior year.\nThe increase in other reflects the prior-year impact of our Beyond Meat investment.\nResults for our 50/50 joint venture with BP benefited from higher year-over-year average ethanol prices in local currency, as well as improved industrial efficiency.\nEarnings in the fourth quarter of last year benefited from lower depreciation due to our Brazilian Sugar and Bioenergy operations being classified as held for sale.\nFor the quarter and year ended December 31, 2020, income tax expense was $97 million and $248 million respectively, compared to $16 million and $86 million respectively for the prior year.\nThe increase in income tax expense during 2020 was primarily due to higher pre-tax income.\nAdjusting for notable items, the effective tax rate for the year was just under 70%.\nThe effective tax rate was lower than our prior forecast, primarily due to earnings mix.\nNet interest expense of $66 million were slightly higher than our prior forecast, due to increased short-term borrowings to support higher commodity prices and volumes.\nHere you can see our positive earnings trend adjusted for notable items and some timing differences over the past four years, reflecting the execution of our strategy to drive operational performance, optimize our portfolio, and strengthen financial discipline.\nSlide 8 compares our full-year 2020 adjusted SG&A to the prior year.\nWe achieved underlying addressable SG&A savings of $50 million toward our savings target of $50 million to $60 million established at our June Business Update.\nWhile we are pleased with our progress, we recognize a portion of the savings was accelerated due to COVID-19 related restrictions, such as reduced travel.\nHowever, we are confident we will return to pre-pandemic levels, as we have all learned to operate differently, and we will continue our focus on further streamlining the business.\nThe net increase of $90 million in the specified items reflects a significant increase in performance-based compensation accruals due to our improved financial performance this year, slightly offset by other items such as inflation and the impact of foreign currency fluctuations.\nMoving to Slide 9, for the full-year 2020, our cash generation, excluding notable items and mark-to-market timing differences, were strong with approximately $1.9 billion of adjusted funds from operations.\nThe cash flow generation enabled us to comfortably fund our cash obligations over the year, and apply retained cash of $1.1 billion to reduce debt.\nSlide 10 summarizes our capital allocation of adjusted funds from operations.\nAfter allocating $254 million to sustaining capex, to include maintenance environmental health and safety, and $34 million to preferred dividends, we had approximately $1.6 billion of discretionary cash flow available.\nOf this amount, we paid $282 million in common dividends to shareholders, invested $111 million in growth and productivity capex, and bought back $100 million of our stock.\nAs shown previously, the remaining cash flow of approximately $1.1 billion was used to strengthen our balance sheet in support of our credit rating objective of BBB/Baa2.\nMoving on to Slide 11, a $1.1 billion of retained cash flow offset a portion of our $3.1 billion of cash outflow of this year for working capital.\nAs a result, net debt rose by $2.2 billion over the course of the year.\nThe growth in working capital, primarily reflects an increase in readily marketable inventories, resulting from higher commodity prices and our deliberate decision to increase volumes to optimize earnings potential.\nAs the slide shows, our availability under committed credit lines remained largely unchanged, leaving us with ample liquidity as we enter 2021.\nAs you can see on Slide 12, at the end of the fourth quarter, only 9% of our net debt was used to fund uses other than readily marketable inventories.\nThis compares to 17% last year.\nFor 2020, adjusted ROIC was 15.9% or 9.3 percentage points over our RMI-adjusted weighted average cost of capital of 6.6%, and up from 9.7% in 2019.\nROIC was 12.2% or 6.2 percentage points over our weighted average cost of capital of 6%, and well above our stated target of 9%.\nThe widening spread between these return metrics reflects how we have been effectively using merchandising RMI, as a tool to generate incremental profit.\nAs a reminder, we have adjusted these return metrics to exclude the impact of changes in foreign exchange rates on book equity as of year-end 2018.\nWe believe this provides a clear picture of our economic performance from the management actions we've taken over the past two years.\nMoving to Slide 14.\nHere you can see our cash flow yield trend, which emphasizes cash generation measured against our cost of equity of 7%.\nFor the year ending December 31, 2020, we produced a cash flow yield of nearly 26%, up from 13.4% at year-end 2019.\nAs Greg mentioned in his remarks, taking into account the current margin environment and forward curves, we expect full-year 2021 adjusted earnings per share of at least $6 per share.\nIn Agribusiness, full-year results are expected to be down from 2020, primarily driven by lower contributions from oilseed processing and origination primarily in Brazil.\nWhile we are not forecasting the same unique environment or magnitude of opportunities that we captured during 2020, we do see some potential upside to our outlook, resulting from strong demand and tight commodity supplies.\nIn Edible Oils, full-year results are expected to be comparable to last year.\nHigher results in the North American business, driven by a recovery in food service and increased renewable diesel demand are expected to be offset by lower results in our consumer business in Brazil.\nIn Milling, full-year results are expected to be in line with last year.\nIn Fertilizer, full-year results are expected to be down from a strong prior-year.\nIn Non-Core, full-year results in our Sugar and Bioenergy Joint Venture are expected to be a positive contributor, driven by improved sugar and Brazilian ethanol prices.\nAdditionally, the Company expects the following for 2021.\nAn adjusted annual effective tax rate in the range of 20% to 22%, net interest expense in the range of $230 million to $240 million, capital expenditures in the range of $425 million to $475 million, and depreciation and amortization of approximately $415 million.\nWith that, I'll turn things back over to Greg for some closing comments.\nBefore turning to Q&A, I want to offer a few closing thoughts.\nWe set ambitious goals for Bunge's transformation, and we can see the results from the changes we've made.\nNow that we've completed the majority of the actions we originally laid out, we're able to focus on continuous improvement in growing the business across the cycle, as we move forward.\nAs we did in 2020, we're going to be leveraging our platform and the operating model we've put in place, and look for the opportunities ahead of us, as we work effectively to capture the upside and minimize the downside.\nLooking over the longer term, we remain excited about the structural shift we're seeing in the consumer demand for food, feed and fuel.\nIn particular, we're focusing on four primary areas of growth; oilseed processing and origination, renewable feedstock for biofuels, plant protein ingredients and plant lipid ingredients, which is our specialty fats and oils.\nAnd with our global platform, culture of innovation, and oilseed leadership, we believe we're in a unique position to benefit from those trends.\nThe leadership team and I are incredibly proud of the entire Bunge team's continued focus on execution.\nAnd while 2021 will surely present different challenges and opportunities, I'm confident we have the right platform, and I look forward to continuing to work together to maximize Bunge's full potential.\n", "role": "user" }, { "content": "compname posts q4 earnings per share $3.74.\nq4 gaap earnings per share $3.74.\nfavorable market environment continuing into 2021 overview.\nto date, the company has not seen a significant disruption in its supply chain.\nin agribusiness, full-year results are expected to be down from 2020.\nin milling, full-year results are expected to be in line with last year.\nin non-core, full-year results in sugar and bioenergy joint venture are expected to be a positive contributor.\nin edible oils, full-year results are expected to be comparable to last year.\nqtrly earnings per share $3.05 on an adjusted basis excluding certain gains and charges and mark-to-market timing differences.\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: Actual results may differ materially from these statements most notably from the ongoing impact of the COVID-19 pandemic and Benchmark undertakes no obligation to update any forward looking statements.\nFor today's call, Jeff will begin by covering the framework of our COVID-19 emergency response protocol and providing a current status of our global operations.\nRoop will then discuss our first quarter results including a cash and balance sheet summary.\nJeff will wrap up with a rundown of demand outlook by market sector and our near-term guidance, before we conclude the call with Q&A.\nI'd like to start off the call by offering our heartfelt condolences to all who have been affected by the COVID-19 crisis.\nI would also like to recognize the courageous healthcare workers and first responders, who are taking care of those impacted by the COVID-19 virus.\nFor the past three months, we've been working very hard to maintain operations against the global spread of the pandemic with two priorities in mind.\nFirst, is the health and safety of our colleagues and their family.\nThe second priority is to sustain the output of our operation so that we can continue to serve our customers during this critical time.\nSince the early outbreak and direct impact to our Suzhou, China operations, the senior leadership team have met daily and created a task force to centralize employee and operational safety protocols and to establish a global communications cadence.\nWe receive a daily report on employee health and the status of our global manufacturing and engineering operation.\nWe also established a critical work stream to deal with the ever-changing government requirement and regulation and to maintain alignment between the local authorities, our operations and our customers.\nI want to give tremendous kudos to our team for all they have accomplished.\nThis is a 24-hour a day, seven day a week day-in and day-out effort to stay aligned, productive and coordinated.\nOur teams have approached this challenge with incredible result, and a sense of responsibility to our employees, customers, shareholders and local community.\nWhile some employees are being asked to work from home, this is not an option for many directly involved in the manufacturing or design of critical product.\nFor our employees working in our facilities, we've added new protocols for extensive and frequent disinfecting and cleaning, facing of personnel and more.\nTo those employees who could work remotely, we have invested in tools and equipment to allow them to continue to be productive.\nWe are pleased with the results and creativity these teams have shown as they have found new ways to collaborate and to communicate with each other and our customer.\nAs the coronavirus began to make its way around the world, we saw challenges imposed by governments from various forms of stay at home, shelter in place and lockdown orders and some imposed by our own health and human resources teams to ensure we are maintaining safe facilities.\nBenchmark provides critical infrastructure products and essential services in each of our location.\nHowever, government policies and implementations have still impacted operations.\nI'll start with our Suzhou site, which was impacted after the Chinese New Year.\nWe were given early approval to reestablish operations to support critical medical products and were ramped back to full capacity by mid-March.\nOur China plant continues to operate at full capacity today.\nIn mid-March there were new decrees that caused significant disruptions in our Penang, Malaysia operation which includes our largest precision machine facility.\nUnfortunately, local restrictions remain in force and we were only operating at 30% of capacity to start the quarter.\nThis is now changing where we can move to full capacity starting this week.\nWe worked hard to minimize the impact by staggering shifts, extending coverage and modifying our workflow.\nBut we have not been operating at optimum level.\nOur European operations in the Netherlands and Romania have had some limited interruptions but continued to operate near full capacity.\nIn the last few weeks of March and in early April we saw all states in the U.S. implement some form of shelter in place order.\nWe were hit particularly hard in our California facilities where we have five operations, two in the Bay Area and three in Southern California, which are not yet back to full capacity.\nAs we sit here today, we're still working through a major disruption in our two Tijuana, Mexico operation, which were shut down practically overnight by the Baja state despite previously passing an inspection and given the authorization to operate by the Central Mexican Government.\nThese two locations currently remain closed with zero manufacturing output.\nOur Guadalajara facility is also not operating in full capacity due to government restriction.\nThis has been and remains a highly dynamic environment and through the collective efforts of our incredible employees, we are managing priorities to meet and fulfill as much demand as possible.\nOur estimate today is that we are operating approximately at 75% to 80% of productivity.\nWe are hopeful that shelter in place orders do as intended and the infection curve peak and starts to decline, so that normal operation can resume in all location.\nBenchmark began its journey as a medical device manufacturer more than 40 years ago and has maintained partnerships with some of the largest medical technology companies in the world.\nWe are working with medical customers and governments to get lifesaving equipment, where it is needed most, by providing critical design services and expediting manufacturing capacity, even doubling or quadrupling production volumes for some customers.\nDemand has increased for diagnostic imaging products, including mobile X-ray and MRI products and handheld ultrasonic devices.\nWe are supporting multiple ventilator projects with new and existing customers, which are in high demand to support those who need the most critical support in hospitals around the world.\nOn the diagnostic front, we are supporting point of care devices, including a rapid one hour COVID-19 virus tester and a rapid sepsis testing device.\nRoop, over to you.\nI hope everyone and their families are healthy and safe.\nLet me start by echoing Jeff's sentiment on the incredible efforts of our teams to support our customers through a very dynamic environment to deliver our first quarter results.\nAs we manage through the COVID crisis, our priorities remain centered on one, the health and safety of our employees; two, retaining the critical resources and capabilities to support our customers; three, maintaining a healthy balance sheet; and four, ensuring the financial flexibility to run our operations through uncertainty.\nI would discuss these priorities and our actions to support each as we step through our results.\nAs a reminder, on March 16, 2020, we announced that the COVID-19 outbreak would negatively impact our first quarter results relative to the guidance that we had provided on February 6.\nOur first quarter results were below our February guidance driven by direct cost associated with labor expenses, personal protective equipment, supply chain inefficiencies and under absorption, all caused by the disruptive impact of COVID-19.\nEven considering the challenging environment, we achieved revenue of $515 million in the first quarter, which were supported by strong demand in our Semi-Cap, Medical, and A&D sectors.\nOur gross margins for the quarter were 8.4% and non-GAAP earnings per share were $0.22.\nOur non-GAAP earnings reflect revenue changes as well as costs associated with employees who were restricted, quarantined or otherwise affected by the COVID-19 condition.\nWe also incurred higher overtime expenses and we've paid labor premiums to those employees working in our China factory as they worked to recover from the shutdown.\nAnd as a result, we estimate that our China factory inefficiencies impacted our global earnings per share by approximately $0.08.\nAs the impact of COVID-19 conditions expanded globally as Jeff mentioned, there were further inefficiencies and other operations beyond China which, were reflected in our reported non-GAAP EPS.\nOur cash conversion cycle for the quarter was 81 days.\nWe used $3 million in cash flow from operations and free cash flow was a negative $15 million as a result of $13 million spent on capex.\nOriginally we expected to spend approximately $50 million in capital expenditures in fiscal year 2020.\nWe now expect that our capital expenditures for fiscal 2020 will be reduced by approximately half and focus primarily on new product introductions and associated brands.\nMedical revenues for the first quarter increased 15% sequentially and were up 14% year-over-year from volume increases across several customers for new and existing programs.\nDemand through the quarter remained strong with -- in some cases increasing demand for products such as X-ray and scanning devices, controls for hospital equipment including ventilators and diagnostic devices that are critical to support the COVID-19 pandemic.\nSemi-Cap revenues were up 2% in the first quarter and up 25% year-over-year where increase in demand across the majority of our Semi-Cap customers along with the ramp of new customer to our portfolio.\nThis sector was most significantly impacted by labor constraints related to aggressive shelter in place protocols in our Penang, Malaysia and California location, which began in mid-March.\nA&D revenues for the first quarter increased 13% sequentially and were up 15% year-over-year from new program ramps for defense satellite, munition and security.\nWe did receive signals late in the quarter of demand decreases in Commercial Aerospace segment which is less than 30% of our A&D sector revenues.\nIndustrial revenues for the first quarter decreased 4% sequentially and 12% year-over-year.\nThe industrial sector was lower and had the largest variant of any sector as compared to our original Q1 expectation from COVID-related impact.\nOverall the higher value market represented 82% of our first quarter revenue.\nTurning now to our traditional market; computing was down 71% year-over-year from the completion of the legacy computing contract in 2019 and 18% sequentially quarter-over-quarter from lower data center storage and commercial printing product demand.\nTelco was down 15% sequentially and down 37% year-over-year from lower demand for infrastructure build out related products.\nOur traditional markets represented 18% of first quarter revenues.\nOur top 10 customers represented 42% of sales for the first quarter.\nOur GAAP earnings per share for the quarter was $0.10 and our GAAP results included $2.9 million of restructuring and other non-recurring costs in Q1.\nThese costs included $1.9 million of cost-related to our previously announced site consolidation effort and other restructuring type activities around our network and $1 million for an impairment related to a building that is now being classified as held-for-sale.\nOur previously announced San Jose closure is on track to be completed in Q2.\nAs a reminder, there were no GAAP to non-GAAP adjustments related to COVID-19.\nTurning to slide 10 for our non-GAAP financial information for Q1, our non-GAAP -- our Q1 non-GAAP gross margin was 8.4% a 100-basis-point increase quarter-over-quarter and 30-basis-point year-over-year.\nQ1 2020 results were impacted by labor inefficiencies due to the government mandated shutdown in China and shelter in place requirement throughout the rest of our global network and the incurrence from incremental expenses for personal protective equipment.\nOur SG&A was $31.6 million, an increase of approximately $7 million sequentially.\nQ4 2019 SG&A was lower due to reduced variable comp, including stock comp.\nAdditionally in Q1 we have to restart a payroll [Indecipherable].\nSG&A was flat on a year-over-year basis.\nOperating margin was 2.3%, a decrease from 2.6% in Q4 due to the lower than expected revenue and inefficiencies related to COVID-19.\nIn Q1, 2020, our non-GAAP effective tax rate was 19%, which was lower than expected for the quarter due to the distribution of income across our network.\nWe expect that for Q2, our non-GAAP effective tax rate will continue to be in the range of 20% to 22%, again because of the distribution of income around our global network.\nNon-GAAP earnings per share was $0.22 for the quarter and ROIC was 7.1%.\nJeff will provide more details shortly about the strength we are seeing in Defense, Medical and Semi-Cap.\nWe're also seeing a challenging supply chain environment and labor constraint due to the COVID-19 virus.\nAs a result of these inefficiencies, we are proactively taking a series of actions to lower our cost structure and reduce capital expenditures.\nOur CEO, the board and our senior executive team will take a temporary 10% salary cut, while the rest of the senior leaders in the company will take a 7% salary cut through Q3 2020.\nAdditionally, we expect to reduce variable compensation and other discretionary expenses such as travel.\nThe cost reduction actions in our U.S. factories will consist of employees taking rotating time off depending on the factory loading levels.\nCost reduction actions in our non-U.S. locations will depend on a local law requirement.\nIn summary we're being vigilant and very much appreciate the support of our entire organization as we navigate the current environment.\nOur cash balance was $412 million at March 31 with $223 million available in the U.S.\nWe have continued to repatriate cash from our foreign location and we will continue to repatriate in future quarters, while balancing our foreign side cash flow requirement.\nOur cash balances include $95 million of proceeds from borrowings under our revolving line of credit.\nWe borrowed against our revolver proactively to support navigating through the current environment.\nWe will continue to monitor our financial covenant and ensure compliance.\nWe do expect our net interest expense to increase by $500,000 in Q2.\nOverall at the end of Q1 2020 we are in a positive net cash position of approximately $170 million.\nWe believe we have a strong capital structure and our liquidity position provides flexibility to manage our business through the current environment.\nOur accounts receivable balance was $318 million, a decrease of $6 million from December 31.\nContract assets were $160 million at March 31 and $161 million at December 31.\nPayables were up $13 million quarter-over-quarter.\nInventory at March 31 was $338 million up $23 million quarter-over-quarter due to mix changes from customers late in the quarter and bringing in inventory to support long production cycles for product in our Semi-Cap and Medical sectors.\nWe continue to make proactive investments to secure the critical components needed to support our customers while managing inventory balances.\nFor Q1 2020, our cash conversion cycle was 81 which was within our expectations at the beginning of the quarter and was achieved even considering the challenging environment.\nThis is consistent with our expectation.\nAs discussed previously after the completion of the legacy computing contract in the third quarter of 2019, our cash conversion cycle will be between 78 and 83 days.\nTurning to slide 13 for our capital allocation update, in Q1 we returned approximately $25 million to shareholders, this included $5.5 million as part of our recurring quarterly cash dividend, which we recently increased to $0.16 per share and announced on February 3, 2020.\nWe expect to continue the recurring quarterly cash dividend.\nWe also repurchased approximately 724,000 shares or $19 million.\nAs of the end of March 2020, we had approximately $210 million available under the current share repurchase program after an increase approved by the Board in February 2020.\nWe are prioritizing cash usage for operational need and as such we are not planning to repurchase shares in Q2.\nBecause of the uncertain conditions related to COVID-19 we will not provide our usual detailed level next quarter guidance.\nJeff will provide a detailed view of demand in our end market by sector, an overview of recent new business wins and an update on our key strategic initiative.\nTurning now to the impact of the pandemic on Benchmark on slide 15, I want to provide some insights into what we're hearing from our customers by sector.\nI would like to focus on two dimensions, the current visibility of demand by each market vertical and our ability to translate that demand to revenue based on operational and supply chain constraint.\nIn summary, the second quarter will be less about demand than our operational and supply chain capability to support it.\nOur supply chain team has been proactively managing parts supply during this pandemic, since the early days of the outbreak in China.\nThe team is accessing risk areas with our suppliers every day and taking preventative steps to ensure our critical supply lines remain open.\nHowever, the global supply base remains subject to the same ordinances and decrees that affect our operation and are causing inevitable interruption in our suppliers, ultimately impacting our output.\nIn the Medical sector, demand remains strong for the medical products we produce.\nOur medical design services and new program ramp.\nFurthermore, as I discussed, we have been engaged by existing and new customers and helping produce medical equipment to help fight COVID-19 and in some cases this has meant a significant increase in demand.\nThis demand and our ability to support medical customers will result in sequentially higher revenues in Q2 and we expect our second half 2020 revenue in this segment will be higher than the first half.\nIn Semi-Cap, the demand recovery for semiconductor capital equipment continues based on the current forecast from our customers.\nHowever, operations to supply chain challenges that exist in our California and Malaysia operations are impacting our ability to fulfill all of our demand backlogs in Q2.\nOur competitive position remains strong in the sector, where we have won new programs and expanded our penetration in key accounts over the past several years.\nWe also expect increased revenue in the second half of the year in this area based on strong semiconductor capital equipment demand.\nDemand in the industrial sector is met and we expect some subsectors to be impacted more than other.\nApproximately 20% of our industrial customers support the oil and gas industry and we expect demand to be softer throughout the balance of the year.\nWe also expect weakness in industrial transportation and infrastructure.\nA bright spot could be the automation and robotic sub-segment where we have a number of new wins.\nAs a result, we expect the industrial sector to be down in the second quarter with some recovery in the second half.\nSimilar to industrial, the traditional markets of computing and telco are met.\nAt present satellite communication-related products are increasing, but datacenter and telco infrastructure buildup budgets are expected to be under pressure.\nIn Q2, impact through our Tijuana and Malaysia operations and supply chain are impacting computing and telco revenues as well, but output should recover the demand in the second half.\nWe also expect an increase in high performance computing projects and associated revenue in the back half of the year.\nOur A&D sector is comprised of approximately 70% defense related product and 30% aerospace.\nDemand remains strong for defense product, but we are challenged at this time to fully support these programs in our California location, including critical subcomponent shortages that are manufactured in Tijuana.\nAs these issues improve, we expect higher defense related revenue.\nFor our commercial aircraft program, we have seen a significant decline in demand and we anticipate much lower demand through the rest of the year barring any major improvement in commercial aviation.\nDespite the challenging global environment and disruption to our normal customer engagement workflows, we were pleased with our continued design and manufacturing win momentum accomplished in Q1 as shown on slide 16.\nIn our Medical sector we were awarded programs for affordable ultrasound and a mobile imaging device both with existing customers.\nWe also received a design win for an automated drug freezer with a new customer, which we expect to convert to a manufacturing win in the future.\nThe new ventilator program that we were awarded will appear as new business wins in Q2.\nIn Semi-cap we were awarded a precision machining program for a next generation in-chamber tool focused on wafer elimination along with a design and manufacturing award for an EUV electronics controller expanding our participation in this cutting edge technology.\nIn aerospace and defense, we received additional award for munitions, electronics and a flight recorder in which we will perform process design and manufacturing.\nOur pipeline in the defense segment is very encouraging and we have bid on a large number of projects that we expect to hear the results of in the coming months.\nIt's clear this segment has made a serious commitment to outsourcing more of their manufacturing needs but they require sophisticated partners who can meet their exacting standard.\nBenchmark is up to this challenge and has continued to invest in this segment.\nIn Industrial, we're making process to new wins for a vehicle tracking and diagnostic devices and the design and manufacturing of a new artificial intelligence enabled LIDAR scanner.\nIn addition to new business wins, we were pleased to be recognized by our customers for delivering complex products with high quality.\nFor example, we announced that we were selected by Raytheon with an EPIC Award for Excellence related to the design and manufacturing of a ruggedized multi-domain router using critical communications supporting our military.\nBenchmark Secure Technology has been a Raytheon partner for almost 20 years and we look forward to supporting this expanding strategic relationship across Benchmark.\nGiven the current environment, we've elected to suspend quarterly guidance for the second quarter.\nThe quarter can unfold under a variety of scenarios, the magnitude of which remains uncertain depending on the timing of government action to allow the return to full production and supply chain improvement.\nInstead, we will offer some directional guide posts for now and resume guidance once we have more clarity and predictability.\nGiven where we are in the quarter and our assessment of our operations, we expect revenue to modestly decline sequentially as we have lost manufacturing time which cannot be recovered.\nWe also expect that second quarter will be the lowest revenue quarter of 2020 despite the stronger demand outlook in Medical, Semi-Cap and Defense.\nSecond quarter margins will be down sequentially primarily from lower revenues and associated under absorption, lower productivity levels, incremental supply chain costs and employee-related expense.\nAt present many of our operations which are shut down or operating at reduced capacity, payroll costs cannot be mitigated even if employees cannot come to work.\nAlso given our demand outlook and new program ramp from wins in the past 24 months, we need to maintain critical resource capability, which Roop mentioned as a top priority.\nWe also expect gross margins will recover to the 9% range in the second half of 2020.\nAs Roop covered, we've taken a number of proactive actions during the quarter to manage expenses including compensation adjustments, merit and hiring delays and furloughs where permissible.\nWe are biasing toward these actions versus headcount reductions in the near term to support our long term growth.\nAs a result of some of the actions, we expect that SG&A will be reduced approximately 8% in Q2.\nBeyond Q2, we also -- have also run a number of scenarios for the remainder of the year and we will take appropriate actions to further reduce costs as appropriate if the pandemic continues or demand conditions change.\nWe feel very confident that our experienced, disciplined execution and strong balance sheet will allow us to navigate this period of uncertainty, while continuing to invest in the future.\nAs we enter 2020, we prioritize how we would spend our time this year to build a better Benchmark.\nEven with the significant challenges brought on by COVID-19, our key strategic initiatives remain unchanged.\nIn fact, progressing these initiatives goes hand-in-hand with how we are managing the current price.\nOne of the greatest testaments on progress has been the multiple calls and emails we receive from our customers on our effective and standardized protocols and efficient communication to make sure our priorities remain aligned.\nThese endorsements confirm progress on our journey to be a trusted partner and service provider for our customers.\nWe will continue to work on these longer term initiatives to prepare the company to capture the growth that lies ahead.\nOur competitive position remains strong and I have the utmost confidence in our leadership and our global team.\n", "role": "user" }, { "content": "q1 non-gaap earnings per share $0.22.\nq1 gaap earnings per share $0.10.\nq1 revenue $515 million versus refinitiv ibes estimate of $510 million.\nunable to forecast with certainty effect on benchmark's financial and operational results for q2 of 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: For today's call, Jeff will begin by covering a summary of our first quarter results, including new program wins.\nRoop will then discuss our detailed first quarter results, including a cash and balance sheet summary and second quarter 2021 guidance.\nJeff will wrap up with an outlook by market sector and progress to-date on our strategic initiatives, including ESG and sustainability.\nWe will then conclude the call today with Q&A.\nOverall, we delivered a solid start to 2021.\nOur first quarter results reinforce our commitment to executing the strategy we have laid out and continuing to demonstrate operational excellence.\nIn Q1 revenues of $506 million were above the midpoint of our guidance for the quarter led by continued global strength in our semi-cap sector, which grew 37% year-over-year.\nOur non-GAAP gross margins of 8.3%, non-GAAP operating margins of 2.3% and earnings per share of $0.21 were all in line with our forecast guidance.\nWe had another strong quarter of working capital results as the cash conversion cycle was in 65 days, which enabled $37 million of operating cash flow and $30 million of free cash flow for the quarter.\nDespite some significant disruptions due to COVID that temporarily shut down two of our facilities in Malaysia, our teams did an amazing job of caring for our people, recovering in the quarter, and delivering for our customers.\nOur leadership and COVID task force continue to navigate our organization through the challenges of the pandemic, and we are taking actions to encourage vaccinations across our employee population; first here in the US and in other countries as the vaccine is available.\nI'm really proud of our team around the world who continue to deliver solid results, while successfully navigating COVID.\nIn addition to positive results, we had another strong quarter of bookings where the outsourcing and new deal opportunity environment remains strong even in the pandemic.\nOur pipeline continues to grow, and our trailing four quarter wins are over $800 million, which is a new record for our organization.\nNow I'd like to highlight a few key wins in the quarter.\nIn the Medical sector, we were awarded new manufacturing programs for insulin infusion pumps, a bacterial diagnostic instrument and a mobile MRI device.\nIn the A&D sector, we were awarded new programs for RF satellite control electronics, advanced optical manufacturing for night vision applications and a precision machining program for a military application.\nWe are excited to further expand our world-class machining capabilities into the A&D sector.\nIn Industrials, I wanted to highlight two customer case studies.\nThe first is with our customer, Ouster, a leading provider of high-resolution digital LiDAR sensors used in industrial automation, smart infrastructure, robotics and automotive applications.\nIn our Thailand facility, we are providing complex microelectronics, optics and printed circuit board assemblies for Ouster.\nAfter completion of certifications in 2019, we are now scaling capacity to meet full volume production.\nOur team has done an outstanding job meeting the rigorous quality requirements to bring these programs to market, and we look forward to fulfilling volume demands in support of Ouster in the coming years.\nThe second is with our new customer, Geophysical Technology, Inc., which utilizes seismic systems for measuring the Earth's subsurface for resource extraction, earthquake monitoring, construction and hydrothermal projects.\nBenchmark was selected based on our strong reputation for quality and reliability and to assist in near-shoring manufacturing to North America for the next-generation of products.\nWe're excited to be GTI's manufacturing partner.\nIn Computing and Telco, we were awarded design services for a new hyperscale Computing product and manufacturing services for new broadband products.\nOur new business pipeline remains strong across all of our sectors, and we expect to grow bookings year-over-year.\nRoop, over to you.\nTotal Benchmark revenue was $506 million in Q1, which was slightly above the midpoint of our guidance.\nAs expected, decreased revenues primarily from A&D were partially offset by increases in Semi-Cap and Telecom.\nMedical revenues for the first quarter were relatively flat sequentially from continued lower demand for products involved in COVID therapies and softer demand related to cardio care and other elective surgery devices.\nAs Jeff will comment later, we do expect an uptick in the second half from new programs.\nSemi-Cap revenues were up 12% in the first quarter and up 37% year-over-year from continued demand strength from our wafer fab equipment customers, who are continuing to boost capacity to support greater chip output.\nAs a reminder, we provide primarily non-electronic precision machining, and electromechanical assembly to these customers.\nA&D revenues for the first quarter decreased 19% sequentially from further deterioration in demand from our commercial aerospace customers, with no signs of demand recovery in the near future.\nAs a reminder, revenues to commercial aerospace customers was approximately 25% of our 2020 A&D sector revenue.\nIndustrial revenues for the first quarter were slightly down from continued softness in oil and gas infrastructure, primarily building in transportation and new program ramp delays.\nOverall, the higher value markets represented 80% for our first quarter revenue.\nRevenues from computing and telco sectors, our traditional markets was flat quarter-over-quarter.\nRevenue increases in testing products were offset by continued softness in commercial satellite programs.\nOur traditional markets represented 20% of first quarter revenues.\nOur top 10 customers represented 44% of sales in the first quarter.\nTurning to slide seven.\nOur GAAP earnings per share for the quarter was $0.22.\nOur GAAP results included restructuring and other one-time costs, totaling $1.6 million related to reductions in force and other restructuring activities around our network of sites, $3.4 million of insurance recovery.\nFor Q1, our non-GAAP gross margin was 8.3%.\nThis is 10 basis points better than the midpoint of our Q1 2021 guidance and 10 basis points less than our year-over-year comparison, which has stronger higher value market mix.\nOn a sequential basis, we were lower by 130 basis points, as a result of our lower revenue, reduced absorption, higher discrete medical claims activity and higher variable compensation.\nOur SG&A was $30.5 million, a decrease of $1.9 million sequentially due to lower variable compensation costs.\nNon-GAAP operating margin was 2.3%.\nIn Q1 2021, our non-GAAP effective tax rate was 16.9%, as a result of a mix of profits between the US and foreign jurisdictions, Non-GAAP earnings per share was $0.21 for the quarter, which is a $0.01 higher than the midpoint of our Q1 guidance and non-GAAP ROIC was 6.4%.\nTurning to slide eight to review our cash conversion cycle performance.\nOur cash conversion cycle days were 65 in the first quarter, an improvement of six days from the fourth quarter from the timing of inventory receipts, shipments to customers and collections within the quarter.\nTurning to slide nine for an update on liquidity and capital resources.\nOur cash balance was $400 million at March 31 with $153 million available in the US.\nOur cash balances grew $4 million sequentially because of our strong cash conversion cycle performance, even while we have invested in inventory for future ramps.\nWe generated $37 million cash flow from operations in Q1 and our free cash flow was $30 million.\nAt March 31, we had $135 million outstanding on our term loan with no borrowings outstanding on our available revolver.\nTurning to slide 10 to review our capital allocation activity.\nIn Q1, we can pay cash dividends of $5.8 million and use $13.1 million to repurchase 441,600 shares.\nAs of March 31, we had approximately 191 million remaining in our existing share repurchase authorization.\nIn Q2, we expect to repurchase shares opportunistically, while considering market conditions.\nWe expect revenue to range from $515 million to $555 million, which at the midpoint, represents a 9% year-over-year improvement.\nWe expect that our gross margins will be 8.5% to 8.7% for Q2 and SG&A will range between $31 million and $32 million.\nThe sequential increase in gross margins is expected due to higher revenues and improved absorption.\nWe still expect gross margins for the full year to be at least 9%.\nImplied in our guidance is a 2.5% to 2.9% non-GAAP operating margin range for modeling purposes.\nThe guidance provided does exclude the impact of amortization of intangible assets and estimated restructuring and other costs.\nWe expect to incur restructuring and other non-recurring costs in Q2 of approximately $0.8 million to $1.2 million.\nOur non-GAAP diluted earnings per share is expected to be in the range of $0.23 to $0.29 for a midpoint of $0.26.\nBased on the strength of new bookings, execution of new program ramps and continued growth in our Semi-Cap sector, we are increasing our capex plans for the year to be between $50 million to $60 million.\nWe estimate that we will generate approximately $80 million to $100 million of cash flow from operations for the fiscal year 2021.\nThis range contemplates increased working capital investments and inventory to support growth for our customers through the year.\nOther expenses net is expected to be $2.5 million, which is primarily interest expense related to our outstanding debt.\nWe expect that for Q2, our non-GAAP effective tax rate will be between 19% and 21% because of the distribution of income around our global network.\nThe expected weighted average shares for Q2 are $36.5 million.\nAs you're aware, the overall demand environment is gaining strength from the macroeconomic recovery, which has outpaced electronic component supply.\nLead times are extending as more components are going on allocation, primarily in semiconductors.\nWe are maintaining close alignment with our suppliers and distributors to minimize disruptions to existing orders and working to secure supply to support customer demand increases.\nIn some cases, we are actively working with customers to replan, mix and redesign some products to enable alternate component sourcing.\nThese actions still give us confidence that we will grow revenue in 2021.\nIn summary, our guidance takes into consideration all known constraints for the quarter and assumes no further significant interruptions to our supply base, operations or customers.\nGuidance also assumes no material changes to end market conditions due to COVID.\nFollowing Roop's comments on our second quarter guidance, I wanted to provide some additional color on our view of demand by sector for the remainder of 2021.\nThis is on slide 13.\nFor the second quarter, we expect revenue to be up sequentially by about $30 million.\nThis strength is led by expected sequential growth in Semi-Cap, A&D and Computing.\nIn Semi-Cap, the demand outlook continues to build for semiconductor capital equipment and is strengthening in Q2 over our Q1 results.\nThe strong demand for semiconductors due to the accelerating pace of digital transformation is fueling this growth and we remain well positioned with the industry leaders in this sector.\nWe believe this wafer fab equipment growth cycle has the potential to continue for several years, not only due to the current severe semiconductor shortages but also driven by government investment to address concerns about supply chain security and overall competitiveness.\nWith this current demand strength and signals from our customers, we are revising our outlook for this sector upward from 10% growth to greater than 20% revenue growth over 2020 levels.\nIn A&D, growth in the second quarter is led by increased demand for defense-related communications, radar and security products.\nGrowth is expected in Q2, even though demand for commercial aerospace programs, which was about 25% of the sector demand in 2020, continues to deteriorate.\nAs such, we expect the A&D sector will still be flat for 2021.\nIn the Computing sector, we expect strong revenue growth in 2021 from high-performance computing projects, with expected ramps starting in Q2 and continuing through second half 2021.\nIn the Medical sector, we're expecting revenue to remain relatively flat in the first half as elective surgery and demand for cardiac related products have not yet returned to pre-pandemic levels.\nWe are receiving some early indications from our customers that elective surgery demand is strengthening, and this, coupled with a number of new program ramps starting in Q3, point to stronger Medical sector growth in the second half of this year.\nWe expect 2021 will be another growth year for the Medical sector.\nIn the Telco market, where we remain highly selective in our engagements, overall demand is stable in Q2 and is improving through second half '21 from broadband infrastructure product growth.\nIn Industrials, we have yet to see significant demand recovery in our oil and gas, and our building and transportation infrastructure customers.\nWe are excited about a tremendous number of new program ramps in the industrial space.\nMany of these programs are new designs and technologically advanced programs.\nAnd as such, we are experiencing some program delays.\nBased on these dynamics, we believe Industrials will now be flat for the year.\nSince the February call, our ESG Council has successfully worked to deliver our first SASB fact sheet, which can be found on the sustainability page of our website.\nThis document highlights our current performance against the technical requirements for the EMS, ODM industry within the SASB framework.\nThe objective of releasing this fact sheet is to provide continued transparency as we further enhance our performance within the framework of our five key ESG tenets.\nBeyond the SASB report, we have also provided further updates on our progress in both our most recent annual report and proxy.\nAt Benchmark, we value diversity and expect our leaders to embrace all people regardless of gender, race, class or creed, recognizing that greater inclusion fosters better decision-making and increased innovation.\nWe are strengthening our diversity equity and inclusion programs through a planned set of actions around training, policies and through a revitalized recruiting strategy.\nAs such, we have engaged a consultant who is leading a DEI perception study to establish a framework for how we listen, learn and act to achieve our goals.\nWe are very proud to have been awarded a 2021 silver medal from EcoVadis in recognition of our sustainability progress.\nEcoVadis is one of the world's most trusted providers of business sustainability ratings, and their assessment covers a broad range of non-financial management systems, including environmental labor and human rights, ethics and sustainable procurement.\nThis recognition puts us in the top 25% of companies rated.\nLooking ahead, we have started both quantitative and qualitative data collection to align reporting to the Global Reporting Initiative or GRI standards.\nAs we have announced previously, we are a committed partner with Applied Materials and other strategic customers as part of the electronic supply chain ecosystem.\nThere is tremendous momentum at Benchmark surrounding ESG and sustainability, and I look forward to providing further updates as we continue our journey.\nI now want to wrap up the call today with a summary of our progress toward our three strategic initiatives for 2021, on slide 15.\nGrowing revenue is the top priority at Benchmark.\nThrough the efforts of the entire Benchmark organization and led by our go-to-market team, we are continuing to see strong new bookings, both with existing accounts and targeted new customers with innovative products aligned to our sector strategies.\nWe are very focused on helping our customers accelerate their time to market, providing more of the complete solution, which includes both engineering and manufacturing services.\nThis is reflected in our increased attach rate of design engagements to manufacturing wins and vice versa.\nTo that point, in Q1, about 50% of our new wins have an engineering component.\nOur differentiated offerings in support of the Semi-Cap market and our new program wins have enabled significant growth in the Semi-Cap vertical, which we expect will now grow over 20% this year.\nThis strength, coupled with new programs and high-performance computing in mid-2021 and additional new program ramps in the higher value markets, gives us confidence that we can achieve greater than 5% growth in 2021.\nIn order to support our long-term growth and scale objectives, we must also invest in sustainable infrastructure and talent, needed to support our long-term business.\nAs I discussed earlier, ESGs and sustainability initiatives and advancing diversity and inclusion underpin the foundational imperative.\nBut they are not our only areas of investment as we are also investing in tools, processes and manufacturing assets to drive further operational effectiveness.\nAs we evaluate how to best serve our customers, including exploring advances in technology, we are also contemplating incremental capital investments aligned to our strategy, as Roop referenced earlier.\nEven though we continue to invest in our business, we are committed to driving an efficient shared services organization and continuing our focus on expense management to maintain our SG&A spend at or below 6% of revenue.\nFinally, we expect to grow earnings faster than revenue.\nOur model is predicated on revenue growth that enables higher utilization to better leverage our fixed costs.\nWith revenue growth from increasing demand in new ramps, we still expect to achieve 9% gross margin for the full year.\nGiven the current supply chain environment, we do expect inventory growth in support of securing component supply for our customers.\nWhile we are still forecasting cash flows from operations for the full year between $80 million and $100 million.\nIn support of efficient use of capital and returning value to our shareholders, we plan to continue buybacks and our recurring dividend.\nAll-in-all, 2021 is off to a good start.\nI remain energized and excited about our capabilities and the progress we are making in developing our strategic customer relationships.\nI look forward to providing further updates on our call in July.\n", "role": "user" }, { "content": "benchmark sees q2 revenue between $515 million to $555 million.\nq1 non-gaap earnings per share $0.21.\nq1 gaap earnings per share $0.22.\nsees q2 non-gaap earnings per share $0.23 to $0.29 excluding items.\nsees q2 revenue $515 million to $555 million.\nq1 revenue $506 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: For today's call, Jeff will begin by covering a summary of our second quarter results and by providing a current status of our global operations.\nRoop will then discuss the second quarter results in more detail, including a cash and balance sheet summary and our third quarter guidance.\nJeff will wrap up with an outlook by market sector and an update on our strategic initiatives before we conclude the call with Q&A.\nOur second quarter results were achieved against the backdrop of mandatory facility shutdowns, component constraints, and extra processes required to keep everyone safe.\nDuring Q2, we achieved revenue of $491 million, which was down sequentially from Q1, but supported by strong demand in our Medical and Semi-Cap sectors.\nNon-GAAP gross margin for the quarter was 7% and non-GAAP earnings per share were $0.07.\nOur non-GAAP earnings include $4 million or $0.10 per share of COVID related costs that we could not fully anticipate as we entered the quarter.\nIn addition to these COVID costs, we experienced other production inefficiencies as a result of the current pandemic environment.\nOur overall performance was helped by the aggressive cost reduction actions taken earlier in the quarter.\nOur cash conversion cycle for the quarter was 84 days.\nDespite operating challenges, we generated $23 million in cash flow from operations and returned $6 million of cash to shareholders as part of our recurring quarterly dividend payment.\nAs we look forward, I wanted to step back and offer a few perspectives.\nI'll do that on Slide 4.\nSince I joined Benchmark last year, we've made a lot of positive changes and all of these have been supported by an amazing team.\nFrom the hard work required to execute on our strategic initiatives and goals that we outlined last year, to overcoming unique challenges presented by the unprecedented global pandemic of today, let me simply say our team has risen to the occasion.\nBefore I arrived, the company had embarked on a strategy to diversify the markets we serve and drive our portfolio mix with a greater concentration in higher value markets.\nIn the past year, we have worked further to align the customers where we can add the most value and these efforts have paid off.\nToday we enjoy a diverse portfolio of products across many high growth and high value sectors.\nThat being said, we are not immune to the current recession that this disease has caused and we have an unprecedented amount of demand changes in our portfolio that's required a lot of the team's attention to ensure we capitalize on new opportunities while mitigating any risks.\nWe believe this diverse portfolio and exposure to high value segments will allow us to expand our quarterly revenue through the balance of the year.\nSupply chain in our complex high mixed environment is a constant focus, and our recent results have been supported by the strong performance of our supply chain team.\nDuring the second quarter and due to the team's efforts, we were not significantly impacted by component shortages, but they did in some places contribute to operational inefficiencies.\nFurther, our revamped go-to-market organization has grown the manufacturing and engineering services opportunity pipeline by over 30% in the past 12 months, and have delivered three quarters of sequential growth in bookings, which bodes well for our long-term growth potential.\nAs we look out to the end of the year, we are still on track to exit 2020 with at least 9% gross margin and we expect to build on this momentum into 2021.\nAs the global pandemic continues to evolve, we have expanded protocols focused on keeping a safe work environment for our employees.\nOur actions are informed by the best practices published by the CDC, the WHO and local authorities, and we've completed a Company Employee Survey to solicit direct feedback on our actions to date and ensure our employees agree that we are maintaining a safe work environment.\nWhere possible we are continuing to permit about 20% of our employees to work from home.\nWe have shifted our customer engagements to a virtual environment with real time video supported factory tours as we limit travel to protect our teams.\nWe even hosted a virtual grand opening of our new Phoenix operation with Governor Ducey and Mayor Gallego.\nOur teams have adapted well to the new reality, and we are finding creative ways to stay close to our customers and continuing to collaborate with them on solving new challenges.\nIn Asia, China and Thailand we are fully operational through the second quarter.\nAs we entered Q2, our Penang, Malaysia operations, which includes our largest precision machining facility operated at 50% capacity based on local restrictions, which were subsequently lifted at the end of April.\nFrom the 1st of May, Malaysia has been fully operational.\nOur European sites in the Netherlands and Romania were fully operational in the second quarter and remains so today.\nAcross the US, our five operations in California were impacted by shelter-in-place orders through April.\nSince early May and to the present all California locations as well as our other US sites are fully operational.\nIn Mexico, we have two operations in Tijuana and one in Guadalajara.\nThe 100% shutdown that impacted our Tijuana operations was lifted in mid-May after we passed some inspection and were given authorization to operate by the Baja's state.\nThere has been a phase return to work since this time and the Tier 1 sites are now operating at approximately 75%.\nOur Guadalajara facility has been essentially operating at 75% productivity due to at-risk employees being required to stay home for the Jalisco state government restrictions.\nWe are staggering shifts and other protocols in our Mexican operations to keep our employees safe and optimize output.\nThis has been and remains a highly dynamic environment.\nAs shelter-in-place orders were lifted in the US, we had hoped the country could maintain the declining infection curve.\nUnfortunately this has not happened.\nAs the incident rate domestically increases, there could be temporary shutdowns of one of our facilities at any given time.\nAnd we stand ready to execute decontamination protocols beyond our normal safe work in cleaning procedures.\nOur operation teams will continue to maintain our safety first approach, while managing schedules to ensure we meet delivery obligations to our customers.\nOver to you, Roop.\nI hope everyone and their families are staying healthy and safe.\nLet me start by echoing Jeff's sentiment on the incredible efforts of our teams to support our customers through a very dynamic environment.\nAs we manage through the COVID crisis, our priorities remain centered on one, the health and safety of our employees.\nTwo, delivering for our customers.\nThree, maintaining a healthy balance sheet and four, ensuring the financial flexibility to run our operations through uncertainty.\nTotal Benchmark revenue was $491 million.\nMedical revenues for the second quarter increased 14% sequentially and were up 18% year-over-year from continued new product ramps, strength throughout our medical customers and increasing demand for critical devices necessary to support the COVID-19 fight, including X-ray and ultrasound devices, ventilators and diagnostic equipment, which we estimate is approximately a third of our sequential growth.\nSemi-Cap revenues were up 5% in the second quarter and up 39% year-over-year from continued strong demand across our Semi-Cap customers.\nA&D revenues for the second quarter decreased 26% sequentially due to approximately $15 million lower revenue from our commercial aerospace programs, which is approximately 30% of the sectors revenue.\nThe remaining decline in the sector is related to defense program timing changes, whether that is the end of certain programs or transitions to new programs.\nDemand from our defense customers for security solutions, aircraft, munitions and satellites remained strong.\nWe expect continued strong demand in Q3 and Q4 2020 including new programs ramping which should result in sequential revenue growth.\nIndustrial revenues for the second quarter decreased 15% sequentially.\nDemand for products in the oil and gas industry, which is approximately 20% of our revenue, continued to be generally soft and will likely stay soft for the remainder of the year.\nIn addition demand decreased for goods that support the commercial building and transportation infrastructure markets.\nOverall, the higher value markets represented 81% of our second quarter revenue.\nIn the traditional markets, computing was up 20% quarter-over-quarter from new program ramps and two engineering and manufacturing programs in high-performance computing.\nTelco was down 10% sequentially.\nWe saw pockets of strength in demand for network infrastructure, which was offset by lower demand for broadband and commercial satellite applications.\nOur traditional markets represented 19% of second quarter revenues.\nOur top 10 customers represented 44% of sales for the second quarter.\nOur revenue of $491 million reflects a decrease on a quarter-over-quarter basis.\nOur GAAP loss per share for the quarter was $0.09.\nOur GAAP results include restructuring and other one-time costs totaling $5.7 million.\n$3.3 million is related to the severance and other items for the announced closure of our Angleton site which Jeff will cover in more detail in his initiatives update.\n$1.2 million is related to the completion of our San Jose closure and the remaining is due to other various restructuring activities around our network.\nOur previously announced San Jose site closure has been completed on schedule and within our original cost estimates.\nTurning to Slide 10.\nFor Q2, our non-GAAP gross margin was 7%, a 140 basis points sequential decline.\nAs Jeff stated earlier, our results were negatively impacted by $4 million of costs related to COVID-19 including site shutdown days pursuant to government orders, idle and not fully productive labor costs, personal protective equipment and incremental freight charges.\nThe majority of these costs impacted our gross profit.\nWe expect the second quarter to be the lowest quarterly gross margin in fiscal year 2020, and we still believe that we can exit 2020 at, at least 9% of gross margin.\nOur SG&A was $28.5 million, a decrease of $3.1 million sequentially and $3 million year-over-year due to the cost containment measures, which we have continued, including salary reductions for certain management personnel, including the executive team, freezing travel, reducing discretionary spending and delaying hiring in addition to our reduction in variable compensation expense.\nOperating margin was 1.2%, a decrease from 2.3% in Q1 due to lower revenue, reduced gross margin offset by the lower SG&A.\nIn Q2 2020, our non-GAAP effective tax rate was 29%, which was higher than expected for the quarter due to the distribution of income across our network and certain discrete tax items.\nThe higher tax impact was approximately $0.01 per share.\nNon-GAAP earnings per share was $0.07 for the quarter and non-GAAP ROIC was 5.9%.\nOur cash balance was $356 million at June 30, with $194 million available in the US.\nWe did repatriate cash in Q2.\nWe will continue to repatriate future quarters when appropriate, while also balancing our foreign site's cash flow requirements.\nOur cash balances include $30 million of proceeds from borrowings under our revolving line of credit.\nAt June 30, we were at a positive net of debt cash position of approximately $183 million which was higher than the end of Q1 by approximately $12 million.\nWe believe we've got -- we have a strong capital structure and our liquidity position provides flexibility to manage our business through the current environment.\nWe generated $23 million in cash flow from operations and $13 million free cash flow after netting $10 million of capital expenditures.\nOur accounts receivable balance was $302 million, a decrease of $16 million from the prior quarter.\nContract assets were $154 million at June 30 and $160 million at March 31.\nPayables were down $11 million quarter-over-quarter.\nInventory at June 30 was $364 million, up $26 million quarter-over-quarter.\nTurning to Slide 12 to review our cash conversion cycle performance.\nOur cash conversion cycle days was 84.\nThe primary driver for the slightly higher cycle days was the effect from the increase in inventory.\nInventory days increased due to mix changes from customers late in the quarter and advanced inventory purchases to support long production cycles for products in our Semi-Cap and Medical sectors.\nAlong with the inventory increase, we did see a corresponding increase in customer cash deposits, which is used to offset advanced inventory purchases.\nNow turning to Slide 13 for a capital allocation update.\nIn Q2, we continued to pay a quarterly cash dividend of approximately $5.8 million.\nAs a reminder, we increased our recurring quarterly cash dividend to $0.16 per share on February 3, 2020.\nWe expect to continue the recurring quarterly cash dividend.\nWe suspended our share repurchase program in Q2, and we are not planning any share repurchases in the third quarter.\nTurning to Slide 14 for a review of our third quarter 2020 guidance.\nWe expect revenue to range from $490 million to $530 million.\nOur non-GAAP diluted earnings per share is expected to be in the range from $0.26 to $0.30 or a midpoint of $0.28.\nWe expect to generate cash flow from operations for the full year even considering the challenging COVID-19 environment.\nCapex for the year will be approximately $30 million to $35 million as we prioritize investments to support new customers and expand our production capacity for future growth.\nImplied in our guidance is a 2.9% to 3.1% operating margin range for modeling purposes.\nThe guidance provided does exclude the impact of amortization of intangible assets and estimated restructuring and other costs.\nWe expect to incur restructuring and other non-recurring costs in Q3 of approximately $800,000 to $1.2 million.\nOther expenses net is expected to be $2.4 million, which is primarily interest expense related to our outstanding debt.\nWe expect that for Q3, our non-GAAP effective tax rate will be in the range of 20% to 22%, because of the distribution of income around our global network.\nThe expected weighted average shares for Q3 are 36.7 million.\nThis guidance takes into consideration all known constraints for the third quarter and assumes no further significant interruptions to our supply base, operations or customers.\nThe guidance also assumes no material changes to end market conditions due to COVID-19.\nFollowing Roop's guidance for the third quarter, I wanted to provide additional color on our view of demand by sector for the second half of 2020 on Slide 16.\nAs I stated earlier in the call, our global operations are at or near our planned staffing levels with the exception of Mexico.\nGiven our current operational state, our ability to fulfill demand remains high.\nThrough the second quarter and early in July, we have gained a better picture of the demand outlook from customers in each of our market verticals, and have a current snapshot of what our revenue trends could look like in the second half.\nI want to reinforce, this is just a snapshot because there will likely be puts and takes across our sub sectors as we move forward.\nI will start with the Medical sector where demand grew almost 14% sequentially from Q1 and is forecasted to remain strong throughout the rest of the year from new program ramps in imaging systems and for critical care and diagnostic devices supporting COVID-19.\nOn the flip side, our core medical products that supports cardiac, renal and orthopedic therapies have seen demand reductions in the second half that have offset some of the increases as hospitals and clinics are deferring planned procedures and elective surgeries based on hospital capacity.\nWe expect demand for these products to increase when the COVID crisis lessens.\nBut the end result for our portfolio, is that we believe it will remain at the Q2 level for the balance of 2020, which still represents double-digit year-over-year growth.\nIn Semi-Cap, the demand recovery for semiconductor capital equipment continues based on the current forecast from our customers.\nOn the strength of this demand, we expect sequential quarterly revenue growth for the rest of the year further supported by some new program ramps as well.\nOur competitive position remains very strong and we look forward to increasing our industry leading precision machining position in this sector.\nOur A&D sector is comprised of approximately 70% defense related products and 30% aerospace.\nDemand for radar, missiles, military aircraft and satellite communication devices remains strong, and we expect continued strength in the second half.\nHowever as Roop referenced earlier in our Q2 results, demand for commercial aircraft programs are not showing any signs of recovery in the second half of this year.\nMoving to the Industrial sector.\nWe see limited recovery for customers supporting oil and gas through 2020, which represents approximately 20% of sector revenue.\nWe are also seeing softer demand for commercial and transportation infrastructure markets, as many of our customers' projects have been deferred.\nAs a bright spot, we are seeing strength in testing instrumentation and IoT related products.\nSimilar to Industrials, the traditional markets of Computing and Telco will remain mixed.\nWe see strength in Computing as we saw in Q2 with very complex high performance computing projects landing in the second half.\nHowever, these programs tend to be project orientated.\nSo it's important that the end customer scheduled supports installing these machines in the year.\nDemand from customers we support in security computing and enterprise data centers will remain muted given the lockdown on enterprise IT capital spending.\nOn the Telco side, we've seen increases in network infrastructure products, supporting greater work from home bandwidth demand, but this has been offset by declines for next generation network build out and in some commercial satellite applications.\nDespite a challenging global backdrop that is most of our business development team grounded, we had our third sequential growth quarter of bookings growth.\nOur marketing team has been instrumental in working with our operation and sales teams on virtual tours and capability demonstration that is becoming a part of the new norm in our business.\nFortunately, the demand environment remains favorable for outsourcing, as many companies continue to pivot to more variable design and manufacturing cost models.\nIn the Medical sector, we were awarded programs for a fall detection system and a new drug delivery device, which have both coupled with front-end engineering projects.\nAlso, as we stated last quarter, we were awarded new ventilator programs that are being rapidly transferred into manufacturing revenue for Benchmark.\nIn Defense, we were awarded a number of new programs including design and manufacturing for space module electronics, and for optical sensors for military applications.\nIn Industrials, we were awarded a new product that will come to market for microbial cleaning in commercial venues, which has become a critical application in the new normal of living with COVID and beyond.\nI'm also pleased to announce that we have partnered with CoreKinect to provide IoT ecosystem hardware from our new Phoenix EMS operations.\nOur new business pipeline is strong across our targeted sectors and we remain very encouraged about the prospects for continued outsourcing wins in the coming quarters.\nDuring the first half of 2020, even with the significant challenges brought on by the pandemic, we've continued to make progress on our strategic initiatives, and I wanted to share a few updates as we close the call today.\nBenchmark is in the services business, and one of our top priorities is to deepen our relationship with customers as a strategic partner and trusted innovation collaborator.\nI can report that customer satisfaction which I review with the team weekly remains very high.\nDuring the crisis, there is a heightened level of communication and coordination required in serving customers and as I noted last quarter, I have personally received multiple inputs on the discipline and excellence of our teams.\nIn fact, in Q2, we received three service excellence awards from our top customers recognizing our performance during this pandemic.\nAs I stated earlier in the call, I couldn't be prouder of our organization.\nIn addition, we are partnering with Applied Materials on their SuCCESS2030 Sustainability Initiative and participated in their announcement at SEMICON West earlier this month.\nBenchmark is committed to supporting ESG initiative and are excited when we can further these actions working closely with a valued customer.\nTurning now to growing our business, with our revamped go-to-market organization, we have had our third consecutive quarter of sequential growth in new program wins.\nWe have the right team on the field and we'll continue to reap benefits from the investment in this area.\nWe are making progress in our Medical, Semi-Cap and Defense accounts and starting to see early results with new engineering and EMS wins in our Industrial sector.\nWe continue to drive enterprise efficiencies.\nAgainst a very challenging macro backdrop, our teams have maintained focus on meeting the needs of our customers and our operating performance is improving.\nWe have also continued our global footprint optimization program, which we started almost a year ago.\nThe objective of this program is to utilize ongoing voice of the customer feedback to align our geographic capabilities and footprint to meet customer needs.\nThe outcome of our most recent round strategic reviews, is that we decided to close our Angleton Texas operations.\nWe plan to consolidate many of the programs into other Benchmark manufacturing operations, which will improve utilization and efficiencies.\nThis initiative isn't just about closing factories.\nAs we are also looking at where we want to expand our investment and footprint.\nIn support of that in June, we announced our newest facility with the virtual grand opening of Benchmark Phoenix.\nThis new state-of-the-art facility in Phoenix features RF design in manufacturing circuit fabrication Micro-E, SMT, systems integration and testing all under one roof.\nThis enables us to provide the proverbial one-stop shop for sophisticated customers, looking for extremely densed hybrid circuit designs, who might also have a need for Micro-E or SMT assembly on the same design.\nAnd with our new facility, they don't need to look any further.\nThe customer response for this type of advanced manufacturing operation has been very positive and we look forward to the growth from this operation.\nFinally, I want to close with our initiative on engaging talent and shift in culture.\nFirst, Benchmark has a great cultural foundation and the work we've completed over the past year, since I joined, is a testament to the support we provide each other in this organization.\nAt Benchmark, we are committed to advancing diversity and inclusion efforts at all levels in the company.\nIn this endeavor, we are committed to more transparency, education and diversity training, and talent recruitment to improve our pipeline of diverse future leaders.\nWe look forward to sharing details on our progress in the future as part of our increasing focus on environmental, social and governance affairs.\nNow, let me wrap up.\nThe senior leadership team is engaged in driving these initiatives and the level of collaboration throughout our organization is energized.\nWe remain committed to our long-term strategy and we'll use this unprecedented time of change to hone our skills, rightsize our operations and expand our technical capabilities, so that we will emerge with a stronger organization and business in the years to come.\n", "role": "user" }, { "content": "q2 non-gaap earnings per share $0.07.\nq2 gaap loss per share $0.09.\nq2 revenue $491 million versus refinitiv ibes estimate of $474.3 million.\nsees q3 2020 non-gaap earnings per share $0.26 to $0.30 excluding items.\nsees q3 2020 gaap earnings per share $0.21 to $0.26.\nsees q3 2020 revenue $490 million to $530 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: For today's call, Jeff will begin by covering a summary of our second quarter results, including new program wins.\nRoop will then discuss our detailed second quarter results, including a cash and balance sheet summary and third quarter 2021 guidance.\nJeff will wrap up with an outlook by market sector, a progress update on our strategic initiatives for the year and second half outlook before we conclude the call with Q&A.\nThroughout the past 18 months, we've rallied through the uncertainty surrounding the pandemic and made decisions to increase our investments in new opportunities, which we believe are starting to bear fruit.\nWe've had to make difficult trade-offs during this unprecedented time, but we never lost focus on prioritizing the safety and well-being of our employees and meeting the growing needs of our customers.\nThis approach has served us well as we progressed our strategy in a volatile operating environment.\nRevenues benefited from the continued momentum in the semi cap market as well as stronger demand from customers deploying broadband infrastructure solutions in our Telco sector.\nAdditionally, we are seeing early signs of recovery in some subsectors of the industrial markets.\nRoop will provide more specific color on the constrained component situation, but our teams are facing a heavy workload and significant disruptions in manufacturing planning based on the continued volatility of extended lead times, tight supply and allocations that are limiting the ability to meet customer demand.\nIn the second quarter, we estimate that we left approximately $50 million of demand on the table and most of this demand is rolled into future quarters.\nGiven component constraints, we estimate we may leave $100 million of unfulfilled demand in this quarter, demonstrating the strength of end customer orders.\nWe continue to work closely with our customers to optimize output based on component availability.\nDuring the quarter, we also faced disruptions in our Malaysian operations from the ongoing COVID pandemic where government regulations reduced staffing levels to 60% and required our team to replan our workforce and shift patterns through most of the second quarter.\nEven with these challenges, I'm proud to report our teams in Penang delivered on their customer demand and achieved their targets for the quarter.\nGovernment restrictions have recently eased, now allowing 80% of the workforce capacity and our leadership team continues to do a phenomenal job managing through reduced staffing and intermittent work stoppages to keep our employees healthy and maximize production.\nNow turning to profits.\nWith improving revenue, our non-GAAP gross margins improved 50 basis points to 8.8%, and non-GAAP operating margins improved 20 basis points to 2.5%.\nAs a reminder, our non-GAAP operating margins include stock compensation expenses, which were approximately 70 basis points in the second quarter.\nEarnings per share of $0.27 was above the midpoint of our guidance, and we had another solid quarter of cash conversion cycle results at 64 days.\nOur team continues to pull together, execute with excellence and deliver on our growth strategy through the first half of 2021.\nWe believe this momentum will continue through the rest of the year and demonstrate the benefits of scale in our model.\nIn addition to strong sequential and year-over-year revenue growth, we had another strong quarter of bookings, where the outsourcing and new deal opportunity environment remains strong.\nNow I'd like to highlight a few key wins in the quarter.\nIn the medical sector, we were awarded new manufacturing programs for cardiac monitoring, blood transfusion and an in vitro diagnostics.\nOur winning value proposition in this sector resonates with customers and is supported by our 30-year quality track record of building Class III life-sustaining devices by FDA standards.\nIn Semi-Cap, we continue to win new programs, which are additive to our already strong demand in this sector.\nIn Q2, we added a new Semi-Cap customer to our portfolio where we will be building process controllers for coding equipment.\nWith existing customers, we were awarded new design and manufacturing projects for work cell handlers and power rack electronics.\nThis quarter, we had great wins in semi cap across precision machining, engineering services and electronics manufacturing.\nIn the A&D sector, we were awarded new manufacturing programs for electronic warfare and defense satellites as well as a design program for ruggedized electronics for land-based combat vehicles.\nIn industrials, we are very excited about a major new customer win to manufacture solar battery storage solutions, which could provide meaningful growth to our industrial sector.\nAnd finally, in Computing & Telco, we continue to win new high-performance computing programs where we have unparalleled manufacturing expertise for large form factor, high-density electronics manufacturing.\nHigh-performance computing will be a key contributor to our growth over the next 12 months.\nOur new business pipeline remains strong across all of our sectors, and we expect these bookings to fuel growth in support of our midterm model and longer-term growth plans.\nAll in all, I'm very excited about the meaningful opportunities we are winning, the increased attach rate of engineering services and the level of new prospective wins that our business development teams are engaging in.\nRoop, over to you.\nTotal Benchmark revenue was $545 million in Q2, which was at the higher end of our guidance driven by continued strong performance in Semi-Cap and improving revenue in Industrials and Telco.\nMedical revenues for the second quarter were relatively flat sequentially as expected.\nWe expect Medical revenues to be higher for the second half of 2021 as compared to the first half of 2021 due to new program ramps and improving demand.\nSemi-cap revenues were up 23% in the second quarter and up 60% year-over-year from continued demand strength from our front-end wafer fab equipment customers where we saw increased demand from each of our top customers.\nOur revenue in this sector is primarily precision machining and large electromechanical assembly which are less impacted from the global component shortages.\nA&D revenues for the second quarter increased 8% sequentially and 9% year-over-year from continued strong demand in our Defense programs for surveillance vehicles, secure communications and computing and military satellite programs.\nOur commercial aerospace revenue was flat sequentially.\nIndustrial revenues for the second quarter were slightly better than expected from slight improvements from building infrastructure and commercial construction programs.\nOverall, the higher-value markets represented 82% of our second quarter revenue.\nRevenues from computing and Telco sectors, our traditional markets, were flat quarter-over-quarter.\nWe saw strong demand in Telco from new and existing programs in commercial broadband and commercial satellites but a high-performance computing program that was expected to ramp in Q2 was pushed to the second half of 2021.\nOur traditional markets represented 18% of second quarter revenues.\nOur top 10 customers represented 46% of sales in the second quarter.\nOur GAAP earnings per share for the quarter was $0.20.\nOur GAAP results included restructuring and other onetime costs totaling $1.6 million related to restructuring activities.\nIn Q2, we completed the closure of our Angleton, Texas site as planned.\nFor Q2, our non-GAAP gross margin was 8.8%.\nThis is 20 basis points better than the midpoint of our second quarter guidance, driven by higher revenues and a better mix.\nOn a sequential basis, we were up 50 basis points as a result of our higher revenue, improved productivity and utilization, somewhat offset by higher variable compensation expenses and higher-than-expected U.S. medical costs.\nOur SG&A was $34 million, an increase of $3.5 million sequentially due to higher variable compensation expenses and higher U.S. medical costs.\nNon-GAAP operating margin was 2.5%.\nIn Q2 2021, our non-GAAP effective tax rate was 20.3% as a result of the mix of profits between the U.S. and foreign jurisdictions.\nNon-GAAP earnings per share was $0.27 for the quarter, which is $0.01 higher than the midpoint of our Q2 guidance and $0.06 sequential improvement.\nNon-GAAP ROIC was 7.5%, a 110 basis point increase sequentially and 160 basis point improvement year-over-year.\nOur cash conversion cycle days were 64 in the second quarter, an improvement of one day from Q1.\nTurning to slide nine for an update on liquidity and capital resources.\nThe cash balance was $370 million at June 30, with $135 million available in the U.S.\nOur cash balances decreased $30 million sequentially.\nThe decrease in cash is primarily the result of procuring a higher level of inventory to support future revenue growth and to better manage the increasing lead times for components and current broad supply chain constraints in the marketplace.\nWe generated $4 million in cash flow from operations in Q2, and our free cash flow was a use of $9 million of cash after capital expenditures.\nAs of June 30, we had $133 million outstanding on our term loan with no borrowings outstanding on our available revolver.\nTurning to slide 10 to review our capital allocation activity.\nIn Q2, we paid cash dividends of $5.8 million and used $17 million to repurchase 566,600 shares.\nAs of June 30, we had approximately $174 million remaining in our existing share repurchase authorization.\nIn Q3, we expect to repurchase shares opportunistically while considering market conditions.\nWe expect revenue to range from $555 million to $595 million, which at the midpoint represents a 9% year-over-year improvement.\nWe expect that our gross margins will be 9% to 9.4% for Q3, and SG&A will range between $34 million and $35 million.\nThe sequential increase in gross margins is expected due to higher revenues and improved absorption.\nWe are still targeting gross margins for the full year to be 9%.\nImplied in our guidance is a 3.1% to 3.4% non-GAAP operating margin range for modeling purposes.\nThe guidance provided does exclude the impact of amortization of intangible assets and estimated restructuring and other costs.\nWe expect to incur restructuring and other nonrecurring costs in Q3 of approximately $800,000 to $1.2 million.\nOur non-GAAP diluted earnings per share is expected to be in the range of $0.33 to $0.41 or a midpoint of $0.37.\nWe expect our capex plans for the year to be between $50 million and $60 million.\nWe expect -- we estimate that we will generate approximately $80 million to $100 million of cash flow from operations for fiscal year 2021.\nThis range contemplates the higher inventory levels to support growth for our customers through the year.\nOther expenses net is expected to be $2.1 million, which is primarily interest expense related to our outstanding debt.\nWe expect that for Q3, our non-GAAP effective tax rate will be between 19% and 21% because of the distribution of income around our global network.\nThe expected weighted average shares for Q3 are approximately $35.7 million.\nAs you're aware, end market demand continues to be strong.\nHowever, we continue to see component supply chain constraints across all commodity categories.\nOverall, lead times continue to extend and more components are being placed on allocation by suppliers.\nSeveral commodities are impacted yet semiconductors remain the most constrained.\nWe are maintaining close alignment with our suppliers and distributors to minimize disruptions to existing orders and to secure supply in support of customer demand increases.\nWe are actively working with customers to replan mix and redesign some products to enable alternate component sourcing.\nIn general, our ability to fulfill upside demand is challenging due to component constraints but we do believe these actions still give us confidence that we will grow revenue in 2021 in the high single digits.\nIn summary, our guidance takes into consideration all known constraints for the quarter and assumes no further significant interruptions to our supply base, operations or customers.\nGuidance also assumes no material changes to end market conditions in our operations due to COVID.\nFollowing Roop's comments on our third quarter guidance, I wanted to provide some additional details on our view of demand by sector.\nfor the quarter and the remainder of 2021.\nThis is shown on slide 13.\nFor the second quarter, we expect revenue to be up sequentially by about $30 million.\nThis strength is led by expected sequential growth in computing and A&D with continued strong demand in semi cap.\nAfter 60% year-over-year growth in Q2, we expect our Semi-Cap sector will remain at Q2 revenue levels as demand still remains robust, but we are constrained in the near term by mechanical sub-tier suppliers.\nBased on signals from our customers in the front-end wafer fab processing space, demand will remain at high levels for the balance of 2021 and through next year, supported by increasing demand for semiconductor capital equipment.\nWith this ongoing demand strength and signals from our customers, we are revising our outlook for this sector upward from 20% to greater than 30% revenue growth over 2020 levels.\nThis sector is clearly outperforming our expectations for this year.\nIn A&D, where we grew 8% in Q2, we expect continued growth in third quarter led by increased demand for ruggedized electronics for ground-based military vehicles and secure communication devices.\nWhile commercial Aero demand in the second half is stabilizing, we still expect the A&D sector to remain flat for 2021 as defense strength does not offset aero weakness for the full year.\nIn the computing sector, we expect strong revenue growth in 2021 from high-performance computing projects with the largest revenue growth in the second half of 2021.\nIf there are no further component decommits or design delays, computing could be up over 50% sequentially in the third quarter.\nAs we continue to win new projects in this targeted subsector, we expect continued strength in high-performance computing revenues in 2022.\nIn the Medical sector, we're expecting revenue to grow sequentially in Q3 and Q4.\nFor our portfolio, we see revenue growth across our base business in the second half.\nAdditionally, we have new program ramps contributing to second half growth.\nWe still expect Medical to have a growth year, but as always, new medical program revenue is subject to the timing of product qualifications.\nIn the Telco market, where we had good growth in the second quarter, we expect stable demand in the second half of '21, which will lead to 2021 being a solid growth year from strong performance in broadband communication products.\nIn Industrials, we are pleased to see the order book increasing for our customers supporting the oil and gas market, transportation infrastructure and Building Systems.\nWith this demand improvement forecasted in the second half and a tremendous number of new program ramps in Q4, this sector has the potential to achieve greater than 10% growth for this year.\nWe remain focused on our longer-term strategic initiatives and progress against these even as we deal with short-term challenges created by the pandemic and this constrained supply environment.\nGrowing revenue remains a top priority at Benchmark.\nOur go-to-market team is doing a great job executing our sector development strategies with wins in our targeted subsectors where we have an advantaged position based on our technology and the track record of success with complex programs.\nOur booking levels for both manufacturing and engineering services remain strong.\nWe'll continue to invest in a sustainable infrastructure and our talent for sustainable growth.\nWe are in data collection mode to support our intended reporting against the global reporting initiative, which will increase our transparency and further support our stand-alone sustainability report, which we plan to publish next year.\nWe are also expanding our diversity and inclusion efforts by developing a multiyear continuous improvement road map, supported by robust plans and actions with accountability held by the entire senior leadership team.\nThis road map includes increased training, some enhanced policies and recruiting strategies for our internal organization as well as the ongoing commitment to Board diversification.\nYou may have seen our recent announcement where one of our Board members, Merilee Raines left our board.\nWe have certainly appreciated her service and wish her well.\nLynn is an outstanding director and sits on three public companies where she currently holds two board chairs and one audit share position.\nHer vast experience and history of operational execution will provide additional capabilities and insight to our already talented slate of directors.\nLastly, we are laser-focused on growing earnings.\nFrom our second quarter results to the midpoint of our Q3 guide, we're expecting a greater than 30% sequential earnings improvement.\nThese expected results are enabled by our continued revenue growth trajectory.\nOur target to sustain gross margins at 9% for the full year and our commitment to control our expenses.\nIn summary, on slide 15, I'm very excited about our progress in the first half and remain optimistic about our second half outlook.\nGiven the continuing strong demand outlook in Semi-Cap, improving demand in industrials and expected second half ramps in high-performance computing.\nWe are revising our full year growth outlook to high single digits for 2021.\nOf course, this assumes no worsening component supply constraints or broader pandemic impacts.\nWith this revenue growth and mix, we're expecting sequential quarterly improvement in both gross and operating margins in both three and 4Q.\nOn the gross margin line, we are still targeting to achieve 9% for the full year 2021.\nWith these results, we are still expecting operating cash flows between $80 million and $100 million.\nThrough the first half of 2021, we repurchased $30 million of stock and may continue to purchase the stock opportunistically as well as continue our recurring quarterly dividend which we raised last quarter as part of our capital allocation plan.\nIn closing, I remain excited about the overwhelming positive indicators that we are seeing from our teams and our customers.\nI'm excited about how 2021 is shaping up and look forward to providing you an update in our October earnings call.\n", "role": "user" }, { "content": "q2 non-gaap earnings per share $0.27.\nq2 gaap earnings per share $0.20.\nsees q3 non-gaap earnings per share $0.33 to $0.41 excluding items.\nsees q3 gaap earnings per share $0.27 to $0.35.\nsees q3 revenue $555 million to $595 million.\nq2 revenue $545 million versus refinitiv ibes estimate of $531.7 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: For today's call, Jeff will begin by covering a summary of our fourth quarter results and a summary of initiatives progress in 2020.\nRoop will then discuss our detailed fourth quarter and 2020 results, including a cash and balance sheet summary and first quarter 2021 guidance.\nJeff will wrap up with an outlook by market sector and an update on our strategic initiatives for the year 2021, including ESG and sustainability.\nWe will then conclude the call with Q&A.\nWe hope all of you are remaining safe and healthy during these times.\nIn Q4, we delivered revenue of $521 million, which was at the midpoint of our guidance for the quarter.\nWith improving higher-value sector revenue mix and better operational efficiency, we achieved non-GAAP gross margins of 9.6%, which was above our target of 9%.\nEven with slightly higher SG&A expenses in the quarter due to higher variable compensation and higher-than-anticipated COVID-related expenses at $1.6 million or about $0.04 per share, the resulting non-GAAP operating margin was 3.4%, and non-GAAP earnings were $0.34 per share.\nOur team's effort to bring down inventory and better manage working capital are bearing fruit with cash conversion cycles coming in at 71 days, which enabled $84 million of free cash flow for the quarter.\nWe delivered these results in the fourth quarter amid continued challenges, including increasing COVID infection rates in our communities around the world, particularly impacting our North America operations.\nOur employees, operations leadership and COVID task force are continuing to do everything possible to provide a safe work environment at our sites around the world.\nOur go-to-market team continues to do a great job, and we had another strong quarter of bookings across all business areas of Benchmark.\nWhen I joined the company, we set a goal of consistently achieving over $200 million of new bookings per quarter, and I'm proud to report that even in the face of the global pandemic, we achieved over $800 million in new bookings for the 2020 calendar year.\nAs I've shared before, many elements contribute to driving revenue growth, such as reducing regrettable losses in our business, which we also made progress on in 2020.\nMore importantly, this achievement in new bookings bodes well for our future growth when coupled with our high customer satisfaction and progress on our other go-to-market initiatives.\nIn the medical sector, we were awarded new manufacturing programs for a state-of-the-art DNA sequencing analyzer and surgical device electronics.\nWe were also awarded design services for a low-temperature pharmaceutical storage freezer for which we expect to compete and win future manufacturing revenue.\nIn the A&D sector, we were awarded new programs for soldier training systems and flight control electronics.\nI want to briefly highlight the flight control system win referenced on this slide.\nWe competed with the largest companies in our peer group for this program.\nWe were successful because of our technical depth in aerospace technologies and our innovative approach to solving their most advanced engineering challenges.\nSimilar to what I've shared previously, we offered the customer a solution that included differentiated product engineering services, coupled with a robust global manufacturing proposal.\nOur successful plan to scale with a commitment to a One Benchmark solution provided the winning formula.\nIn industrials, we were awarded new outsourced programs for power controls, electronics destined for a low-cost manufacturing solution in North America and a full-system box build for a LiDAR control box application.\nIn computing and telco, we were awarded new fixed broadband products and new programs for our Benchmark solutions technology team.\nSimilar to last quarter, our new business pipeline continues to be strong across our targeted sectors and subsectors, and we remain very encouraged about the prospect for continued wins where the outsourcing environment for both engineering and manufacturing projects remains favorable.\nDespite all the challenges associated with 2020, we made steady progress on our key strategic initiatives that we laid out for the year.\nWe exited the year with customer satisfaction at an all-time high as a result of our customer focus initiatives.\nWe also made progress on making it easier to do business with Benchmark, along with improvements in deepening our strategic relationships and growing our position with existing accounts.\nOur regrettable loss measure has improved significantly in the last 18 months.\nWhile we have room to improve customer satisfaction further, I'm pleased with the positive trends and the impact this is having on increasing business with our customer base.\nThis customer-centric approach is an important foundation in growing our business.\nAs part of our sector strategies, we align processes to invest in technology to increase win rates.\nAs previously mentioned, we had a record year of new bookings in which we sold the full breadth of services to our customers.\nWe are focused on ensuring bookings convert to revenue.\nTo that end, we experienced annual revenue growth of more than 33% in semi-cap and 11% in medical sector.\nTurning to enterprise efficiencies, we made solid progress on this initiative in the past year.\nWe continue working on optimizing our global footprint, including completing previously announced closures in some locations and ramping up new capabilities in others.\nWe had announced in Q3 of last year our intent to close our aerospace turbine machining facility given the lack of alignment with our long-term strategy and the downturn in the market.\nUltimately, and fortunately, for our customers and employees, we were able to divest of these assets versus shutting down the site, and we transferred the majority of personnel and assets to the acquiring company.\nIn parallel, we have been working on the Angleton site closure and executing the transition plans, which remains on target.\nIn addition, we maintained our focus on expense management.\nThrough improved processes, G&A centralization activities and investment prioritization, we managed our SG&A expense to $122 million for the year, which was lower than forecasted.\nLastly, improving margins and effective working capital management allowed us to exceed our cash flow targets for the year.\nFinally, as I will reference in our ESG update later in the call, we have made strides in engaging talent and shifting our culture.\nAs I shared previously, Benchmark has a great partnership attitude, engages with integrity in all endeavors and a foundation centered on our customers.\nWe've continued to invest in new, diverse skills and talent across our organization.\nOur ongoing commitment to advancing diversity and inclusion efforts at all levels in the company through our ESG processes will make Benchmark a more technically -- technologically rich and innovative organization.\nI hope everyone and their families continue to be safe and healthy.\nTotal Benchmark revenue was $521 million in Q4, which was in line with the midpoint of our Q4 guidance and similar to our Q3 revenue of $526 million.\nAs expected, increased revenues from stronger demand and new programs in industrial, defense and semi-cap offset declines in medical.\nMedical revenues for the fourth quarter were down sequentially from continued lower demand for products involved in COVID-19 therapies, such as ventilators, x-rays and ultrasound devices and overall softer demand related to elective surgeries and trauma devices, which have yet to return to pre-COVID demand levels.\nSemi-cap revenues were up 2% in the fourth quarter and up 24% year-over-year from continued strength for wafer fab equipment to support growth in DRAM and logic demand across our semi-cap customers.\nA&D revenues for the fourth quarter increased 6% sequentially due to strong revenue from radar communications and land-based vehicle systems.\nConversely, commercial aerospace demand, which was about 25% of 2020 revenues, remained muted and continue to decline on certain platforms during the quarter.\nIndustrial revenues for the fourth quarter were up due to seasonality from infrastructure and transportation markets and an increase in engineering services.\nDemand from customers exposed to the oil and gas market remains soft.\nOverall, the higher-value markets represented 81% of our fourth quarter revenue.\nTraditional market revenue comprised of computing and telco was flat quarter-over-quarter.\nNew program ramps in high-performance and secure computing and in broadband network components were offset by lower demand in commercial satellite and data center products.\nOur traditional markets represented 19% of fourth quarter revenues.\nOur top 10 customers represented 38% of sales in the fourth quarter.\nOur GAAP earnings per share for the quarter was $0.21.\nOur GAAP results included restructuring and other onetime costs, totaling $4.4 million related to reduction in force and other restructuring activities around our network of sites.\nOur Q4 -- for Q4, our non-GAAP gross margin was 9.6%, a 90 basis point sequential increase.\nDuring the quarter, gross margin was positively impacted by overall sector mix, improved absorption and a number of customer recoveries, which represented 30 basis points of the 90 basis point increase.\nWe estimate that we incurred approximately $1.6 million or approximately $0.04 per share of COVID costs in the quarter versus $1.3 million in Q3.\nOur SG&A was $32.4 million, an increase of $2.7 million sequentially and $8.2 million year-over-year.\nThe sequential increase are primarily due to reinstatement of salaries and benefits and higher variable compensation.\nThe year-over-year increase is related to higher variable compensation, investments in our IT infrastructure and other expenses.\nNon-GAAP operating margin was 3.4%, an increase from 3% in Q3 due to the increased gross margin.\nIn Q4 2020, our non-GAAP effective tax rate was 17.5%, which was lower as a result of the mix of profits between the U.S. and foreign jurisdictions.\nNon-GAAP earnings per share was $0.34 for the quarter, and non-GAAP ROIC was 6.2%.\nOur non-GAAP earnings per share improved sequentially, primarily from improved operational performance.\nTotal Benchmark revenue for 2020 was $2.1 billion, a decrease from $2.3 billion in 2019 from lower demand from pandemic-impacted customers in commercial aerospace, oil and gas and elective medical subsectors.\nFor the full year, higher-value markets were up 3%, primarily from semi-cap and medical, which increased 33% and 11%, respectively, year-over-year.\nSemi-cap's strength was led by increased demand for DRAM and logic tools and increasing market share with existing programs across our customer base.\nOverall, the A&D sector declined slightly from 2019 revenues due to the deterioration of the commercial aerospace subsector.\nAs a reminder, for 2020, the A&D sector was approximately 75% defense and security related and 25% commercial aerospace.\nDefense demand remained strong throughout the year with increases across a number of new and existing programs.\nOverall, medical revenues grew 11% from new and existing programs.\nIndustrial revenues were down 18% year-over-year, primarily from softness in the oil and gas industry, with additional impacts from the commercial and building infrastructure markets where investments in many large projects remain delayed.\nOverall, the higher-value markets represented 81% of our 2020 revenue compared to 71% in 2019.\nRevenues in the traditional markets were down 41% from 2019, primarily from our exit of the legacy computing contract in Q3 2019 and program transitions in telco.\nOur traditional markets represented 19% of 2020 revenues compared to 29% in 2019.\nOur top 10 customers represented 41% of sales for the full year 2020.\nWe have one customer, Applied Materials, that was greater than 10% of revenue for the full year.\nOur GAAP earnings per share for fiscal year 2020 was $0.38.\nOur GAAP results included restructuring and other onetime costs totaling approximately $19 million.\nThese costs included $13 million of costs related to site consolidation efforts, reduction in workforce activities and other restructuring-type activity around our network, approximately $7 million in asset impairment, offset by $1 million in net insurance proceeds.\nOur 2020 non-GAAP gross margin was 8.4%, a 20 basis point sequential increase.\nWe achieved this increase even with the operational disruptions caused by the COVID-19 pandemic.\nWe estimate that we incurred approximately $7 million of net COVID costs in 2020.\nOur non-GAAP SG&A for 2020 was $122 million, an increase of $3.8 million from 2019.\nThe increase is primarily due to higher variable compensation and IT infrastructure investments.\nNon-GAAP operating margin for the year was 2.5%, a decrease from 3% in 2019, due primarily to the effects of the pandemic on our operational efficiencies and the incurrence of COVID-specific costs.\nIn 2020, our non-GAAP effective tax rate was 19.4%.\nNon-GAAP earnings per share in 2020 was $0.95, and non-GAAP ROIC was 6.2%.\nOur cash conversion cycle days were 71 in the fourth quarter, an improvement of 10 days from the third quarter.\nThroughout fiscal year 2020, and in general, we continue to be focused on effective working capital management.\nThis has resulted in inventory and contract assets improving by six days and advanced payments from customers improving five days in Q4.\nTurning to slide 12 for an update on cash flow and a summary of our cash and debt balance sheet items.\nOur cash balance was $396 million at December 31 with $189 million available in the U.S.\nWe continue to have a strong capital structure, and our liquidity position provides flexibility to manage our business, invest for the future and return capital to shareholders.\nAt December 31, 2020, we had $137 million outstanding on our term loan with no borrowings outstanding on our available revolver.\nSlide 13 shows our cash generation.\nWe generated $95 million in cash flow from operations in Q4 and generated $120 million for the full year 2020.\nOur free cash flow was $84 million in Q4 and $81 million for the full year 2020.\nSlide 14 shows our capital allocation activity.\nIn Q4, we paid cash dividends of $5.8 million and repurchased shares of $5.9 million.\nIn fiscal year 2020, we repurchased $25.2 million, which represented approximately one million shares.\nAs of December 31, 2020, we had approximately $204 million remaining on our share repurchase authorization.\nAt a minimum, we will continue to repurchase shares to offset our annual equity dilution.\nBeyond that, we'll evaluate share repurchases opportunistically while considering market conditions.\nFrom 2018 to 2020, we executed $359 million in share repurchases and paid $67 million in dividends to our shareholders.\nTurning to slide 15 for a review of our first quarter 2021 guidance.\nWe expect revenue to range from $480 million to $520 million, which reflects normal seasonality for some sectors.\nWe have had a number of inquiries regarding the supply chain environment.\nWe can confirm that lead times are extending for some components in the supply chain, including semiconductors and certain passes.\nWe aren't experiencing any near-term impacts beyond our normal expectations, but we will continue to work proactively with our suppliers and customers to secure supply to fulfill future demand.\nWe expect that our gross margins will be 8.1% to 8.3% for Q1, and SG&A will range between $29 million and $31 million.\nThe sequential drop in gross margins is expected due to lower revenues and the ramp of new programs.\nWe do expect that as we continue throughout fiscal year 2021, gross margins will increase, and we expect gross margins for the full year to be at least 9%.\nImplied in our guidance is 2.2% to 2.4% non-GAAP operating margin range for modeling purposes.\nThe guidance provided does exclude the impact of amortization of intangible assets and estimated restructuring and other costs.\nWe expect to incur restructuring and other nonrecurring costs in Q1 of approximately $1 million to $2 million.\nOur non-GAAP diluted earnings per share is expected to be in the range of $0.18 to $0.22 or a midpoint of $0.20.\nWe estimate that we will generate approximately $60 million to $80 million of cash flow from operations for fiscal year 2021, and capex for the year will be approximately $45 million to $50 million as we prioritize investments to support new customers and expand our production capacity through revenue growth.\nOther expenses, net, is expected to be $2.5 million, which is primarily interest expense related to our outstanding debt.\nWe expect that for Q1, our non-GAAP effective tax rate will be between 19% and 21% because of the distribution of income around our global network.\nThe expected weighted average shares for Q1 2021 are $36.3 million.\nThis guidance takes into consideration all known constraints for the quarter and assumes no further significant interruptions to our supply base, operations or customers.\nGuidance also assumes no material changes to end market conditions due to COVID-19.\nAnd with that, back to you, Jeff.\nFollowing Roop's comments on our guidance for the first quarter, I wanted to provide some additional color on our view of demand by sector for 2021 on slide 17.\nFor the first quarter, we expect revenue to slightly decline sequentially from some seasonality and sector-specific dynamics.\nStrong demand for semi-cap and the new HPC program ramp in computing are offset by continued softness in some of our medical sector products, our industrial sector, oil and gas products and further weakness in our commercial aerospace business.\nFrom this Q1 base, we expect sequential revenue growth throughout the remainder of the year, supported primarily from new programs in industrials, medical and computing.\nIn the medical sector, we're experiencing revenue -- we're expecting revenue to remain relatively flat in the first half as demand started to slow for COVID-19-related therapy devices in 4Q, and elective surgery products have yet to recover.\nHowever, we are in flight on a large number of new program ramps for diagnostic and ultrasound products that will benefit second half revenues.\nWith our deep expertise in design and manufacturing for complex medical products and our recent program wins, we have confidence that 2021 will be another growth year for the medical sector.\nIn semi-cap, demand remains strong for semiconductor capital equipment in Q1, which we expect to continue throughout all of 2021, driven by the deployment of 5G and cloud computing demand created by work-from-home and school-from-home trends as well as growth in e-commerce.\nWe remain well positioned in this sector with both our advanced precision machining and electronics manufacturing services and now expect revenues to grow greater than 10% over 2020 levels.\nMoving to the A&D sector outlook.\nWe expect sector revenues to be flat to potentially down in 2021.\nExpected gains from new programs in our strong defense business are offset by further declines and persistent weakness with our commercial aerospace customers.\nCustomers in commercial aerospace have not provided visibility into a time line for demand improvements.\nConversely, we are seeing further improvements in military programs, supporting advanced communications, radar applications and ground-based systems.\nIn industrials, we expect strong year-over-year growth from our new programs that will ramp in first -- second half 2021.\nAt present, we suspect that our oil and gas business will begin to recover starting in Asia in the back half of the year.\nIndependent of this recovery, our new sector leader and business development teams have made significant strides in growing both existing and new accounts.\nIn fact, the industrial sector had the highest value of bookings in 2020.\nThese new programs support our confidence in full year growth, even against the softer near-term demand outlook.\nFor the full year, we also expect growth in the traditional markets.\nIn the telco market, where we remain highly selective in our engagements, we expect overall stable revenue underscored by demand strength in satellite and broadband communication programs.\nIn computing, we expect strong revenue contribution from high-performance computing projects with expected ramps in late Q1 through midyear 2021.\nNow that we're in 2021, we are becoming increasingly bullish on our ability to achieve mid-single-digit growth over 2020.\nWe are expecting continued growth in the medical and semi-cap markets with incremental contributions from industrials and high-performance computing.\nOur higher-value markets are expected to grow for the full year.\nWe expect the higher-value markets to again represent over 80% of our total annual revenue.\nWe are targeting gross margins for the full year to be at least 9% as we offset headwinds from continued COVID costs and a number of new program ramps with benefits from our operational excellence programs.\nWe are also targeting SG&A for the full year to be below 6% from effective expense management and continued progress with shared services consolidation.\nWe remain committed to growing shareholder value and providing incremental returns to shareholders through quarterly dividends and with our share buyback program.\nAt present, the five tenets of our ESG strategy are environmental responsibility, our people, our community, governance, and the ongoing COVID-19 response.\nUnder the oversight of the Board, our internal ESG council is comprised of an enterprisewide, cross-functional team tasked with defining and implementing key projects and investments that will advance these priority initiatives.\nWe have further supplemented this team by partnering with like-minded customers and by engaging with third-party consultants who have specific ESG experience to further accelerate our strategy.\nFor your information, we have been monitoring and tracking energy reduction programs for almost 10 years in support of the environment.\nOn the governance front, we have a diverse corporate Board with 22% of directors represented by women, but we can and will do more.\nWe have plans in flight to expand racial diversity on our Board of Directors and overall plans in the company to strengthen our diversity and inclusion platform through strategy, training and a focused recruiting plan.\nWe have conducted a peer analysis and are mapping current material ESG programs to SASB standards, which we will publish this quarter.\nWe will also provide further updates in the ESG sections of our upcoming annual report and proxy in Q2.\nWe expect to release a stand-alone sustainability report in 2022.\nFuture reports from Benchmark will include both qualitative and quantitative measures reflecting updates and improvements as we advance our overall ESG strategy.\nI want to wrap up our call today with a summary of our three strategic initiatives for 2021 on slide 21.\nGrowing revenue is a top priority of Benchmark.\nAs I referenced earlier, we have spent a considerable amount of time over the past couple of years, optimizing the customer experience through recurring feedback mechanisms and enhancing our strategic relationships.\nOur account management processes are improving, and we are focused on increasing the attach rate of design engagements to manufacturing wins through selling the full breadth of services and capabilities to our customers.\nOnce we successfully win new programs, we are then laser-focused on supporting new program ramps which are forecasted to be at record levels in 2021.\nIn order to achieve our financial targets, we must also invest in a sustainable infrastructure and talent needed to scale our business.\nAs I discussed earlier, ESG sustainability initiatives and advancing diversity and inclusion underpin these foundational efforts.\nThis also involves creating an efficient and scalable infrastructure to streamline the global delivery of our shared services.\nWe have rationalized our investments in corporate infrastructure, including our HR, IT, finance and other shared services, and centralized these groups to achieve scale while concurrently managing SG&A expense in support of our midterm model which we introduced late last year.\nUltimately, our model reflects that we expect to grow earnings faster than revenue.\nRevenue growth in our model enables higher utilization to better leverage our fixed costs, but not all revenue dollars are created equally.\nWe are targeting a portfolio of customers with the right sector mix that value our advanced technologies and leverages the breadth of our services.\nThrough these targeted higher-margin customer engagements and ongoing operational excellence efforts, we will expand margins and ROIC through 2021 and into the coming years.\nI remain excited about our team's ability to capitalize on the growth opportunities in our diverse end markets where our deal pipeline and win rate is increasing, and we remain focused on executing our ongoing initiatives to increase value for our customers, employees and shareholders.\nI look forward to 2021 with optimism, knowing that our strategic investments in the business to drive differentiated value and sustainability have solidified a path to achieve revenue, margin and earnings growth in 2021.\n", "role": "user" }, { "content": "sees q1 non-gaap earnings per share $0.18 to $0.22 excluding items.\nsees q1 revenue $480 million to $520 million.\nq4 gaap earnings per share $0.21.\nqtrly revenue of $521 million.\nqtrly non-gaap diluted earnings per share of $0.34.\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: As I review this past quarter and provide insights into our current quarter's business, I want to reiterate that we will be providing comparisons to both 2020 and 2019.\nGiven the periods of quarantining and stimulus that impacted the business in waves last year, we are anchoring comparisons to 2019 to show underlying business trends.\nTo that point, I am pleased with our second quarter performance as we continue to demonstrate strong growth versus 2019, proving out our Operation North Star strategies, demonstrating progress in our core assortment and underscoring the relationships that we are building, both online and in store with our existing and newly acquired customers.\nIn the quarter, we saw strong double digit, two-year comps in Furniture, Soft Home, Hard Home and Apparel, Electronics & Other.\nConsumables also posted a positive two-year comp, while Food was down mid-single digits, reduced on square footage basis by our pantry reset last fall.\nAs a result, while down 13% to last year on a comparable basis, comparable sales for the second quarter increased 14% to 2019.\nAdditionally, we delivered diluted earnings per share of $1.09 within our guidance range, despite ongoing supply chain and distribution headwinds that were greater than expected at the beginning of the quarter and cost us at least 1 point of comp.\nWhile the Big Lots team is always busy, we were really busy over the past quarter engaging with customers leaning into our store count growth, continuing to upgrade our omnichannel offerings and removing friction from our e-commerce channel, launching a new warranty offering through Allstate, rolling out additional Lot and Queue Line stores, preparing for the launch of our two new forward distribution centers and Project Refresh at the start of the third quarter, further rolling out our BIGionaire's brand activation campaign and navigating a challenging supply chain market.\nWhile addressing these initiatives and macro forces, our teams remained unwaveringly focused on our customers' needs, continuing in our mission to help them live big and save lots.\nWe are dealing with it now and navigating the dynamic and ever-changing complexities of the supply chain.\nBut at the same time we are leaning into and investing in our future and our promising long-term growth opportunity.\nI speak for all Big Lots leadership when I convey how indebted we are to the over 30,000 Big Lots team members.\nWe remain very excited about the huge white space opportunity ahead of us, and know that investing in our customer, our people and our infrastructure will be critical to bringing that growth potential to fruition.\nFreight headwinds weighed on gross margin for the quarter, and in addition, our performance for the quarter was also impacted by labor challenges in two of our regional distribution centers.\nThis dynamic is improving as we enter Q3, and stress on our network will be further reduced by the opening of our first two forward distribution centers.\nIn addition to alleviate immediate supply chain pressures and maintain speed to market, we have set up a nimble and agile temporary DC bypass program for the fourth quarter that will increase efficiency of our DCs and capacity to our network.\nMeanwhile, we remain excited by our merchandising opportunities, and we are focused on driving customer-centric deals every day.\nWe continue to expand our ability to find close-out product in most areas of the store.\nWe are working hard to find great deals and big buys for our customers, whether we source them from closeouts, engineered closeouts or just incredible product we find add value in the market.\nWe see the potential for close-out opportunities to grow in 2022.\nAs we focus on item merchandising and key value messaging, our customer is responding well.\nFor example, our increased investment in apparel is leading to the acquisition of customers that are exploring more of the Big Lots assortment.\nAdditionally, this is a great example of increasing merchandised productivity within the box, driving incremental sales with a strong initial markup and expanding our brand recognition with quality product.\nTurning to our category performance, Food and Consumables both declined versus Q2 2020 as we lap last year's COVID impact.\nThe Consumables were positive on a two-year basis and both categories exceeded our beginning of quarter expectations.\nIn Food, we have continued to see a shift away from grocery and baking categories and into more snacks, beverage, energy drinks and on the go food.\nIn consumables, we saw a rebound in the household chemicals category as well as cosmetics, while paper sales, demand on bath tissue and paper towels continue to be a bit challenged, driven by the prior COVID related stock-ups.\nA year ago we reset Food and Consumables across the store and this is performing well.\nAs we approach lapping this reset, we continue to see opportunity to improve overall productivity and improved values with big deals, own brands and everyday low prices on brand names.\nOur Seasonal assortment, which includes patio, lawn and garden and summer categories like coles, and 4th of July themed goods was challenged for the quarter due to shipping delays and inventory availability.\nThe overall category comped down 15% to last year, but up 4% to Q2 2019.\nMoving into Q3, our inventory situation has improved, and we have seen a resurgence in sales with early strength from our Halloween and Harvest assortment.\nAlthough supply chain pressures related to Asian port and manufacturing disruption will continue to create challenges, we are much better prepared to win at the all important holiday season.\nSoft Home comps were up 14% versus 2019.\nWhile we saw softness in fashion bedding, all other categories met expectations.\nBath rugs and towels, patio rugs and floor mats were particularly strong this quarter.\nAlso noteworthy were the candle collection categories within home decor with strong double-digit growth to 2019.\nHard Home comps were up 13% to 2019, exceeding our expectations with appliances and home organization, delivering double-digit increases in 2019.\nKey classifications such as floor care, kitchen appliances, storage, dinnerware and cookware continued to trend strongly, partially offset by lower, but positive comp sales to 2019 in tabletop, food prep and home maintenance.\nCloseouts in Hard Home were up even more over 2020 with appliances, cookware, home organization all doing very well.\nToys, now rolled into our Hard Home category following our merchandising reorganization also performed quite well and ahead of expectations.\nFurniture delivered another very strong quarter, with comps down 10% to last year, but up 30% to 2019.\nThe furniture team did an outstanding job of mitigating inventory challenges, primarily as a result of chemical shortages affecting foam production, and we achieved our strategic goal of winning Memorial Day weekend with positive comps to last year and two years ago.\nUpholstery was particularly strong in Q2, delivering a flat comp to 2020 and up almost 40% to 2019, driven by high demand for sofas and sectionals.\nAnchored by the Broyhill brand, which continues to gain share, it is now over 40% of total upholstery sales.\nApparel, Electronics & Other also performed very strongly, up 15% to 2020.\nApparel delivered a 90% comp for the quarter, with casual and athletic lifestyle dressing dominating the women's business.\nAlthough tops remains strong, we saw high sell-throughs in capris and shorts as well.\nMens active tops and shorts performed well.\nCloseouts continued to build within the assortment, offering value, breadth and new classifications.\nAccessories saw nice increases with hair and jewelry.\nAdditionally, luggage was introduced as a new category in July with strong sales results that will provide additional growth as we look toward the back half of the year and into 2022.\nThe Lot continues to strengthen as delighting our customers with fun, innovative treasures just right for life's occasions while delivering nearly 2% of the Company's sales in the quarter.\nWe executed a camping theme set and a nostalgia set during the quarter, both of which resonated well with big hits from national brand camping suppliers, novelty [Phonetic] small appliances and unexpected finds such as PopCorn-themed items, a TV projector, large video game units and novelty pet styles.\nI would now like to turn to our longer-term growth strategy.\nWe remain excited about the tremendous progress we are making under Operation North Star, where our growth drivers are growing, our customer base, improving our e-commerce conversion, improving merchandise productivity and increasing our store count.\nWith regard to customer growth, we are thrilled with the continued rollout of our, Be A BIGionaire, brand campaign that we gave a glimpse of last quarter.\nThis program is grounded in extensive consumer insights around why customers love to shop us.\nShe sees us as the home of the hunt for exceptional bargains and surprising treasures.\nI'm delighted to share that this campaign is driving a 2% lift in transactions in the markets where we have rolled it out.\nNew BIGionaires visiting Big Lots for the first time are driving 60% of these incremental transactions.\nThe campaign has also increased brand awareness, consideration and purchase rates, showing that we are gaining relevance.\nOur first campaign featured Retta who successfully transferred her relatability and humor from Good Girls and Parks and Recreation into our BIGionaire campaign.\nAs we gear up for this holiday, you can expect to see additional stars hunting for bargains and treasures at their neighborhood Big Lots.\nComing soon, you'll see Eric Stonestreet, most famous for his role in the beloved comedy, Modern Family and Molly Shannon, best known for her fantastic characters on Saturday Night Live.\nBoth Eric and Molly embraced the Big Lots personality.\nWe cannot wait to share future details with you soon.\nWe're also thrilled that the campaign is resonating with the younger audience.\nIn our demographic distribution, we've seen a 600 basis point share increase in new customers with ages 25 to 39, with the distribution shifting from those 55 and older.\nSavvy shoppers of all ages are discovering Big Lots and they love that we provide everything for their home with incredible value and superior style.\nMeanwhile, our rewards membership continues to contribute productive growth to the business with active membership of 8% versus the second quarter of 2020 adding 1.8 million more new members this past quarter with rewards membership currently at 21.5 million.\nAdditionally, rewards customers in total spent 16% more than last year and 7% more per customer.\nOver 72% of our sales this past quarter were attached to our rewards membership.\nThat penetration to sales is up 400 basis points to the same quarter last year.\nFinally, we continue to see great reactivation through thoughtful win back programs to recapture lapsed rewards members and keep them coming back.\nDemand increased 10% over the second quarter of 2020 representing over 400% of growth to Q2 2019.\nWhile side business declined in the quarter versus Q2 2020, as we lap the height of the pandemic response in 2020, the declines in traffic were more than offset by increases across conversion and basket size.\nDemand for our seasonal lawn and garden assortment and for furniture continued the momentum that we saw in the first quarter.\nECom growth is supported by our investments in the channel to further improve search, purchase and fulfillment capabilities, buy online pickup in store, curbside pickup, ship from store and same-day delivery with Instacart and Pickup.\nThey've all been very successful and drove over 60% of our demand fulfillment.\nTo support holiday, we are increasing the number of stores providing ship from store fulfillment to 65.\nWe are further reducing transaction friction by introducing our third mobile wallet payment program, PayPal, in time for holiday joining our lineup of Apple and Google Pay, and we expect to introduce a new buy now, pay later offering later this quarter.\nAdditionally, we have updated the look and feel of the website to match and enhance the upbeat feeling of our brand and the BIGionaire campaign.\nTurning to merchandise productivity, momentum remained strong within our growing Broyhill businesses as the assortment drove $194 million in Q2 sales.\nThis represents a $77 million increase to Q2 2020, at which point we had just launched the brand.\nWe remained thrilled with Broyhill's trajectory and continue to see strong growth ahead for the brand with over $400 million in year sales today, up to last year's full year performance and showing continued acceleration to becoming $1 billion brand.\nIn addition, it's important to call out that Broyhill is just one aspect albeit a huge focus of our own brand strategy.\nWe are also leaning heavily into Real Living, a private brand in our furniture and home goods area of the store with a lower price point than Broyhill.\nWe are seeing early growth in this brand by consolidating our offering of unbranded goods and transitioning from other private labels currently in the store.\nWe are also introducing new products to make sure we have a complete offer in the Real Living brand.\nReal Living has ramped up quickly, generating over $400 million in sales year-to-date, and we are confident that it, too, will become a $1 billion own brand for Big Lots.\nFor Lot and Queue Line, front end strategies are now rolled out to approximately 1,225 stores.\nThese initiatives act as innovation labs with newness that plays into the rest of the stores assortment, strengthening customer engagement.\nThe Lot and Queue Line continues to drive 3% incremental combined lift to our store performance.\nAdditionally, both have become established aspects of the Big Lots shopping experience as transactions containing items from the Lot tend to be of larger value, include more items and attached to more of the balance of the assortment, while the queue lines are driving strong incremental unit impulse buying upon checkout.\nIn prior calls, we introduced you to our next generation furniture sales team test that puts dedicated furniture focused associates on the sales floor to help educate our customers about the breadth and quality of our home furnishings.\nI'm excited to announce that this test now in over 80 stores continues to perform very well, delivering around a 15% furniture sales lift.\nWe expect to roll this next-generation model to several hundred stores in 2022 delivering at least 1 point of comp to the total Company, on an annualized basis.\nFinally, with regard to store count, our growth is accelerating this year and will further accelerate in 2022 and beyond.\nBased on all the work that we have done in recent months, we are confident that there is white space to grow our store count by hundreds of stores in the coming years with two to three times the net store growth in 2022 than the net increase of around 20 stores we expect to achieve this year.\nAt the same time, we expect to continue slowing our rate of closures as a result of our store intervention program, which this year will be only around 15 stores.\nAll of these growth drivers are supported by key enabling investments.\nEarlier this year, we announced that we would be opening mid-year two forward bulk [Phonetic] and furniture distribution centers to support our growth and relieve pressure in our current regional distribution centers.\nWe are pleased to announce that our first FDC opened in early August, and our second will be receiving inventory early next week.\nAdditionally, we are pleased with the performance of our new transportation management system, which has been crucial to mitigating the pressures that we've experienced within our distribution network.\nMeanwhile, during Q2, we initiated a multi-year program, which we're calling Project Refresh to upgrade our approximately 800 stores not included in our 2017 to early 2020 Store of the Future program.\nThese stores will get new exterior signage, interior repainting and floor repair, a new vestibule experience, remodeled bathrooms and anterior wall graphics, all at a much lower cost than our prior Store of the Future conversions.\nThis will create a consistent brand experience across our stores and enhance our brand for the long run.\nThe average cost per store will be around $100,000, much lower than the prior Store of the Future program.\nAs I hope I've impressed upon you, both in this quarter's discussion and in previous calls, we have resolute belief in our Whitespace potential and in the continued growth opportunities that Operation North Star presents.\nThe underlying progress we are making is increasingly evident.\nBefore handing over to Jonathan, I want to turn back to the supply chain and distribution headwinds we've discussed, which we expect will continue to impact our business in Q3 and Q4.\nPrior to the recent global resurgence of COVID, we were seeing increased import cost driven by global increase in demand for ocean freight.\nOver the past few months, we have seen that dynamic exacerbated by the temporary shutdown of the port at Yantian, China and temporary factory and port closures elsewhere in Asia.\nVietnam, where segments of our furniture and seasonal categories are sourced is currently under COVID restrictions that impact our supplier's ability to produce at scale.\nThe Vietnamese government is targeting September 15th, as the date to ease restrictions.\nIn addition, the port of Ningbo, China experienced a terminal closure in mid-August, although has now reopened.\nThese developments highlight the fluidity of the situation and the ongoing uncertainties caused by COVID-19.\nWhile these pressures are expected to be transient, they are resulting in both cost increases due to an imbalance of container supply and demand, as well as sales impact due to delayed inflow of product, particularly from Vietnam.\nThe guidance that Jonathan will cover in a moment bakes in our current estimates of these impacts.\nIn summary, we are facing some near-term challenges, but our underlying business remains strong as evidenced by our strong two year comps in the second quarter, which have continued into Q3.\nWe are as confident as ever that our Operation North Star strategies will drive significant growth in the coming years, supported by key investments we are making.\nAs Bruce referenced, so much was accomplished this quarter as our teams remain focused on providing a great experience, great assortment and great value to our customer.\nNet sales for the second quarter were $1.457 billion, and a 11.4% decrease compared to $1.644 billion a year ago.\nThe decline was driven by a comparable sales decrease of 13.2% as we lap stimulus impacts in 2020, on the height of last year's nesting activities, partially offset by 180 basis points impact from net store openings and relocations.\nOur comp result was slightly off our negative low-double digit guidance, driven by labor challenges at two of our regional DCCs -- regional DCs, which adversely impacted store inventories.\nSales in total were up 16% to 2019's $1.252 billion with a two-year comp of 14% [Phonetic] driven by basket size.\nAs a side note, when we reference two-year comps going forward, we will be doing so on a multiplied rather than an additive basis.\nNet income for the second quarter was $37.7 million compared to $110.1 million in Q2 of 2020 and $20.6 million in 2019.\nDiluted earnings per share for the quarter was $1.09 within our guidance range coming into the quarter.\nAs a reminder, we reported adjusted earnings per share of $2.75 last year, which excluded the gain on the sale of our four owned distribution centers.\nEPS for this year's second quarter reflected continued strong control of expenses which offset the slight miss on sales.\nIn addition, we've got approximately $0.03 of benefit from share repurchases during the quarter.\nGross margin rate for Q2 was 39.6%, down 200 basis points from last year's second quarter rate, and 20 basis points below 2019, in line with our guidance.\nOur margin rate reflects freight headwinds, partially offset by first cost benefits, pricing increases and judicious markdown deployment.\nFreight headwinds were greater than initially expected with freight costs closing close to 200 basis points of gross margin contraction year-over-year.\nTotal expenses for the quarter, including depreciation were $524 million, down from $534 million last year, and slightly lower than beginning of quarter expectations, despite the distribution and transportation cost pressures, while deleveraging versus last year expenses leveraged 120 basis points versus 2019.\nAll of the above drove us to an operating margin for the quarter of 3.7%, versus 9.1% last year and 2.6% in 2019.\nExcluding the freight headwinds, our operating margin would have been closer to 5.7%, a 300 basis point improvement to 2019.\nInterest expense for the quarter was $2.3 million, down from $2.5 million in the second quarter last year.\nIn light of our strong liquidity position and current market conditions, on June 7th, we prepaid the remaining $44.3 million principal balance under our 2019 term note secured on the Apple Valley distribution center equipment.\nIn connection with the prepayment, we incurred a $0.4 million prepayment fee and recognized $0.5 million loss on debt extinguishment in the second quarter.\nThe income tax rate in second quarter was 26.7% compared to last year's rate of 25.8%, with the increase primarily driven by the impact of the Section 162(m) executive compensation add back.\nMoving on to the balance sheet, total inventory was up 32% to $943.8 million, slightly ahead of our beginning of quarter guidance.\nThe increase was driven by the lapping of a typically low inventory levels at the close of the second quarter in 2020.\nInventories were up 8% of Q2 2019, maintaining a strong two-year turn improvement while supporting our ability to drive third quarter performance.\nDuring Q2, we opened 12 new stores and closed seven stores.\nWe ended Q2 with 1,418 stores and with total selling square footage of 32.3 million.\nCapital expenditures for the quarter were $45 million compared to $41 million last year.\nDepreciation expense in the quarter was $35.3 million, approximately $1.3 million lower than the same period last year.\nWe ended the second quarter with $293 million of cash and cash equivalents and no long-term debt.\nAs a reminder, at the end of Q2 2020, we had $899 million of cash and cash equivalents and $43 million of long-term debt.\nThe year-over-year reduction in cash levels, reflects our deployment of proceeds from the sale and leaseback of our distribution centers toward share repurchases and the payment of taxes on the gain on sale and leaseback.\nWe repurchased 2.4 million shares during the quarter for $153 million at an average cost per share of $63.57, under our previously announced $500 million authorization.\nThere is approximately $97 million remaining as of the end of the second quarter of 2021.\nFor the program to date, we have repurchased 7.3 million shares at an average cost of $55.18, including commission.\nAs announced in a separate release today, our Board of Directors declared a quarterly cash dividend for the third quarter of 2021 of $0.30 per common share.\nThis dividend is payable on September 24, 2021 to shareholders of record on the close of business on September 10th, 2021.\nAs Bruce noted earlier, we are facing significant sales and margin challenges as a result of Asian manufacturing and supply chain disruption due to recent COVID issues.\nIn addition, we will incur additional expense in the back half related to actions we are taking to ensure we are competitive in hiring and retaining labor in our stores and DCs.\nOur guidance below incorporates are a best estimate to all of these impacts, although they remain fluid.\nIn the third quarter, we expect a diluted loss per share in the range of $0.10 to $0.20 compared to $0.76 of earnings per diluted share for the third quarter of 2020.\nFor the full year, we expect earnings per share in the range of $5.90 to $6.05.\nWhile this represents a decline to last year's adjusted diluted earnings per share of $7.35, it represents 60% plus growth to 2019 earnings.\nThe guidance does not incorporate any share repurchases we may complete in the third or fourth quarters.\nOn a two year basis, we expect comps to be up low double digits.\nAs Bruce referenced, our Q3 has got off to a good start, with two year comps running ahead of Q2, but we have baked in some moderation as the quarter progresses due to receipt delays.\nFor the full year, we expect a negative low-single digit comp versus 2020 which will again equate to double-digit comps on a two-year basis.\nOur full year sales outlook bakes in approximately $60 million of adverse impact in Q3 and especially Q4, related to COVID related manufacturing shutdowns in Vietnam.\nWe expect the third quarter gross margin rate to be down approximately 175 basis points to last year, driven by freight headwinds as Bruce previously discussed.\nVersus 2019, the rating -- versus 2019, the rate is expected to be down approximately 100 basis points, essentially all freight-related.\nRecent shutdowns of the port of Yantian in China resulted in a significant increase in container rates that will impact our cost of goods in Q3 and Q4.\nFor the full year, we now expect a gross margin rate impact from freight of approximately 150 basis points resulting in gross margin rate being down approximately 50 basis points versus 2019 and approximately 100 basis points versus 2020.\nWe expect freight pressures to abate as we move forward and we continue to see other areas of gross margin opportunity, including promotional and pricing optimization and shrink reduction.\nWith regards to SG&A, at our projected sales levels, we expect Q3 and the full year to deleverage versus 2020, but both to show healthy leverage versus 2019.\nIn Q3, expense dollars will be up slightly to last year, driven by incremental expense investments in labor and in our forward distribution centers.\nThe full year SG&A expense dollars will be up to 2020 driven by the full year impact of the sale and leaseback of our distribution centers, additional supply chain expenses including investments in our new forward distribution centers, other strategic investments and higher equity compensation expense.\nThese increases will be mitigated by more than $30 million of structural expense savings, which remain an ongoing area of focus and priority.\nWe continue to expect 2021 capital expenditures to be around $200 million to $210 million including around 55 store openings, of which around 20 will be relocations.\nOur capex outlook also includes the first wave of store upgrades, under our new Project Refresh program.\nOn a net basis, we expect total store count to grow by about 20 stores in 2021.\nWe expect to further accelerate store count in 2022 and beyond.\nAs Bruce said, our work has increasingly validated the opportunity to grow our store count materially in the coming years, and we are making the necessary investments to support that.\nWe continue to expect inventory to increase significantly versus 2020, reflecting very depleted levels of a year ago.\nAs Bruce referenced earlier, we are seeing strong early sales for our late fall and early holiday assortment, supported by higher inventory levels.\nWe expect ending Q3 inventory to be up around 10% versus 2019, continuing to reflect healthy turn improvement.\nWe expect a similar two-year inventory increase at the end of Q4, which will include some accelerated lawn and garden receipts, support Q1 sales and minimize the risk of further supply chain disruption.\nWe know we left sales on the table and seasonal over the past 12 months to 18 months, and we are heavily focused on recapturing those sales as we go forward.\nAs well as the impact in Q4 ending [Phonetic] inventory, these early receipts will drive around $6 million of additional supply chain expense in Q4.\nOverall, our third quarter will be a challenging one, driven by supply chain challenges, resulting sales impacts and cost increases.\nHowever, we expect our underlying business measured by our two year comp trend to remain strong, with healthy margins after adjusting for freight effects, supported by continued strong expense management.\nWe continue to work very hard to ensure we are well positioned -- as well positioned as possible for the all important holiday season.\nAnd we look forward to continuing to demonstrate strong underlying performance in 2022 and beyond.\n", "role": "user" }, { "content": "big lots q2 earnings per share $1.09.\nq2 earnings per share $1.09.\nqtrly sales of $1.46 billion with 2-year comp of 14%.\nsees q3 loss per share $0.10 to $0.20.\nqtrly ecommerce demand up 10% to q2 2020 and up 400% to 2019.\nsees full year earnings per share in range of $5.90 to $6.05.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Simply put, we have growing confidence that our strategies across merchandising productivity, real estate growth and e-commerce put us at a transformational moment for the Company.\nWe see a clear path to growing our business by several billion dollars over the coming years.\nOur Board of Directors echoes this confidence and yesterday authorized an incremental $250 million share repurchase program, underscoring our collective belief in Big Lots' positive growth story and our continued commitment to returning value to our shareholders.\nTurning now to our third quarter.\nWe were pleased to deliver results in line with guidance despite incremental supply chain disruptions compared to our beginning of quarter two.\nIn discussing our results and outlook, we will continue to reference comparisons to 2019, as generally being the most relevant given the abnormal impacts of COVID-19 on our business in 2020.\nOn a two-year basis, Q3 comparable sales increased 12%, while declining 5% to 2020.\nTotal sales increased over 14% [Phonetic] versus 2019 with 210 basis points of favorability from our net new and relocated stores.\nThe two-year growth in sales reflects the strength and resilience of our Operation North Star strategies as stimulus has faded as a factor in our results.\nA loss per share of $0.14 was within our guidance range.\nAnd while we were subject to the continuing macro pressures of which I'm certain you are all aware, including supply chain disruption, inflation and labor constraints, we were able to contain these for the quarter.\nSales for the quarter benefited from growth in basket, driven by AUR expansion across each category and positive mix effects as we penetrated deeper end of furniture and seasonal.\nWe saw strong positive two-year comps in Furniture, Seasonal, Soft Home, Hard home, and apparel, electronics and other.\nAs expected, consumables experienced single digit two-year growth and food was down mid-single digits due largely to a strategic reduction in square footage in conjunction with our pantry optimization reset last fall.\nFurniture delivered another very strong quarter with two-year comps up low double digits.\nSeasonal though was the quarter highlight with comps over 30% on a two-year basis with lawn and garden and Halloween and Harvest all doing very well.\nWe feel very good about the fourth quarter and even with some delayed receipts, we anticipate high sell-through of our holiday merchandise that will translate to a strong seasonal comp for the quarter.\nTurning to marketing, we are thrilled with the continued rollout of our be a BIGionaire brand campaign that started in spring.\nAs a reminder, this campaign is grounded in extensive consumer insights around why customers love to shop us.\nShe sees us as the home of the hunt for exceptional bargains and surprising treasures.\nAs we turn to the fourth quarter for our holiday BIGionaire campaign featuring Eric Stonestreet and Molly Shannon, we are receiving excellent feedback that the ads are attention-grabbing, likable and driving intention to shop.\nYou can look forward to great things from this campaign featuring not only superstars, but more importantly, unique gifts and decor and always incredible value.\nThe campaign, coupled with our rewards program is resonating.\nRewards active members were up over 9% versus Q3 last year.\nNow with 22.1 million members still boasting a five-year CAGAR of 10%.\nIn Q3, rewards members accounted for 64% of transactions and 76% of sales, both up 400 basis points to same quarter last year.\nBefore turning to our discussion of our strategic opportunities, I would like to provide a few brief comments on Q4.\nFirst and foremost, our absolute focus for Q4 has been to position ourselves appropriately with inventory to drive sales and deliver an excellent holiday for our customers, and the quarter has started off strongly with positive 10% two-year comps for fiscal November.\nWhile manufacturing and supply chain pressures will impact both our top and bottom lines in Q4, we are aggressively managing through them as we continue to grow the business.\nThis includes partnering closely with our manufacturing and transportation partners, strategically prioritizing receipts, creating new capacity with our forward distribution centers and our DC bypass program and ensuring we are competitive in recruiting and retaining DC associates.\nIn addition, we have taken pricing actions and we'll continue to do so in response to volatile supply chain costs, while continuing to deliver great value for our customers.\nAnd we have line of sight to ending the fourth quarter with a strong inventory position to meet spring demand and deliver strong Q1 sales, and we know that we left sales on the table in each of the past two years.\nLooking a bit further out, it is too soon to give specific guidance for 2022 as a whole.\nSo while we face a big hurdle with the lapping of stimulus in Q1 and Q2 of this year, which we estimate was worth about 5 points of comp on a full year basis and will result in negative comps in Q1 of '22, we expect to deliver overall sales growth in '22 on top of two years that greatly exceeded any prior sales level we achieved as a Company.\nThat growth in '22 and beyond will be achieved through the three key Operation North Star drivers we have referenced on prior calls, specifically growth in same-store sales, driven by our many successful merchandising initiatives, accelerated growth in our store footprint and growth driven by a rapidly scaling e-commerce and omnichannel operations.\nI would like to take a moment on each of these to talk about the opportunity we see ahead of us.\nStrategically building our merchandise assortment to maximize productivity will be a key driver of our growth in the coming year and beyond.\nThis will be driven by discrete in-store programs, new tools and by leveraging our rapidly growing owned brands.\nStarting with our next generation furniture sales team, this initiative is rolling out presently and is making a strong positive sales and margin impact, driving close to a 50% lift to the furniture business in stores where it has rolled out.\nThis program is currently in 100 stores and will initially scale to around 500 stores in '22, driving at least a point of comp on an annualized basis for the entire Company.\nBig Lots has been known for winning at holiday and in lawn and garden in the spring and summer with our outdoor seasonal patio sets, gazebo and pools [Phonetic].\nHowever, we have a major whitespace space opportunity for elevating our seasonal assortment, increasing our newness in transitioning between seasonal moments with greater efficiency and effectiveness.\nWe will show a big for not just holiday, but for Valentine's Day, St Patrick's Day, 4th of July and other seasonally relevant moments, winning the seasons throughout the year.\nAdditionally, as I will discuss in more detail shortly, furniture and seasonal volume will both be supported by the expanded DC network capacity that we are developing to more efficiently flow bulky merchandise to our stores.\nMoving to our own brands, in particular Broyhill and Real Living, we see major upside both with furniture and beyond.\nMost importantly, we have proven that they resonate well with our customer.\nBroyhill and Real Living each have the potential to achieve $1 billion in annual sales across all home categories and are well underway toward that, both north of $0.5 billion in sales on a year-to-date basis through Q3.\nBroyhill accounted for over $160 million in Q3 sales, up close to 50% over the same quarter in 2020.\nApproximately 40% of sales came through our home decor, Seasonal and hard lines.\nSimilarly, Real Living continues on its strong trajectory, almost doubling versus Q3 of last year and delivering over $60 million of growth during the quarter across multiple product categories.\nAs we referenced last quarter, our increased investment in apparel has helped us bring in new customers and is well on its way to making apparel significant category for us.\nAs the first graduate category from the Lot, we have built apparel in a scrappy way to be over $200 million program this year with a clear opportunity for more than doubling sales in the years to come.\nCustomers are giving us credit for our expanded offering as we better organize our offering in store around casual loungewear.\nAdditionally, while we will not become an apparel store, we have recruited seasoned leadership to bring focus to this productivity enhancing opportunity.\nAdditional space productivity enhancements have been made through our Lot and Queue Line strategies.\nThese two strategies now in over 1,300 stores have maintained their accretive sales impact and we plan to complete our rollout in '22.\nIn addition to these strategies, new initiatives such as Lots under $5 offering represents a further opportunity to drive higher productivity.\nThe Lots under $5 which will roll out in the middle of 2022 will create a value destination for our customers, anchored on surprise and delight treasure hunt products priced at $1, $3 and $5.\nThe assortment will be seasonally relevant and have impulse items to create excitement for newness as she increases visit frequency.\nThis is just an example of the ongoing category innovation that will be an integral part of our business going forward.\nSupported by new tools and processes and an outstanding team, we are confident that our merchandise related strategies will deliver tremendous growth in productivity.\nOn our last few calls, we have discussed our whitespace opportunity for net new stores.\nIn 2021, we are reversing the historical trend of relatively stagnant store count and will increase our net new store count by over 20 stores.\nIn 2022, we expect that figure to be over 50.\nWhile sales volumes will range depending on square footage and market demographics, we expect at least $120 million of annualized impact from next year's net new stores and that they will deliver 4-wall EBITDA margins of 10% or greater.\nTurning to e-commerce, our year-to-date sales growth is around 300% versus 2019, and we have a clear line of sight to e-commerce becoming a $1 billion business over the next few years.\nOur approach to date has been to replicate the friendliness of our in-store interactions online by removing friction points and allowing our customers to purchase where she wants, how she wants, with what tender she wishes and to have that product filled through the channel that she prefers.\nSince the initial rollout of BOPUS in 2019, we now provide curbside pickup, ship from store capabilities and same-day delivery via Instacart and Pickup.\nTo support holiday, we increased the number of stores providing ship from store fulfillment to 65.\nWe continue to see over 60% of our demand fulfilled through these new capabilities.\nAdditionally, joining our lineup of Apple and Google Pay, we expanded our mobile wallet capabilities this past quarter with both PayPal and PayPal paying for, our first Buy Now Pay Later solution.\nIn the coming year, we expect to unveil further capabilities and additional Buy Now Pay Later choices.\nMobile payment now represents 35% of our total online transactions.\nAs I mentioned, even though our e-commerce channel has grown from close to nothing in 2017, to well over $350 million expected in 2021, huge opportunity remains to further upgrade user experience and drive conversion, where we have already made great strides.\nEnhanced user search and checkout experience, enhanced inventory visibility and access further extending our isle and accelerating supplier direct fulfillment will all fuel this growth.\nPerhaps more importantly, over the past few years, we have worked to expand our online choices to better reflect our in-store assortment selections.\nWhat was less than 20% of our assortment a few years ago is now approximately two thirds of our over 30,000 choices.\nI would now like to pivot to some of the key enablers of our future success.\nEarlier this year, and specifically during last quarter's call, we discussed our need to invest in our supply chain through the rollout of our forward bulk product and furniture distribution centers or FTCs, and our transportation management system.\nOur legacy distribution center network was designed for a $5 billion pick and pack, brick and mortar business model.\nAs we have grown substantially over the past few years, lean further into bulk furniture and seasonal businesses and significantly grown our e-commerce business, we have outgrown our capacity.\nWe are addressing this by distorting processing and logistics for bulk goods out of our five legacy distribution centers into our new FTC network, enabling us to better leverage the capacity of our original regional DCs that were designed for carton flow.\nIn addition, our transportation management system that launched last year and completed rollout this year will optimize how our more complex and higher capacity network functions.\nIn 2022, we plan to launch two additional FTCs, further relieving pressure on our regional DCs and enhancing our ability to process bulk product.\nAdditionally, through our strong relationships, we have the ability to open pop up, bypass DCs to further assist regional DCs and handling seasonal receipt peaks.\nFinally, in 2022, we will begin work on our centralized repacking facility at our Columbus distribution center to handle individual unit pick products, further enhancing our regional distribution center throughput.\nAs we optimize our store footprint and enhanced inventory availability, we need to ensure consistent customer experience across our stores.\nAnother key enabler as we referenced on the prior quarter's call is our Project Refresh program to upgrade approximately 800 stores, which were not included in the 2017 to 2020 Store of the Future program.\nCompleting this project will create a more consistent consumer experience, while better representing the Big Lots brand and will harmonize internal processes as we are currently catering to too many differently formatted or condition stores.\nAt an average cost of a little over $100,000 per store, far below our Store of the Future conversions.\nThese stores are getting new exterior signage, interior repainting and floor repair, a new vestibule experience, remodel bathrooms and interior wall graphics.\nProject Refresh is underway with around 50 stores being completed in the fourth quarter and we are in the process of finalizing our plans for a more extensive rollout in 2022.\nTo summarize, I'm greatly enthused about not just where we can be in a few years, but in what we are achieving every day to make that reality occur.\nOur growth driver is led by an ambitious driven and highly talented team, will continue to materially scale our business in the coming years.\nOur mission at Big Lots is to help her live big and save lives and we'll do that by being her best destination home discount store, chockfull of exceptional value and surprising and fund products, all wrapped in a delightful and easy shopping experience.\nAs I turn the discussion over to Jonathan, I do wish all of you a wonderful and meaningful holiday season.\nBe safe, stay healthy and stop into your local Big Lots for you gifts, decorations, special treats and supplies.\nNet sales for the quarter were $1.336 billion, a 3.1% decrease compared to $1.378 billion a year ago, but up 14.4% to the third quarter of 2019.\nThe decline versus 2020 was driven by a comparable sales decrease of 4.7%, in line with our negative mid single-digit comp guidance.\nTwo-year comps were 12.3% and was strongest in August, but remained healthy throughout the quarter, driven by basket size.\nOur third quarter net loss was $4.3 million compared to $29.9 million net income in Q3 of 2020, and a loss of $7 million in 2019.\nEPS for the quarter was a loss of $0.14, in the middle of our guidance range.\nAs a reminder, we reported diluted earnings per share of $0.76 last year.\nSupply chain impacts across gross margin and SG&A accounted for around $0.60 of the year-over-year reduction in EPS.\nThe gross margin rate for Q3 was 38.9%, down 160 basis points from last year's third quarter rate and 80 basis points below 2019, slightly outperforming our guidance.\nThe 38.9% rate reflects the freight headwinds that we have discussed, partially offset by pricing increases.\nTotal expenses for the quarter, including depreciation were $523 million, up from $515 million last year.\nThis was also in line with our expectations coming into the quarter and driven by incremental expense investments in labor and in our forward distribution centers.\nWhile expenses deleveraged versus last year, they leveraged 90 basis points to Q3 2019, driven primarily by efficiencies in store expenses, partially offset by supply chain expense, including the costs of our new forward distribution centers and expense from the June 2020 sale and leaseback of our regional DCs.\nOperating margin for the quarter was a loss of 0.3% compared to a profit of 3.1% in 2020, and a loss of 0.4% in 2019.\nInterest expense for the quarter was $2.3 million, down from $2.5 million in the third quarter last year and down from $5.4 million in Q3 2019.\nIn September, we announced the successful amendment and extension of our unsecured revolving credit facility.\nThe amendment provides more favorable pricing and covenants.\nWith this new facility, we anticipate saving a minimum of $850,000 in interest and fees on an annualized basis and substantially more if we draw on the revolver.\nThe income tax rate in the third quarter was a benefit of 29.3% compared to last year's expense rate of 24.1%, with the rate change primarily driven by the impact of the disallowed deduction for executive compensation and the favorable impact of the discrete item in the prior year.\nOn a full year basis, we expect our tax rate to be slightly favorable to 2020.\nTotal ending inventory was up 17% to last year at $1.277 billion and up 14% to 2019, somewhat ahead of our beginning of quarter guidance.\nThe increase versus prior years was a purposeful heavy up of inventory to support holiday to right set furniture depth and support incremental inventory for the Lot and apparel.\nThe increase versus guidance reflects our successful efforts to get more inventory receipts into the supply chain ahead of holiday, as well as increased unit costs due to inbound freight.\nDuring the third quarter, we opened nine new stores and closed three stores.\nWe ended Q3 with 1,424 stores and total selling square footage of $32.5 million.\nCapital expenditures for the quarter were $46 million, compared to $34 million last year.\nDepreciation expense in the third quarter was $35.9 million, up $3 million so the same period last year.\nWe ended the quarter with $70.6 million of cash and cash equivalents and no long-term debt.\nAs a reminder, at the end of Q3 2020, we had $548 million of cash and cash equivalents and $39 million of long-term debt.\nThe year-over-year reduction in cash levels reflects our deployment of proceeds from the sale and leaseback of our distribution centers toward share repurchases and the payment of taxes on the gain on the sale and leaseback.\nWe repurchased 2 million shares during the quarter for $97 million at an average cost per share of $47.43, completing our August 2020 $500 million authorization.\nUnder that authorization, we have repurchased 9.35 million shares in total at an average cost of $53.49 per share including commission.\nWe announced today that our Board of Directors has approved a new share repurchase authorization, providing for the repurchase of up to $250 million of our common shares.\nThe authorization is effective December 8th and is open-ended.\nAlso, our Board of Directors declared a quarterly cash dividend for the third quarter for fiscal 2021 of $0.30 per common share.\nThis dividend is payable on December 29, 2021 to shareholders of record as of the close of business on December 15, 2021.\nAs Bruce commented earlier, we see ongoing capital return as a key component of long-term shareholder value creation.\nFor the quarter, we expect diluted earnings per share in the range of $2.05 to $2.20, compared to $2.59 of earnings per diluted share for the fourth quarter of 2020 and $2.39 cents in Q4 of 2019.\nFor the full year, we now expect diluted earnings per share in the range of $5.70 to $5.85.\nThe $0.20 reduction from our prior guidance range is entirely accounted for by additional supply chain, SG&A expense, which I will come back to in a moment.\nThe guidance does not incorporate any share repurchases we may may complete in the quarter.\nIn addition, the Q4 sales will see a benefit of approximately 180 basis points from net new and relocated stores.\nOn a two-year basis, we expect comps to be up high-single digits.\nFor the full year, we expect a negative low-single digit comp versus 2020, which will again equate to double-digit comps on a two-year basis.\nWe expect the fourth quarter gross margin rate to be down around 150 basis points from last year and and also Q4 2019.\nThis is somewhat more erosion and estimated in our prior guidance, impacted by higher freight as we have successfully worked to move inventory through the supply chain to drive sales.\nFor the full year, we expect gross margin rate to be down approximately 70 basis points versus 2019 and approximately 120 basis points versus 2020.\nAt this point, we are not counting on any early abatement of freight pressures, but we do expect this over time.\nIn the meantime, without factoring in any freight-driven tailwind, we expect to see 2022 margin improvement, driven by taking additional price increases where appropriate and reflecting a benefit from new pricing and promotion capabilities as well as from the deployment of new planning tools.\nWe expect Q4 expense expense dollars to be up by a mid single-digit percentage to last year, driven by incremental expense investments in store and DC labor, our forward distribution centers and depreciation expense.\nRelative to our prior full-year guidance, forth quarter distribution and transportation expenses have increased by around $14 million.\nThis includes $4 million related to additional receipt volume during the quarter, in addition to the $6 million we called out on our last earnings call.\nIt further includes $4 million of higher initial costs related to our new FTCs, $2 million related to fuel and domestic carrier rates, and $2 million related to additional actions we have taken on DC labor rates.\nWe expect most of these expenses to be transitory or timing related.\nFor the full year, SG&A expense dollars will be up around 3% to 2020, driven by the full year impact of the sale and leaseback of our distribution centers, additional supply chain expenses, including investments in our new FTCs, other strategic investments and higher equity compensation expense.\nWe now expect inventory to end Q4 of approximately 20% to 2019.\nThis reflects strong progress in rebuilding our inventories to support spring sales and as noted above, will result into additional receipt processing expense in Q4.\nAs a reminder, we began both 2020 and 2021 with depleted inventories.\nIn addition, we have intentionally pulled forward seasonal inventory receipts.\nWe now expect 2021 capital expenditures to be between $170 million and $180 million, including around 55 store openings, of which around 20 will be relocations.\nThe reduction from prior quarters guidance in capex is driven by timing shifts, including the move of our new centralized repacking spend out of 2021.\nOur capital projection includes approximately 50 Project Refresh stores in 2021.\nOn a net basis, we expect total store count to grow by around 20 stores in 2021, we expect to further accelerate store count in 2022 and beyond.\nAs Bruce described, we are increasingly confident in our long-term topline opportunity and we expect to achieve -- to achieve a record new sales year in 2022, driven by our net new store openings.\nIn addition, as noted a moment ago, we expect to turn the corner on gross margin rate for 2022.\nWe will have some additional growth-related expenses in 2022 related to new stores, our FTC rollout and other strategic investments, and we will also face inflationary wage and other pressures.\nTo help fund these investments, we will maintain our focus on achieving structural reductions in our expenses, building on the excellent progress we have already made under Operation North Star.\nWe are excited by the opportunities ahead of us in '22 and beyond, and we look forward to providing more color on this as we enter 2022.\n", "role": "user" }, { "content": "compname reports q3 loss per share of $0.14.\nq3 loss per share $0.14.\nnet sales for q3 of fiscal 2021 totaled $1,336 million, a 3.1% decrease compared to $1,378 million for same period last year.\ncompname announces new $250 million share repurchase authorization.\nfor q4 of fiscal 2021 co expects to report diluted earnings per share in range of $2.05 to $2.20.\nqtrly comparable sales decrease of 4.7%.\nexpects q4 gross margin to be down about 150 basis points to last year, driven by freight headwinds.\nbig lots - for fy, expects negative low single digit decrease in comparable sales.\nexpects a sales benefit of about 180 basis points for q4 as a result of net new store openings.\nsupply chain challenges will continue in near-term.\nbig lots - impact of freight headwinds for fy is expected to result in a 120 basis point decline in full year gross margin compared to last year.\nhave taken pricing actions and will continue to do so in response to volatile supply chain costs.\nguidance does not incorporate further potential share repurchases in fiscal 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: Today, we will review the first quarter results of 2021.\nWith me on the phone today are Norman Schwartz, our Chief Executive Officer; Ilan Daskal, Executive Vice President and Chief Financial Officer; Andy Last, Executive Vice President and Chief Operating Officer; Annette Tumolo, President of the Life Science Group; and Dara Wright, President of the Clinical Diagnostics Group.\nOur actual results may differ materially from these plans and expectations, and the impact and the duration of the COVID-19 pandemic is unknown.\nWe cannot be certain that Bio-Rad's responses to the pandemic will be successful, that the demand for Bio-Rad's COVID-19-related products is sustainable or that Bio-Rad will be able to meet this demand.\nOur remarks today will also include references to non-GAAP net income and non-GAAP diluted income per share, which are financial measures that are not defined under generally accepted accounting principles.\nBefore I begin the detailed first quarter discussion, I would like to ask Andy Last, our Chief Operating Officer, to provide an update on Bio-Rad's operations in light of the current pandemic-related environment that we are experiencing globally.\nAs expected, COVID continues to have an impact on our operations, but as previously communicated, we have now adapted well to this environment, and our employees around the world continue to perform to the highest standards.\nWe continue our focus on the three areas previously communicated, the ongoing safety of our employees; continuing manufacturing operations to ensure product supply and support of our customers; and making sure we continue to make progress on our core strategies.\nOverall, we continue to be very pleased with our employee safety despite the increases in COVID in some areas of the world.\nOur internal COVID transmission rates remain extremely low, and we are starting to benefit from the vaccination programs.\nIn Q1, we have maintained the work from home policies we adopted in 2020 and are continuing to monitor the pandemic closely as we assess the right timing for a more general return to the workplace.\nAs we enter Q2, we expect to continue to experience the impact of the pandemic for at least the coming quarter, but are confident in our ability to meet customer demand while progressing our core strategies and new product development objectives.\nAnd as the global economy trends toward recovery, we're also paying close attention to our supply chain as accelerated demand for raw materials has the potential to cause constraints and prolong higher-than-typical logistics costs.\nProvided there is positive global progress on controlling COVID, we anticipate operations starting to return to more normal operating practice in the second half of the year.\nNow I would like to review the results of the first quarter.\nNet sales for the first quarter of 2021 were $726.8 million, which is a 27.1% increase on a reported basis versus $571.6 million in Q1 of 2020.\nOn a currency-neutral basis, sales increased 23.4%.\nThe first quarter year-over-year revenue growth was impacted by a tough compare of about $10 million revenue carryover to Q1 of 2020 related to the December 2019 cyber-attack.\nOn a geographic basis, we experienced currency-neutral growth across all three regions.\nWe continued to see strong demand for product associated with COVID-19 testing and related research.\nGenerally, we are seeing most academic and diagnostic labs now running about 90% capacity, which is an improvement to what we saw in Q4.\nWe estimate that COVID-19-related sales were about $94 million in the quarter.\nSales of the Life Science Group in the first quarter of 2021 were $366.5 million compared to $227.2 million in Q1 of 2020, which is a 61.3% increase on a reported basis, and a 56.9% increase on a currency-neutral basis.\nThe year-over-year growth in the first quarter was driven by the continued strength of COVID-19-related qPCR products.\nIn addition, we saw strong double-digit year-over-year sales growth in Droplet Digital PCR, Western Block and antibody products.\nIn addition, Process Media, which can fluctuate on a quarterly basis, saw strong double-digit year-over-year growth in the quarter over the same quarter last year.\nExcluding Process Media sales, the underlying Life Science business grew 56.2% on a currency-neutral basis versus Q1 of 2020.\nOn a geographic basis, Life Science currency-neutral year-over-year sales grew across all regions.\nIn addition to continued adoption of Droplet Digital PCR in BioPharma, we also saw good demand for the QX ONE in wastewater testing applications for COVID, and we expedited the introduction of COVID variant assays, which are being well received.\nKey opinion leaders continue to highlight the sensitivity advantage of Droplet Digital PCR.\nSales of the Clinical Diagnostics Group in the first quarter were $358.5 million, compared to $340.3 million in Q1 of 2020, which is a 5.4% growth on a reported basis, and a 2.2% growth on a currency-neutral basis.\nDuring the first quarter, the Diagnostics Group posted solid growth in diabetes and in quality controls.\nWe started to see a recovery of market demand for non-COVID business, with diagnostics labs returning to about 90% of pre-COVID levels.\nThe recovery of routine testing and elective surgeries is still progressing.\nOn a geographic basis, the Diagnostics group posted growth in Asia.\nThe reported gross margin for the first quarter of 2021 was 55.1% on a GAAP basis, and compares to 55.5% in Q1 of 2020.\nThe current quarter gross margin percentage declined mainly due to expenses associated with the restructuring initiative that we communicated earlier this year, offset by better product mix, lower service costs and higher manufacturing utilization.\nAmortization related to prior acquisitions recorded in cost of goods sold was $4.6 million compared to $3.9 million in Q1 of 2020.\nSG&A expenses for Q1 of 2021 were $225.9 million or 31.1% of sales compared to $193.7 million or 33.9% in Q1 of 2020.\nThe year-over-year SG&A expenses increased mainly due to expenses associated with the restructuring initiative and higher employee-related expenses, and it was offset slightly by a $5 million cybersecurity insurance settlement related to the 2019 cyber-attack as well as lower discretionary spend.\nTotal amortization expense related to acquisitions recorded in SG&A for the quarter was $2.4 million versus $2 million in Q1 of 2020.\nResearch and development expense in Q1 was $73.9 million or 10.2% of sales compared to $49.3 million or 8.6% in Q1 of 2020.\nThe year-over-year R&D expenses increased due to expenses associated with the restructuring initiative and increased project spend.\nQ1 operating income was $100.9 million or 13.9% of sales compared to $74.4 million or 13% in Q1 of 2020.\nLooking below the operating line.\nThe change in fair market value of equity securities holdings added $1.179 billion of income to the reported results, which is substantially related to holdings of the shares of Sartorius AG.\nDuring the quarter, interest and other income resulted in net other income of $16.9 million compared to $3.3 million of expense last year.\nQ1 of 2021 included $19 million of dividend income from Sartorius, which was declared this year in Q1.\nIn 2020, the Sartorius dividend was declared in the second quarter.\nThe effective tax rate for the quarter was 24.7% compared to 23.7% in Q1 of 2020.\nThe tax rates for both periods were driven by the large unrealized gain in equity securities.\nThe year-over-year increase in our effective tax rate was due to the restructuring initiative announced earlier this year.\nReported net income for the first quarter was $977.4 million, and diluted earnings per share were $32.38.\nThis is an increase from last year and is substantially related to changes in the valuation of the Sartorius holdings.\nMoving on to the non-GAAP results.\nLooking at the results on a non-GAAP basis, we have excluded certain atypical and unique items that impacted both the gross and operating margins as well as other income.\nIn cost of goods sold, we have excluded $4.6 million of amortization of purchased intangibles, $24 million of restructuring-related expenses and a small legal reserve benefit.\nThese exclusions moved the gross margin for the first quarter of 2021 to a non-GAAP gross margin of 59% versus 55.9% in Q1 of 2020.\nNon-GAAP SG&A in the first quarter of 2021 was 25.4% versus 33.3% in Q1 of 2020.\nIn SG&A, on a non-GAAP basis, we have excluded restructuring-related expenses of $34.7 million, legal-related expenses of $4.4 million, and amortization of purchased intangibles of $2.4 million.\nIn R&D, we have excluded $16.9 million of restructuring-related expenses.\nThe non-GAAP R&D expense in Q1 was consequently 7.9%.\nThe cumulative sum of these non-GAAP adjustments result in moving the quarterly operating margin from 13.9% on a GAAP basis to 25.8% on a non-GAAP basis.\nThis non-GAAP operating margin compares to a non-GAAP operating margin in Q1 of 2020 of 13.9%.\nWe have also excluded certain items below the operating line, which are the increasing value of the Sartorius equity holdings of $1.179 billion, and $1.8 million of loss associated with venture investments.\nOur non-GAAP effective tax rate for the quarter was 23.6% versus 25.7% in Q1 of 2020.\nThe tax rate was impacted by changes in the geographic mix of earnings.\nAnd finally, non-GAAP net income for the first quarter of 2021 was $157.4 million, or $5.21 diluted earnings per share compared to $57.6 million and $1.91 per share in Q1 of 2020.\nMoving on to the balance sheet.\nTotal cash and short-term investments at the end of Q1 were $1.025 billion, compared to $997 million at the end of 2020.\nDuring the first quarter, we purchased 89,506 shares of our stock for a total of $50 million at an average price of approximately $559 per share.\nFor the first quarter of 2021, net cash generated from operations was $114 million, which compares to $63 million in Q1 of 2020.\nThe improvement is mainly driven by higher operating profits.\nThe adjusted EBITDA for the fourth quarter of 2021 was $232 million or 31.9% of sales, and excluding the Sartorius dividend, was 29.3%.\nThe adjusted EBITDA in Q1 of 2020 was $107.4 million or 18.8% of sales, which did not include the 2020 Sartorius dividend.\nNet capital expenditures for the first quarter of 2021 were $19.5 million, and depreciation and amortization for the first quarter was $32.7 million.\nMoving on to the guidance.\nWe began the year with a projection of between 4.5% and 5% non-GAAP sales growth, and a non-GAAP operating margin of between 16% and 16.5%.\nEven though we continue to be uncertain about the duration and impact of the COVID-19 pandemic, given the results of the first quarter and our current outlook, we are now guiding currency-neutral revenue growth in 2021 to be between 5.5% and 6%.\nThis includes COVID-related sales, which we estimate to be between $170 million and $180 million versus our prior estimate of about $150 million and $160 million.\nWe project most of the 2021 COVID-19-related sales to occur during the first half of the year, and we continue to assume a continued gradual return to pre-pandemic activity and a more normalized business mix.\nFull year non-GAAP gross margin is now projected between 56.5% and 57% versus our previous guidance of 56.2% and 56.5%.\nAnd full year non-GAAP operating margin to be about 17%, and full year adjusted EBITDA margin to be about 22% versus previous guidance of 21%.\n", "role": "user" }, { "content": "compname reports q1 non-gaap earnings per share of $5.21.\nq1 non-gaap earnings per share $5.21.\nq1 earnings per share $32.38.\nq1 sales rose 27.1 percent to $726.8 million.\nfor full year 2021 anticipates non-gaap currency-neutral revenue growth of approximately 5.5 to 6.0 percent.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Today, we will review the fourth quarter and full year results of 2020.\nWith me on the phone today are Norman Schwartz, our Chief Executive Officer; Ilan Daskal, Executive Vice President and Chief Financial Officer; Andy Last, Executive Vice President and Chief Operating Officer; Annette Tumolo, President of the Life Science group; and Dara Wright, President of the Clinical Diagnostics group.\nOur actual results may differ materially from these plans and expectations and the impact and duration of the COVID-19 pandemic is unknown.\nWe cannot be certain that Bio-Rad's responses to the pandemic will be successful, that the demand for Bio-Rad's COVID-19 related products is sustainable or that Bio-Rad will be able to meet this demand.\nOur remarks today will also include references to non-GAAP net income and non-GAAP diluted income per share, which are financial measures that are not defined under generally accepted accounting principles.\nNow before I begin the detailed fourth quarter and full year discussion, I would like to ask Andy Last, our Chief Operating Officer, to provide an update on Bio-Rad's operations in light of the current pandemic-related environment that we are experiencing globally.\nI'd just like to take a few minutes to review our current state of operations around the world.\nAs an opening comment, I would like to recognize the tremendous contributions and flexibility of our employees around the world during 2020.\nTheir response to the shifting needs of operating in a pandemic have been truly exemplary.\nSo at the onset of the pandemic, we set ourselves three key areas of focus to manage through this challenging period, which we continue with into 2021.\nAs a quick reminder, these are; the ongoing safety of our employees, continuing manufacturing operations to ensure product supply and support of our customers, and making sure we continue to make progress on our cost strategies.\nAs we close out 2020 and entered into 2021, we've now achieved a steady state for operating in the pandemic reflecting employee safety, work from home and adoption of company and local policy and practices.\nOverall, we have experienced minimal internal transmission of COVID across the company and where we have suspected cases, have found the internal testing of employees in the U.S., using our droplet digital PCR platform, to be very valuable in maximizing productivity.\nAs we enter 2021, we are well positioned to meet market and customer demands driven by the pandemic and our manufacturing sites, and R&D is operating effectively.\nIn addition, our commercial organization has deployed digital tools where appropriate to minimize onsite visits to only the essentials required to keep customers up and running on our platforms.\nSo with that brief overview, I will pass it back to Ilan.\nAnd now would like to review the fourth quarter and full year results for 2020.\nNet sales for the fourth quarter of 2020 were $789.8 million, which is a 26.5% increase on a reported basis, versus $624.4 million in Q4 of 2019.\nOn a currency neutral basis, sales increased 24.4%.\nThe fourth quarter sales included $32 million of damages award related to intellectual property litigation with 10x Genomics, covering the period between 2015 and 2018.\nExcluding the $32 million, the fourth quarter year-over-year currency neutral revenue growth was 19.4%.\nThe fourth quarter year-over-year revenue growth also benefited from an easy compare of about $10 million revenue carryover to Q1 of 2020, related to the December 2019 cyberattack.\nOn a geographic basis, we experienced currency neutral growth across all three regions.\nWe saw strong demand for products associated with COVID-19 testing and related research.\nGenerally, we are seeing most academic and diagnostic labs now running between 70% and 90% capacity, which is similar to what we saw in Q3.\nWe estimate that COVID-19 related sales were about $132 million in the quarter.\nSales of Life Science group in the fourth quarter of 2020 were $428.5 million, compared to $242 million in Q4 of 2019, which is a 77.1% increase on a reported basis and a 73.9% increase on a currency neutral basis, and it was driven by our PCR product lines, as well as strong performance in the biopharma segment.\nThe fourth quarter revenue also included a $32 million damages award related to intellectual property litigation.\nExcluding that $32 million damages award, the currency neutral revenue growth was 60.9%.\nThe year-over-year growth in the fourth quarter was across all of the Life Science key product areas.\nProcess media which can fluctuate on a quarterly basis so strong double-digit year-over-year growth in the quarter, over the same quarter last year.\nExcluding process media sales and the $32 million damages award, the underlying Life Science business grew 64.6% on a currency neutral basis versus Q4 of 2019.\nGrowth in the overall Life Science segment was offset by continued softness in academic research demand, as these labs around the globe are still operating below capacity.\nHowever, we believe that some of the demand was associated with larger than normal end of year budget release.\nOn a geographic basis, Life Science currency neutral year-over-year sales grew across all regions.\nLast month, the FDA granted an EUA for our COVID qPCR assay kit, which runs on Bio-Rad's existing CFX PCR platforms, as well as qPCR systems from other providers.\nThe assay kit is a multiplex test that targets two separate regions in the viral genome, to ensure greater sensitivity and tolerance to potential mutations.\nIn addition, earlier today, we received an EUA approval from the FDA for COVID FluA and FluB qPCR syndromic multiplex test.\nThese tests, which allows discrimination between each of these three different viruses, also runs on Bio-Rad's CFX PCR platforms, as well as qPCR systems from other providers.\nSales of Clinical Diagnostics products in the fourth quarter were $359.6 million compared to $379 million in Q4 of 2019, which is a 5.1% decline on a reported basis and a 6.6% decline on a currency neutral basis.\nDuring the fourth quarter strength in our quality controls products was offset by weakness across the rest of the diagnostics portfolio.\nResurgence of COVID cases during the fourth quarter, the impact of the recovery of routine testing trends and the elective surgeries.\nOn a geographic basis, the Diagnostics group was relatively flat in the Americas, but posted declines in the other regions.\nThe reported gross margin for the fourth quarter of 2020 was 58.3% on a GAAP basis and compares to 52.9% in Q4 of 2019.\nThe current quarter gross margin benefited mainly from better product mix, lower service costs, higher manufacturing utilization, as well as $23 million [Phonetic] gross margin benefit, associated with the 10X Genomics damages award.\nAmortization related to prior acquisitions, recorded in cost of goods sold was $4.6 million compared to $4.5 million in Q4 of 2019.\nSG&A expenses for Q4 of 2020 were $219.1 million or 27.7% of sales compared to $214.2 million, or 34.3% in Q4 of 2019.\nThe year-over-year SG&A expenses benefited from ongoing cost savings initiatives and lower discretionary expenses, and was offset somewhat by higher employee-related expenses.\nTotal amortization expense related to acquisitions recorded in SG&A for the quarter was $2.4 million versus $2.1 million in Q4 of 2019.\nResearch and Development expense in Q4 was $65.8 million or 8.3% of sales compared to $57.1 million, or 9.1% of sales in Q4 of 2019.\nQ4 operating income was $175.2 million or 22.2% of sales, compared to $59.2 million or 9.5% of sales in Q4 of 2019.\nLooking below the operating line, the change in fair market value of equity securities holdings added $904 million of income to the reported results and this is substantially related to holdings of the shares of Sartorius AG.\nDuring the quarter, interest in other income resulted in a net expense of $1 million compared to $5.8 million of expense last year.\nOur GAAP effective tax rate for the fourth quarter of 2020 was 22.2% compared to 20.9% for the same period in 2019.\nOur GAAP tax rate in 2020 and 2019 were affected by the large unrealized gains in equity securities.\nIn addition, the 2019 tax rate included a discrete benefit, which allowed us to apply higher foreign tax credits.\nReported net income for the fourth quarter was $839.1 million, and diluted earnings per share were $27.81.\nThis is an increase from last year and is again substantially related to changes in the valuation of the Sartorius Holdings.\nMoving on to the fourth quarter non-GAAP results.\nLooking at the results on a non-GAAP basis, we have excluded certain atypical and unique items that impacted both the gross and operating margins, as well as other income.\nLooking at the non-GAAP results for the fourth quarter.\nIn sales, we have excluded the $32 million damages award.\nIn cost of goods sold, we have excluded $8.7 million IP-license costs associated with the damages award.\n$4.6 million of amortization of purchased intangibles, and a small restructuring benefit.\nThese exclusions moved the gross margin for the fourth quarter of 2020 to a non-GAAP gross margin of 58.2% versus 54.1% in Q4 of 2019.\nNon-GAAP SG&A in the fourth quarter of 2020 was 28.2% versus 31.7% in Q4 of 2019.\nIn SG&A on a non-GAAP basis, we have excluded amortization of purchase intangibles of $2.4 million, legal related expenses of $6.3 million and restructuring and acquisition-related benefits of $3.1 million.\nNon-GAAP R&D expense in the fourth quarter of 2020 was 8.7% versus 8.2% in Q4 of 2019.\nIn R&D, on an non-GAAP basis, we have excluded a small restructuring benefits.\nThe cumulative sum of these non-GAAP adjustments result in moving the quarterly operating margin from 22.2% on a GAAP basis to 21.4% on a non-GAAP basis.\nThese non-GAAP operating margin compares to a non-GAAP operating margin in Q4 of 2019 of 14.3%.\nWe have also excluded certain items below the operating line, which are the increase in value of the Sartorius equity holdings of $904.3 million, $2.1 million associated with venture investments and $3 million of interest income, associated with the 10X damages award.\nOur non-GAAP effective tax rate for the fourth quarter of 2020 was 24.3% compared to 17.7% in 2019.\nThe non-GAAP tax rate for the fourth quarter of 2019 was lower compared to 2020, due to a discrete benefit, which enabled us to apply higher foreign tax credits.\nAnd finally, non-GAAP net income for the fourth quarter of 2020 was $121 million or $4.01 diluted earnings per share, compared to $70 million and $2.32 per share in Q4 of 2019.\nMoving on to the full year results, net sales for the full year of 2020 were $2.546 billion on a reported basis, excluding the 10X damages award of $32 million, sales were $2.514 billion which is 8.9% growth on a currency neutral basis.\nWe estimate that COVID-19 related sales were about $313 million.\nSales of Life Science group for 2020 were $1.23108 billion.\nExcluding the 10X damages award of $32 million, the year-over-year growth was 35% on a currency neutral basis.\nThe majority of the year-over-year growth was driven by our four PCR products, droplet digital PCR and process media.\nOn a geographic basis, Life Science currency neutral full year-over-year sales grew across all three regions.\nSales of Clinical Diagnostics products for 2020 were $1.305 billion which is down 7.1% on a currency neutral basis.\nOn a full year basis, clinical labs have seen a significant negative impact of the pandemic, which was slightly offset by growth within quality controls.\nOn a geographic basis Clinical Diagnostics full year-over-year sales, saw declines across all regions.\nThe full year non-GAAP gross margin was 56.9% compared to 55% in 2019.\nThe year-over-year margin increase was driven mainly by product mix and manufacturing efficiencies, which was somewhat offset by higher logistics costs.\nFull year non-GAAP SG&A was 30.9% compared to 34.4% in 2019.\nThe lower SG&A was driven by our ongoing cost savings initiatives and lower discretionary expenses, offset somewhat by higher employee related expenses.\nFull year non-GAAP R&D was 9.1% versus 8.5% in 2019 and full year non-GAAP operating income was 17% compared to 12% in 2019.\nLastly, the non-GAAP effective tax rate for the full year of 2020 was 24%, compared to 24.1% in 2019.\nThe non-GAAP effective tax rate for 2020 was consistent with our guidance of 24%.\nMoving on to the balance sheet; total cash and short-term investments at the end of 2020 was $997 million, compared to $1.120 billion at the end of 2019 and $1.160 billion at the end of the third quarter of 2020.\nIn December, we repaid the $425 million of outstanding senior notes.\nYear-end inventory decreased by about $18 million from the third quarter of 2020.\nThe decrease in inventory was driven by higher demand for COVID-19 related products.\nDuring the fourth quarter, we did not purchase any shares of our stock.\nWe have a total of $273 million available for potential share buybacks.\nFull year share buybacks was about 292,000 shares for $100 million.\nIn 2019, we purchased about 88,000 shares of our stock for $28 million.\nFor the fourth quarter of 2020, net cash generated from operating activities was $284.7 million, which compares to $159.8 million in Q4 of 2019.\nFor the full year of 2020, net cash generated from operations was $575.3 million versus $457.9 million in 2019.\nThe adjusted EBITDA for the fourth quarter of 2020 was 25.2% of sales.\nThe adjusted EBITDA in Q4 of 2019 was 18.7%.\nFull year adjusted EBITDA, included the Sartorius dividend, was $546.4 million or about 21.7% compared to 17.5% in 2019.\nNet capital expenditures for the fourth quarter of 2020 were $39.2 million and full year capex spend was $98.9 million.\nDepreciation and amortization for the fourth quarter was $36.2 million and $138.1 million for the full year.\nIn December, we communicated our long range plan.\nWe project revenues to grow to an overall range of $2.75 billion and $2.85 billion by the end of 2023.\nThis growth will be driven by droplet digital PCR, single cell applications, Clinical Diagnostics, bio production and increasing growth in biopharma customers.\nWe expect non-GAAP gross margin in 2023 to land in a range of 57% to 57.5%.\nWe expect this positive increase to come from footprint optimization and better capacity utilization.\nAdjusted EBITDA margin should be in the range of 23% and 24%, based on top-line growth, productivity improvements, and SG&A leverage.\nLast week, we initiated a strategy driven restructuring plan, to improve operating performance as part of our 2023 goals.\nThe restructuring plan primarily impacts our operations in Europe, and includes the elimination of certain positions, the consolidation of certain functions, and the relocation of certain manufacturing operations from Europe to Asia.\nThe restructuring plan is expected to eliminate a total of approximately 530 positions, approximately 200 positions in manufacturing, and 330 positions across our SG&A and R&D functions.\nAnd subsequently creation of a total of about 325 new positions, approximately 100 new positions in manufacturing and 225 new positions across SG&A and R&D functions.\nThe restructuring plan will be implemented in phases over the next two years.\nAs a result of this restructuring plan, we expect to incur between approximately $125 million and $130 million in total costs, which we anticipate will consist of approximately $86 million cash expenditures, in the form of one-time termination benefits to the affected employees.\nApproximately $19 million in capital expenses associated with the restructuring plan, and about $20 million to $25 million in one-time transaction cost.\nWe anticipate about $80 million to $90 million of restructuring charges related to this restructuring plan will be recorded in the first quarter of 2021, with the balance recorded by the end of 2022.\nMoving on to the non-GAAP guidance for 2021.\nWhile we are pleased with the overall performance in 2020, we continue to be uncertain about the duration and impact of the COVID-19 pandemic, although we assume a gradual return to pre-pandemic activity levels and normalized business mix.\nWe are guiding a currency neutral revenue growth in 2021 to be between 4.5% and 5%.\nWe estimate about 10% to 11% revenue growth for the Diagnostics group.\nThe Life Science group year-over-year revenue is expected to be about flat, as we projected COVID-related sales in 2021 to be about half versus 2020.\nWe continue to assume that we will experience quarterly revenue fluctuations for process media, although we estimate an overall double-digit growth for the full year.\nFull year non-GAAP gross margin is projected between 56.2% and 56.5%, and full year non-GAAP operating margin to be between 16% and 16.5%.\nWe estimate the non-GAAP full year tax rate to be between 24% and 25%.\nCapex is projected between $120 million and $130 million and full year adjusted EBITDA margin of about 21%.\nI don't really have a lot to add.\nI do think companies would say that that 2020 is certainly one for the history books.\nAs I think back on the year and I think as Andy alluded to in the beginning, it was certainly an all-out effort this last year, to manage a myriad of challenges and not to lose sight of where we're headed in the longer term.\nI think as well -- as Ilan, pointed out, the COVID-related revenues are expected to moderate in 2021.\nBut I do feel that there is still a big question of when the pandemic will come under control.\nSo in the meantime, we'll continue to work on our core initiatives to allow us to make progress over the next few years and certainly we appreciate your continued interest in Bio-Rad.\n", "role": "user" }, { "content": "q4 non-gaap earnings per share $4.01.\nq4 earnings per share $27.81.\nq4 sales $789.8 million versus refinitiv ibes estimate of $686.8 million.\nfor 2021, anticipates non-gaap currency-neutral revenue growth of about 4.5 to 5.0%.\nsees 2021 estimated non-gaap operating margin of about 16.0% to 16.5%.\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: blackhillscorp.com, under the Investor Relations heading.\nLeading our quarterly earnings discussion today are Linn Evans, President and Chief Executive Officer; and Rich Kinzley, Senior Vice President and Chief Financial Officer.\nAlthough we believe that our expectations and beliefs are based on reasonable assumptions, actual results may differ materially.\nI'll begin on Slide 4, which lists our key achievements during the first quarter.\nOur top priority of Black Hills Corporation is safety, which works hand-in-hand with reliability in our predominantly cold weather service territories.\nI'm proud of our team's exceptional and resilient performance.\nThe Black Hills team along with our electric and natural gas systems and our generating fleet performed very well through the historic decrees of the Winter Storm Uri.\nWe successfully served extraordinary demand, keeping our customers safe through life threatening cold conditions across our service territory.\nOur balanced mix of power generation resources, including reliable and dispatchable generation capacity allowed us to completely avoid rolling blackouts experienced in other areas of the country, even while our South Dakota electric utility served a new winter peak load.\nOf course, our success in serving our customers during Winter Storm Uri didn't happen by chance, rather it was a result of our relentless focus on our customers and ongoing investments for our safe, reliable and resilient infrastructure.\nWinter Storm Uri demonstrated how critical energy is to our daily lives.\nThe storm highlighted the need for safe, reliable natural gas utilities and reliable generation capacity when our customers experienced temperatures as low as 27 degrees below zero, setting numerous all-time record lows across our communities.\nAs an example, Lincoln, Nebraska reported 11 straight days of temperatures below zero in February with lows of the minus 20s.\nRecognizing essential value of natural gas during these weather events, we're pleased that four of our six gas states: Arkansas, Iowa, Kansas and Wyoming, recently passed legislation that protects our customers freedom to choose a type of energy is right for them.\nLast week we announced, we joined the ONE Future Coalition of gas utility companies who are voluntarily reducing emissions.\nThis is an addition to our previously announced participation in the EPA's Methane Challenge as we enhance our commitment to modernize and make our pipelines more resilient.\nContinuing on Slide 4.\nWe remain encouraged by the ongoing steady growth in new customer connections driven by population migration into our service territories.\nOur team also showcased our agility and the strength of our financing strategy during the first quarter.\nGiven the unprecedented and unforeseeable market pricing for natural gas in February, we immediately supplemented our liquidity with additional short-term financing by securing an $800 million term loan on favorable terms.\nThis term loan and other ongoing cash conservation initiatives ensures our ability to continue funding our strong capital investment program.\nSlide 5 sets out our financial outlook.\nHowever, absent these storm cost, our financial results were otherwise strong.\nDuring the February storm, we immediately implemented expense and cash management initiatives and we're executing on other opportunities to mitigate the impact of the storm.\nRich will cover the details in his financial update.\nGiven these ongoing initiatives and the opportunities we see for the remainder of this year, our 2021 earnings guidance remains unchanged.\nWe also reaffirmed our 2022 earnings guidance and we remain confident in our long-term growth targets, including 5% to 7% earnings growth for 2023 through 2025 and at least 5% annual dividend growth.\nSlide 6 illustrates our disciplined growth plan with upside potential.\nWe plan on capital investments in more than $3 billion through 2025 and we expect to identify and develop incremental projects.\nWe're also developing other growth opportunities including less capital intensive projects such as data center load additions and other innovative customer solutions, including renewables and other technologies.\nI noted already that we're seeing accelerated population migration into our service territories and we're gaining confidence this trend will continue.\nThe last item on this slide is a focus on cost discipline and continuous improvement.\nThese are long-term initiatives for leaner more efficient processes and the use of new technologies to be better every day.\nMoving to Slide 7.\nWe've made progress on our regulatory initiatives.\nOur team is finalizing three rate review applications to be filed in the second quarter.\nWe plan to file a new rate review for Colorado Gas, and we recently completed a hearing before the commission regarding our ongoing safety and integrity investment rider.\nIn Kansas, we're filing our first rate review in seven years, which renews our five year system safety and integrity investment rider.\nAnd in Iowa, we plan to file our first rate review in more than a decade, including a request for a new system safety and integrity investment rider.\nIn addition to our normal regulatory activity, we're engaged with regulators regarding recovery for costs associated with Storm Uri.\nMoving to Slide 8.\nFor our electric utilities, resource planning is a key focus, as we determine how best to reliably and cost effectively serve growing customer demand and achieve our greenhouse gas emission goals.\nWe're targeting early July to submit our integrated resource plan for our jointly operated South Dakota and Wyoming electric systems.\nWe're modeling various scenarios to meet our growing customer demand.\nInitial modeling which is always subject to change, indicates a need to add renewable, dispatchable natural gas generation, battery storage, additional transmission and upgraded pipeline capacity.\nThese scenarios consider customer impacts in achieving our greenhouse gas emission goals.\nWe are also modeling a scenario that considers the Biden Administration's economywide greenhouse gas emission goals and what that would cost customers.\nI'm excited about this process as we look to provide greater clarity into these future opportunities in the upcoming months.\nAnd finally on Slide 9, we're well positioned as an integrated utility with a strong long-term growth outlook.\nWe're executing our customer-focused strategy and are confident in our future.\nSlide 11 summarizes earnings per share for the first quarter.\nWe delivered earnings per share of $1.54 compared to $1.59 as adjusted in Q1 2020.\nImpacts from Winter Storm Uri overshadowed what were otherwise solid financial results.\nThe net storm impacts were $0.15 per share, which more than offset weather favorability and the benefit of new rates.\nWe estimate weather benefited earnings by $0.07 per share compared to normal.\nFor the quarter, heating degree days were 4% higher than normal at our electric utilities and 3% higher than normal at our gas utilities, attributable primarily to extreme cold in February, offsetting warmer than normal weather in January and March.\nCompared to Q1 2020, the weather impact was favorable by $0.11 per share, given a warmer than normal first quarter heating season last year.\nSlide 12 details how we are addressing Winter Storm Uri impacts.\nIn the first quarter, we incurred approximately $571 million of incremental cost to serve our customers.\nThis includes $559 million of deferred utility fuel costs we booked as a regulatory asset.\nWe've had constructive dialog with regulators in a filed or expect to file our remaining storm-related regulatory recovery requests in the second quarter.\nWe've already filed requests for our gas utilities in Arkansas, Iowa, Nebraska and Wyoming and for South Dakota Electric.\nRecovery plans vary by state with proposed recovery in some states within one year while other states may take up to five years or longer.\nIn the first quarter, we booked storm-related net expenses of $12.55 million pre-tax or $0.15 per share after tax.\nThe largest contributor was $8.2 million of non-recoverable incremental gas purchase costs at Black Hills Energy Services, which serves 52,000 of our regulated utility customers in Nebraska and Wyoming through the Choice Gas program.\nThis program allows customers the option to choose their gas provider and is supported by a hedging and procurement plan based on demand history and forecasts.\nServing our Choice Gas customers is a small, low risk and profitable piece of our business.\nHowever, it was subjected to the unprecedented market pricing and elevated demand caused by storm Uri.\nFor our electric businesses, the impact to our wholesale power margin sharing of $3.2 million was partially offset by $1.7 million of power generation benefits.\nWe also incurred $2.1 million of fuel costs that are outside of our regulatory cost recovery mechanisms, primarily in Montana, where we serve two industrial customers pursuant to contracts.\nThis small piece of our utilities is typically very low risk but was subjected to the same unprecedented market pricing and elevated demand.\nIn February, we immediately implemented strategies to mitigate the $0.15 earnings per share impact from Uri over the remainder of the year through cost management, ongoing wholesale power marketing opportunities and identified regulatory proceedings.\nSlide 13 illustrates the drivers of change in net income year-over-year for the first quarter.\nAll amounts listed are after-tax.\nThe main drivers compared to last year were gross margin improvements at our gas utilities offset by Storm Uri impacts.\nNatural gas margin increases were driven by weather favorability and new base rates and rider recovery on investments for customers.\nElectric utility margins were lower than the prior year, primarily due to tax reform benefits that we passed on to our Colorado Electric customers.\nWe credited over $9 million of tax reform benefits, which lowered revenue and had an offsetting income tax benefit, resulting in minimal overall impact to first quarter results.\nThe additional quarter-over-quarter tax benefits in the far right were related primarily to additional production tax credits related to the Corriedale Wind Project that went into service in late 2020.\nO&M was impacted by higher employee costs and outside services.\nOutside services increased over the prior year because of higher Director fees tied to our stock price performance, which was much stronger in Q1 this year compared to last year.\nThe change in other income expense over the prior year was driven by market impacts on a non-qualified deferred compensation expense.\nAdditional first quarter detail on segment earnings can be found in the Appendix.\nSlide 14 shows our financial position through the lens of capital structure, credit ratings and financial flexibility.\nWe have a manageable debt maturity profile and are committed to maintaining our solid investment grade credit ratings.\nAt the end of April, we had approximately $530 million of available liquidity on our revolving credit facility.\nIn February, we entered into an $800 million, nine-month term loan to bolster our liquidity in light of the increased fuel costs related to Storm Uri.\nWe repaid $200 million of that term loan at quarter-end and are developing the appropriate refinancing strategy for the remaining $600 million as we finalized Storm Uri recovery mechanisms.\nI expect we will issue debt with a three to five year term in the second or third quarter to match the recovery period of the bulk of the dollars from the deferred Storm Uri fuel cost.\nNew debt and deferred recovery of fuel cost temporarily increased our debt to total capitalization ratio to 62% at the end of March.\nAs we recover storm costs, repay debt and execute on our equity program, we expect to reduce the debt to total capitalization ratio and continue to target a debt to total cap ratio in the mid 50s.\nOur equity issuance expectations are unchanged.\nWe expect to issue $100 million to $120 million in 2021 and $60 million to $80 million in 2022 through our at-the-market equity offering program.\nWe will continue to evaluate financing needs as we finalize our storm cost recovery proposals.\nMoving to our dividend on Slide 15.\nIn 2020, we proudly marked 50 consecutive years of annual dividend increases, one of the longest track records in our industry.\nSince 2016 we have increased our dividend at an average annual rate of 6.6%.\nLooking forward, we anticipate increasing our dividend by more than 5% annually through 2025 while maintaining our 50% to 60% payout target.\nWe are uniquely positioned as an integrated utility in constructive jurisdictions with a complementary business mix across stable and growing territories.\nWe continue to be well positioned both operationally and financially to be ready to serve all our stakeholders.\n", "role": "user" }, { "content": "qtrly earnings per share $1.54.\nreaffirming our 2021 and 2022 earnings guidance and five-year capital plan of more than $3 billion.\nremain confident in our strategy and opportunities ahead as we target 5% to 7% earnings growth beyond 2022.\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: blackhillscorp.com, under the Investor Relations heading.\nBefore we begin today, we would like to note that Black Hills will be attending the EEI Financial Conference starting November 7 in Hollywood, Florida.\nMaterials for our investor meetings will be posted on our website prior to the start of the conference.\nLeading our quarterly discussion today are Lin Evans, President and Chief Executive Officer; and Rich Kinzley, Senior Vice President and Financial Officer.\nAlthough we believe that our expectations and beliefs are based on reasonable assumptions, actual results may differ materially.\nI'll begin on Slide 4.\nBut before I discuss our key achievements for the third quarter, I'd like to start by recognizing our dedicated Black Hills team.\nWorking together, we delivered strong operational and financial results, and we serve record peak customer loads, and we delivered quarter-over-quarter earnings that were up 21% compared to last year.\nWe have a great team, and I value and appreciate them very much.\nOur Board recently approved a 5.3% increase in our dividend, achieving 51 consecutive years of dividend increases.\nThis represents one of the longest streaks in our industry.\nAnd naturally, we're quite proud of this accomplishment and the growth that it reflects.\nWe also made excellent progress on our regulatory initiatives, including our three rate reviews and Winter Storm Uri cost recovery.\nAnd finally on this slide, early in the quarter, we published our updated and our comprehensive corporate sustainability report, along with our new and expanded ESG disclosures.\nWe continue to make solid strides communicating our sustainability focus, including our achievements and our goals for the future.\nSlide 5 lays out our financial outlook.\nGiven our success in delivering strong operational, financial and regulatory performance in the second and third quarters, we're increasing the lower end of our 2021 earnings guidance range by $0.05 per share.\nWe're also maintaining our 2022 earnings guidance range, and we continue to target a 5% to 7% average earnings growth for 2023 through 2025, and at least 5% annual dividend growth.\nSlide 6 lays out our regulatory progress with a focus on regulatory rate reviews, our investment rider requests and Winter Storm Uri cost recovery.\nWe've made good progress on our regulatory strategies this year, achieving constructive and productive outcomes.\nWe've reached a unanimous settlement agreement with all parties for our Colorado natural gas rate review that will provide $6.5 million in new annual revenue.\nWe anticipate new rates being effective January 1, 2022, pending final approval of the settlement.\nWe also received approval for a new three-year system safety and integrity rider, which is a critical mechanism to help us provide ongoing safe and reliable service to our Colorado gas customers for years to come.\nIn Kansas, we also reached a unanimous settlement agreement for our rate review, which includes the renewal of our five-year safety focused capital investment rider.\nThe settlement benefits customers through a net neutral base rate impact.\nIn addition, we're pleased that the settlement provides federal and state tax reform benefits to customers, a timely benefit for our Kansas customers given current high natural gas commodity prices.\nIn Iowa, we're working through the regulatory process and hope to achieve a resolution by year-end, with final rates effective in the first quarter of 2022.\nShifting to our Winter Storm Uri cost recovery process.\nWe filed our recovery plans in all states by the second quarter.\nWe've already obtained approvals for Nebraska Gas and South Dakota Electric, and we're collecting interim rates for Arkansas, Iowa and Wyoming gas.\nAt Wyoming Electric, Uri related costs will flow through their normal cost adjustment mechanism.\nWe also recently received a positive settlement for Wyoming Gas and we're currently engaged in settlement discussions for Kansas Gas.\nWe expect to complete our Uri cost recovery filings either during the fourth quarter or in the first quarter of next year, and we remain confident we will recover the costs submitted in our applications.\nLooking forward, we're preparing for our next rate reviews for Arkansas Gas and Wyoming Electric.\nWe're planning to file a rate review for Arkansas gas late this year.\nFor Wyoming Electric, we'll file by midyear 2022, as required by a prior settlement agreement from several years ago.\nMoving to Slide 7.\nTo enable continuing growth in Wyoming, we're excited to announce a 285-mile electric transmission expansion project that we're calling, Ready Wyoming.\nAs proposed, the project will provide many benefits for our customers.\nAmong those benefits are enhancing resiliency through further interconnection of our Wyoming and South Dakota electric systems, expanding access to existing third-party transmission systems and providing access to new energy markets and additional renewable resources.\nImportantly, the project will also increase overall transmission capacity, allowing us to serve the growing Cheyenne community.\nThe project's expanded access and capacity will allow us to better serve growth in technology businesses like data centers and blockchain and crypto miners, which I'll discuss in more detail in a later slide.\nThe project will also enable and benefit renewable energy expansion both through expanded access for existing renewable resources and for new wind and solar projects in the Cheyenne region.\nWe're working toward filing for approval of the project in the first quarter of 2022.\nAnd following approval, we plan to construct the project in several phases or segments spanning 2023 through 2025.\nMoving to Slide 8.\nWe have refreshed and increased our 2021 through 2025 capital investment program by $149 million, to a total of $3.2 billion.\nIn doing so, we firmed up nearly $300 million in projects that were placeholders in last quarter's forecast.\nThis $3.2 billion forecast includes incremental investment for the Ready Wyoming project.\nThis is a robust plan, and there are certain other investment opportunities we're aggressively pursuing, including other potential transmission projects and what we call capital-light growth opportunities that may arise.\nI'll note that our current base capital forecast does not include potential transmission or renewable generation assets that may derive from our South Dakota and Wyoming Integrated Resource Plan or from our clean energy plan to be filed in Colorado next year.\nTo help evaluate additional opportunities to lower cost for customers, we joined several other utilities in the Western U.S. to form the Western Markets Exploratory Group.\nThis group will explore the potential for developing an organized wholesale market in the Western interconnect while also reviewing transmission expansion opportunities and other possible grid solutions.\nIn Cheyenne, we continue to experience strong load growth, including growth from data centers and related businesses.\nFor perspective, the peak demand day for Wyoming Electric increased from 192 megawatts in 2014 to 274 megawatts this past summer.\nThat's a 43% increase during that period.\nWith our entrepreneurial approach, combined with our Ready Wyoming transmission project, we're optimistic about recruiting more technology-oriented businesses into Cheyenne and Wyoming.\nAs an example, this summer, our growth team received numerous request to serve crypto mining businesses.\nYou may recall Wyoming was an early leader in passing legislation to support blockchain and crypto mining business and we already have an approved block chain interruptible service tariff in place.\nIn response to the multitude of crypto mining inquiries, we issued a reverse request for proposals in August.\nThat RFP results in a very robust response.\nWe recently narrowed the bidders list and we've selected finalist for contract negotiations.\nWe also continue to be very optimistic about ongoing population migration into our service territories.\nBoth our electric and gas utility service territories are seeing accelerating customer growth, and we continue to witness ongoing customer growth trends.\nFinally, we demonstrated our discipline throughout the pandemic and after Winter Storm Uri to manage costs, and we're also fostering ongoing sustainable cost savings through innovation and continuous improvement.\nYou'll hear more about these efforts in the near future as we discuss our companywide Energy Forward program.\nMoving to Slide 9.\nWe're fully engaged on sustainability for our communities.\nWe made significant progress toward our carbon intensity reduction goals listed on this slide.\nIn 2020, we already achieved a 30% reduction at our electric operations and a 33% reduction in our gas utility since 2005.\nOur forward emission goals are not based on aggressive assumptions or technology that doesn't currently exist.\nOur Midwest culture is to be true to our word and we have published goals that we expect to meet or exceed based on existing assets and current technologies because our goals are reliant upon current technology.\nThere's potential upside for acceleration in our carbon reduction goals.\nAs technologies advance and as cost decline for renewables and battery storage, we're confident in our emissions goals.\nWe're also watching technologies for potentially reducing carbon emissions from our existing plants, which could accelerate achieving our emission goals.\nOne of our defined steps to meet our 40% reduction goal by 2030 within our electric operations will be the conversion of our Neil Simpson II coal-fired power plant to natural gas.\nWe'll also add renewable generation and battery storage resources to achieve our emissions goals.\nFor our natural gas utility, we expect to reach to 50% reduction by 2035.\nWe'll do that through continued pipeline replacement programs and additional emission reduction strategy such as damage prevention, expanding leak detection and energy efficiency.\nWe're adopting process improvements such as vacuum technology for gas system blowdowns.\nWe're also integrating more renewable natural gas in our system with several projects already in service and many more in development, and we voluntarily committed to reduce methane emissions through our participation in the EPA methane challenge and the One Future Coalition.\nLooking to the future, we're supporting research to advance emissions reduction technologies.\nWe're participating in a feasibility study to test the viability of using hydrogen and natural gas generation at our Cheyenne Prairie Generating Station.\nWe're also supporting the University of Wyoming's research program for turbine firing technologies that would further reduce emissions.\nWe've invested alongside our peers at our carbon capture research project and other emerging clean energy technologies.\nOur goal in fostering innovation is to find more efficient and affordable ways to deliver energy with lower emissions, which will benefit our communities and our stakeholders.\nI encourage you to visit the sustainability link on our investor website to read more about our sustainability progress and our commitments.\nIn August, we published SASB and NGSI disclosures as well as our 2020 sustainability reports and other refreshed and more comprehensive disclosures.\nSlide 10 has a graphic that shows the decarbonizing trends in our generation fleet.\nWe've been upgrading our fleet for nearly a decade, beginning with the retirement of 123 megawatts of four older coal-fired power plants in 2013 and 2014.\nSince that time, we've added 282 megawatts of owned wind generation and another 132 megawatts of wind energy through power purchase agreements with a number of other renewable projects in flight.\nLooking forward, and as I stated previously, we already announced that the Neil Simpson II coal-fired power plant will be converted to natural gas in 2025.\nThe remainder of the time line shows how we expect to meet carbon reduction goals by converting or replacing the remaining coal-fired power plants over the next two decades.\nThis time line could very easily be influenced by generation and emission technology advances and cost declines.\nIn our cold weather geography, having immediately reliable, and dispatchable generation capacity is an absolute must.\nAs we demonstrated during Winter Storm Uri, we experienced no outages.\nSlide 11 lists recent achievements by our team.\nI'm pleased with our team's engaged mindset toward continuously improving our operations, especially in regard to safety, reliability and the customer experience in our workplace culture.\nOur dedicated team at Cheyenne Prairie Generating Station was recently awarded OSHA's highest worksite safety recognition Star status.\nThis recognition is no simple task.\nIt required a multiyear rigorous audit and approval process to be recognized as a leader in the prevention of hazards and a focus on continuous improvement of safety and health management systems.\nI'm happy to note this is our second time achieving this recognition with the Cheyenne Prairie team, joining the Pueblo Airport Generating Station team in Colorado as OSHA recognized industry leaders in safety.\nWe're also industry leaders in reliability with all three of our electric utilities recently listed in the upper half of the top quartile for reliability, as measured by SAIDI.\nThis remarkable achievement reflects years of diligent effort by our team and executing our customer-focused operations and investment strategy.\nWe also continue to improve our customer experience, achieving a J.D. Power ranking of second overall by our gas utility in the South region.\nAlso, our year-to-date Net Promoter Score through mid-October was approximately 64, an improvement from 60 in 2020 and notable improvement from a score of 42 four years ago.\nI already mentioned our great workplace and engaged team.\nI'm pleased to report we were named for the second consecutive year to Achievers 50 Most Engaged Workplaces.\nWe survey our employees about every 18 months to understand how we're doing and how we can improve as a team.\nThis anonymous survey is conducted by a third party and returned strong scores as compared to our industry, especially in regard to safety, company values and management effectiveness.\nFinally, on this slide, we were named a Veteran-Friendly Employer of the Year at Wyoming's 2021 Safety and Workforce Summit.\nSlide 13 summarizes earnings per share for the third quarter.\nWe delivered earnings per share of $0.70 compared to $0.58 in Q3 2020, a 21% increase.\nPositive financial results were driven by new rates, strong customer growth and usage and mark-to-market gains.\nOn a consolidated basis, weather was not a major driver of earnings compared to normal, but was unfavorable compared to Q3 2020, which experienced a $0.05 benefit compared to normal.\nSlide 14 illustrates the detailed drivers of change in net income quarter-over-quarter.\nAll amounts listed on this slide are after tax.\nThe main drivers compared to last year were $1.5 million of gross margin improvement from new rates and riders, $2.8 million of increased margin from customer growth and higher usage per customer, especially in our electric utilities, and $4.8 million mark-to-market gains for both wholesale energy and natural gas commodity contracts.\nWe continue to manage O&M closely with a minimal quarter-over-quarter increase.\nDD&A increased as a result of our capital investment program and interest expense increased as a result of higher debt balances mainly due to the impact from Winter Storm Uri.\nThe improvement in other income expense over the prior year was driven by lower benefit costs, market impacts of nonqualified deferred compensation expense and benefits from company-owned life insurance.\nSlide 15 shows our financial position through the lens of capital structure, credit ratings and financial flexibility.\nWe have a manageable debt maturity profile and are committed to maintaining our solid investment-grade credit ratings.\nAt the end of September, we had more than $500 million of available liquidity on our revolving credit facility.\nIn July, we amended and extended our revolving credit facility with similar terms through July 2026.\nAnd in August, we issued $600 million of notes due in 2024.\nProceeds from the notes were used to repay our term loan balance and other short-term indebtedness.\nThe new notes are repayable after six months, providing flexibility to pay down proportionately alongside increased cash flows from Winter Storm Uri cost recovery plans.\nThe weighted average length of recovery we requested in our regulatory plans is 3.7 years.\nNew debt and deferred recovery of fuel cost for Winter Storm Uri temporarily increased our debt to total capitalization ratio to 62% at the end of March, and it remained at that level through the end of September.\nAs we recover storm costs, repay debt and execute on our equity offering program, we expect to reduce our debt to total capitalization ratio.\nWe continue to target a debt to total cap ratio in the mid-50s within the next two to three years.\nDuring the third quarter, we issued $23 million through our at-the-market equity offering program for a total of $63 million year-to-date.\nWe expect to issue a total of $100 million to $120 million in both 2021 and 2022.\nThe increase in 2022 compared to what we previously disclosed is mainly related to the increases in our capital forecast.\nMoving on to our dividend on Slide 16.\nLast week, we delivered on our dividend growth target with our Board approving a 5.3% increase in our quarterly dividend.\nFor 2021, the quarterly dividend achieved 51 consecutive years of dividend increases, one of the longest track records in our industry and a record we're quite proud of.\nOver the last five years, we have increased our dividend at an average annual rate of 6.4%, and we anticipate increasing our dividend by more than 5% annually through 2025, while maintaining our 50% to 60% payout ratio.\nWe're pleased with how our team responded in the second and third quarters and meeting our financial objectives and overcoming the challenges presented by Winter Storm Uri.\nWe've made excellent progress on our regulatory activities, increased and clarified our capital investment program and enhanced our ESG disclosures.\nOnce again, we've shown our ability and agility to continue delivering solid financial results and strategic progress.\n", "role": "user" }, { "content": "compname reports q3 earnings per share $0.70.\nq3 earnings per share $0.70.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We're coming to you in strange times.\nThis is the first call that we've ever done where the management team is not together in one location.\nSo Leslie and Tom are in Miami, I'm in New York, and we are doing this virtually.\nAlso, I've never done a conference call where we've had more than one or two pieces of paper in front of me with some bullet points on them.\nAnd today, Leslie has put in front of me a 27-page deck and talking points that are several pages long.\nSo forgive me for all the shuffling that you might hear on the call.\nInstead of jumping straight into the earnings for the quarter, I would like to take five minutes of your time to first talk about exactly -- give you kind of a state of the union for BankUnited.\nWhat is it that we've been doing over the last six to seven weeks as the situation has evolved?\nWhat are we prioritizing now and then give you just a lay of the land, and then we'll get into the numbers and discuss in detail what first quarter was like.\nSo let me start by, first and foremost, giving a big shout out to the BankUnited team.\nEvery person who comes here calls this home and works hard.\nA crisis revealed the character of people.\nI think that is true, not just for people, but also reveals the true character of an organization.\nAnd I'm very proud to say that what I have seen over the last six or seven weeks, it really fills me with great pride that I'm leading this organization.\nPeople have come together, as help each other, work ungodly hours while they were under immense amount of personal distress.\nSo there are too many examples to get into, but I just want to give a big one shout out to everyone in the company, not just people working in PPP, on the branches or keeping our call centers up, but everyone, right down to the person who's making sandwiches in the cafeteria all the way to the last day when we shut down the cafeteria.\nWe have, as you can imagine, going through this early in March, we made our employees' wellbeing and safety our No.\nWe enable 97%, as of now, 97% of our employees are working from home.\nAnd this is 97% of our nonbranch employees, of course.\nWe have extended our paid time off policy.\nWe have increased our health benefits to cover any expense associated with this COVID.\nWe have not furloughed any employees.\nI'm a very superstitious person, so it is -- I'd say this very carefully.\nWe were recently awarded by South Florida Business Journal an award for being one of the healthiest employers in South Florida.\nAnd I hope that we can claim this again next year.\nSo far, we've had only one confirmed COVID case in the employee base.\nWe do think there are a couple of others who will never get tested but have overcome COVID as well.\nIt sounds like it, but only one confirmed COVID case, which is pretty good, given though what is going on.\nWhen you take care of your employees, they in turn then take care of your customers.\nAnd if they take care of your customers, then that takes care of the company.\nThat's sort of the chain that I follow.\nSo quickly, let me tell you what we've been doing to support our customers.\nThe most obvious thing is offering the operational resilience that is needed at a time like this.\nWe activated our business continuity plan.\nWe beefed up all the back office IT infrastructure that is needed to run the company from afar with no really any significant operational issues on customer service disruptions.\nIf you'd asked me this -- how I felt about our ability to do this in the first week of March when we were preparing to do this, I was pretty nervous, but I'm happy to say that everything has also gone without a glitch and the bank is working fine from an operational perspective.\nOur employees, several hundreds of them, have worked tirelessly now for about three weeks to deliver the PPP program.\nWe are also -- I think as of last night, are close to $700 million or maybe over $700 million in loans that we've done through the PPP program.\nAnd our estimates are that we've helped retain about 85,000 or 86,000 jobs in our footprint through this program.\nAnd we're not done.\nThere's more going through as we speak.\nThe team has been working around the clock, and we will help a few hundred more small businesses before eventually the money runs out on the PPP.\nWe have approved deferrals for many borrowers who have contacted us and asked for assistance because of pandemic.\nAnd equally importantly, we have honored all our commitments whether they were lines that we've had or a business that was in the pipeline where we had made a commitment to close in our loan.\nWe did not back away from anyone, and that is equally important.\nWe have waived select fees, and we have also temporarily halted new residential foreclosure actions.\nBy the way, while all this is happening, I just want to clarify, when I say 97% of the employees, nonbranch employees are working remotely, 76% of our branches are still open.\nThey are open on a limited basis, of course, drive-throughs and appointment-only method, but they are open and we are serving clients.\nThe traffic, as you can imagine has gone down substantially.\nAlso, we have -- from somewhere in the second week of March or mid-March, we have made sure that we have enough liquidity to take care of any client needs in case somebody would need it.\nWe continue to hold an excessive amount of liquidity, but we now feel the time is right to start taking it down.\nI think beginning next week, we will take down this excess liquidity that we've been sitting on to serve our clients.\nNow turning back internally, as you can well imagine, we are prioritizing the risk management and credit quality and credit quality risk management.\nWe've identified portfolios and borrowers that we believe will be under an increased stress in the environment.\nI call these sort of the sort of the -- you're in direct line of fire-type of our portfolios.\nWe have reached out to every single borrower in these segments, and we will talk in detail about what these segments are and how big they are.\nBut we have reached out to all borrowers in these segments.\nAnd in other segments, we have reached out to everyone over $5 million in exposure to understand this exactly what the impact will be to our balance sheet.\nWhile we always do stress testing sort of it's a routine business for us, in this environment, we have significantly enhanced these processes that you would expect us to.\nBut through all of this, I -- it's important while you're managing a crisis, not to forget what the long-term plan is and to keep those long-term plan is and to keep those long-term strategic objectives in mind, and we're doing that while we're fighting the immediate economic crisis.\nSo again, so I think the biggest question here that you probably have is, what does it mean for our balance sheet, right?\nI will start by saying that our balance sheet is strong.\nI feel very good about our balance sheet, our capital levels, our liquidity levels.\nAnd you see at March 31, our regulatory ratio, no matter which you look at bank holding company, they're also insignificantly in excess of well-capitalized thresholds.\nWe are committed to our dividend, which we very recently increased by 10%.\nI think it was in the middle of February.\nWe did, however, stopped our share buyback program.\nWe were very -- we had an authorization from I guess -- I think it was the fourth quarter, it was authorized $150 million.\nWe executed about $101 million, and we stopped that, and we're going to put it aside at least until the dust settles on the economy.\nA question that we have seen a lot of other bank teams have been asked, who presented earnings in the last week or so, anticipating the same question, we did some analysis for you.\nBy the way, there's a slide deck.\nLike I said, this time around, we've never had a slide in our calls, but at this time, we have provided a lot more disclosure and there's a 27-page slide deck.\nSo from time to time, I will make references to certain slides.\nI'm not going to flip every page, but I will make the references.\nSo for example, right now, I'm talking about Page 4 in the slide deck, which then takes the DFAST severely adverse scenario for 2018 and 2020 and runs that on the March 31, 2020, portfolio to see what the losses would be.\nAnd by the way, not just 9 quarters of losses, but lifetime losses.\nDFAST is a nine-quarter exercise.\nBut with this, we've actually used lifetime losses.\nAnd we have used those, which we don't think are really relevant.\nBut nevertheless, since that question will probably be asked, we did that analysis anyway.\nWe use full 2018 and to 2020 DFAST severely adverse scenario, and said, OK, if -- what are the losses that are generated, and you can see them on Slide 4.\nAnd if those were the -- channels were to be used now, would we still be well capitalized and the capital ratios hold up?\nAnd the answer is yes, they do.\nSo quickly, one question so I don't forget again about liquidity, which is the next slide.\nWe have tons of liquidity.\nWe are -- we currently have over $8 billion, I think it's $8.5 billion of liquidity, safe liquidity available.\nA lot of it is in cash.\nWe will take some of the cash position down as we think things are settling down in the marketplace.\nBut with that, let me switch over quickly and talk about the quarter.\nWe reported a net loss of $31 million, $0.33 a share.\nThis is driven in the large part to the large provision that we do.\nThe provision for this quarter was $125 million.\nThis increased our credit losses to $251 million, which is 1.08%.\nSo we used to be, at December 31st, we were at $109 million or 47 basis points.\nOn January 1st, under CECL, that number bumped up to $136 million or 59 basis points and now in the end of March, we were at 1.08% or $251 million.\nAnd that obviously was the biggest driver in the $31 million loss that we are posting this quarter.\nI will ask Leslie to give you some more detail around CECL and the assumptions that went into calculating that provision.\nBut I will say, before I hand it over to her, is that we believe this at March 31st, our reserve estimate is based on both data that is current and conservative at that quarter end.\nThis reflects our best estimate of lifetime credit losses on the portfolio.\nIn second quarter, we will go through the same exercise.\nThere are three big areas, which will impact our CECL estimates for the next quarter, which is going to be an update of the macroeconomic outlook.\nAn update of our portfolio, especially our high-risk sectors.\nAnd also, our assessment of impact of government stimulus because we've seen more stimulus this time around than we've ever seen in the history of the Republic.\nSo $2.5 trillion and counting in fiscal stimulus and God knows how much on the monetary side.\nSo I'm going to refer you to Slide 8 in the supplemental deck that talks a little bit about our CECL methodology.\nFundamentally, for the substantial majority of our portfolio segments, we're using econometric models that forecast PDs, LGDs and expected losses at the loan level for those are then aggregated by portfolio segment.\nOur March 31st estimate was largely driven by the Moody's March mid-cycle pandemic baseline forecast that was issued on March 27.\nThis forecast assumes an approximate 20% decline in GDP in Q2, unemployment reaching about 9% in Q2, the VIX approaching 60 and year-over-year decline in the S&P 500 approaching close to 30%.\nThe forecast path assumes a recovery beginning in the second half of 2020, with unemployment levels remaining elevated into 2023.\nI know there's been a lot of focus on GDP and the current unemployment in all the discussions taking place around the CECL forecasts, and those are certainly important reference points.\nBut I do want to remind you that these are very complex models, and there are, in fact, hundreds, if not thousands, of national, regional and MSA-level economic variables and data points that inform our loss estimates.\nSome of the more impactful ones are listed on the right side of Slide 8 there for you.\nAnother thing that I want to point out about our CECL estimate at 3/31, we did not make a qualitative overlay.\nWe don't think our models really take into account fully the impact of all of the government assistance that's being provided to our clients, PPP, other deferral programs that we might have in place.\nWe did not make this qualitative overlay for that at March 31st.\nThe reason we didn't is we just felt it was premature to really be able to dimension those things at March 31st.\nAnd as Raj pointed out, that's something we'll take into account when we consider our second quarter estimate.\nI want to refer you now to Slide 9.\nLeslie, just one second.\nI just got a text from someone saying that the call cut off for about 20 seconds, and they couldn't hear you for the first 20 seconds.\nSo you may want to just repeat what you said because I think those are important points because I want to make sure everyone gets those.\nSo best to start on CECL.\nMaybe I'll do better this time.\nHopefully, I won't contradict myself.\nSo again, I'm referring to Slide 8 in the deck about our CECL methodology.\nFundamentally, for the substantial majority of our portfolio segments, we use econometric models that forecast PDs, LGDs, and expected losses at the loan level, which are then aggregated by portfolio segment.\nOur March 31st estimate was largely driven by Moody's March mid-cycle pandemic baseline forecast that was issued on March 27th.\nThat forecast assumes an approximate 20% decline in GDP in Q2, unemployment reaching about 9% in Q2, the VIX approaching 60, and year-over-year decline in the S&P 500 approaching close to 30%.\nThe forecast pass assumes a good recovery beginning in the second half of 2020 with unemployment levels remaining elevated into 2023.\nAnd well, there's been a lot of focus on GDP and unemployment, and the discussions taking place around these CECL forecasts, and those are certainly important reference points, these are complex models, and there are, in fact, hundreds, if not thousands, of national, regional and MSA-level economic variables and data points that inform the loss estimates, and some of the more impactful ones of those are listed for you on Slide 8.\nI also want to mention briefly that we did not incorporate in our CECL estimates at 3/31 any significant qualitative overlay related to the impact of the government direct assistance, PPP, deferral programs that we may put in place.\nAt 3/31, we felt we just didn't have enough data to properly dimension the impacts of those, so we did not reduce our reserve levels to take those into account.\nAnd as Raj mentioned, that's something we'll be considering in more detail in Q2.\nAnd now I'll refer you back to the deck and look at Slide 9.\nAnd Slide 9 provides for you a visual picture of what changed our reserve form 12/31/19 to 3/31/20.\nWe started at $108.7 million.\nYou can see here the $27.3 million impact of the initial implementation of CECL.\nThe most significant driver of the increase in the reserve from January 1st after initial implementation to March 31st is not surprisingly, the change in the reasonable and supportable forecast, which increased the reserve by about $93 million.\nWe've also taken an additional $16 million in specific reserves this quarter, the majority of this related to the franchise finance portfolio.\nWhile the credits that are driving these reserves had been identified as potential problem loans prior to the onset of COVID, we believe the underlying issues and amount of those reserves were certainly further aggregated by the COVID crisis and particularly as workout solutions have become more limited.\nI want to reemphasize that we ended at -- for the quarter at 3/31/20 with a reserve of 1.08% of loans, and we certainly don't think that's outside in comparison to other banks whose results we've seen released.\nI want to take a minute and just focus you on Slide 10.\nAnd it gives you a distribution of the reserve by portfolio segment at March 31st.\nAnd you can see here that on a percentage basis, the franchise portfolio, not surprisingly, carries the highest reserve, followed by the C&I portfolio.\nAnd you can see the results of those on Slide 4 in the deck.\nAnd what we did here was we took our March 31, 2020, portfolio, and we ran that portfolio through both 2018 DFAST severely adverse scenario and the 2020 DFAST severely adverse scenario.\nIn the table here showing you total lifetime, not nine-quarter, projected credit losses for our significant portfolio, C&I, CRE, BFG, residential under each of those scenarios as well as the bank's pro forma regulatory capital ratios.\nNow those were calculated as if all incremental losses were applied to the March 31, 2020, our capital position.\nSo they don't really take into account any PPNR that might offset losses over the course of the forecast horizon or any actions management might take to reduce risk weight -- risk-weighted assets during a period of stress, both of which would have been taken into account in a DFAST regulatory submission.\nSo you can see that our reserves at March 31, 2020, stand at about 44% of severely adverse projected losses under 2018 DFAST and about 56% of some severely adverse projected losses under the 2020 DFAST severely adverse scenario.\nAnd you can see in the box there that all of our capital ratios that remain in excess of our well-capitalized threshold of under those distressed scenarios.\nLet's talk PPNR, pre-provision pre-tax net revenue.\nIt came in at $85 million this quarter, and that compares to $104 million last quarter.\nSo what was that delta of that $19 million?\nSo, really three buckets.\nFirst, NII was down by $5 million.\nNII really is for two reasons; one, our margin contracted by 6 basis points from 2.41% to 2.35%.\nAnd the reason for that is asset yields came down faster.\nDeposit pricing really wasn't changed much until pretty late in the quarter.\nYou will see a very meaningful impact on deposit pricing going forward.\nBut for this quarter, that the basis risk between these assets are priced and what things they're tied to versus deposits.\nThere was that gap of a few weeks, which is what caused margin to come down.\nAlso, first quarter is not a very strong asset growth quarter for us.\nThe nature of our business is first quarter tends to be our slowest quarter.\nSo we didn't see that much in terms of asset growth.\nSo you combine little-to-no asset growth.\nAnd by the way, a lot of other banks are seeing asset growth coming from time draws.\nOur business is not built around that kind of business.\nAnd we did not get that benefit, and we did not see a lot of line growth.\nI don't think it's a benefit.\nI think it's a good thing that we did not have that business but that creates little bit of asset growth and NIM that compressed 6 basis points leads to a $5 million reduction in NII.\nAlso on fee income.\nLast quarter, we had $7.5 million or so of securities gains.\nWell, this quarter, we've had $3.5 million of securities losses.\nSo that's an $11 million-or-so swing in fee income.\nBy the way, in the $3.5 million securities losses in this quarter, it includes a $5 million of unrealized losses on equity securities.\nWe haven't sold them, but the accounting makes us take it through the P&L.\nAnd lastly for expenses, again, first-quarter expenses are always higher because you start to fight the cycle all over again.\nHSA contributions, the 401(k) contribution, and all that stuff hits in the first quarter, so that is what drove expenses higher.\nIf you compare it into expenses from a year ago, that's probably a better way to compare, and those expenses were obviously much lower.\nOur first quarter this year, it was much lower.\nSo what does it really mean for next quarter?\nWell, for next quarter, we expect asset growth to pick up for no other reasons, and we're doing a lot of PPP loans.\nWe'll probably do some Main Street Lending loans.\nWe expect margin to expand.\nDeposit prices have come down very, very aggressively, not just in the middle of this March, but also at the beginning of May.\nAnd that should feed into margin, and we are very positively biased toward our margin in the second quarter and beyond.\nExpenses should come down as well because all that five-level stuff that I talked to you about will be behind us after the first quarter.\nAnd naturally, expenses will get better next quarter.\nSo that's what all the guidance we'll be able to give you, but I do feel it's important to mention these things in some level of detail.\nI mentioned a little bit on PPP program.\nSo I think we could rename BankUnited for the month of April as Bank of PPP.\nThat's like all we've been doing.\nTo give you a little comparison, we have an SBA business where we probably do roughly about 200 units of business in a year.\nWe are now in the process of trying to do over 3,000 loans through the SBA in less than a month or so.\nIt has -- has been a very large operational challenge that people across the company have been recruited to help in.\nAnd so far, we've already close to $700 million of loans that we've done and we're not done yet.\nWe still have a few more that we will do over the course of today and tomorrow, or day after, until the money runs out.\nWe're also now on a case-by-case basis providing deferrals to borrowers, who are being impacted by the pandemic, and that started somewhere in the middle of March.\nThose requests have now tapered off somewhat in the last week to two weeks, and Tom can talk about that in a little more.\nBut before that, Tom, why don't you spend a little time talking about loans and deposits?\nJust give a little more detail around that.\nSo let's start off with deposits, where we've continue to make good progress on our deposit growth initiatives.\nAs you can see, deposits grew for the quarter by $606 million, and just over 50% of that or $305 million was noninterest DDA, which now stands at the 18.4% of total deposits, compared to 15.9% a year ago.\nI guess, as we've talked in all of these calls, growing noninterest DDA is one of the most important things that we're trying to do in the bank right now.\nAnd unlike what some other banks have reported, most of this DDA growth was really core DDA growth.\nThis wasn't related to draws on lines of credit.\nAnd I'll go into a little bit more detail about that later.\nWe've consistently been moving down deposit pricing as the Fed has reduced rates.\nThe cost of total deposits declined by 12 basis points this quarter from 1.48% to 1.36%.\nAdditional moves by the Fed in late March had minimal impact on our ability to move cost of funds down further in Q1.\nBut as Raj mentioned, you'll see that impact much larger in Q2.\nTo give you a better idea of this, the spot rate on total interest-bearing deposits, including our certificates of deposit, declined by 36 basis points of December 31, 2019, to March 31, 2020, and then by another 27 basis points through April 17th of 2020.\nSo a total of 63 basis points decline during that period of time.\nAnd if you go to Slide 7 in the deck, you'll get a little bit more information and detail on that.\nOn the loan side, Raj mentioned, loans that are relatively flat for the quarter with net growth of $29 million.\nThere were some parts of the portfolio where we actually saw very good growth.\nThe C&I business had total growth of $353 million, which was a good quarter for that segment.\nMortgage warehouse outstandings have also increased by $84 million, but really offsetting that, our CRE book declined by $315 million, which is pretty much in line with what we expected, primarily driven by the continued decline in New York multi-family, which was $249 million.\nAnd unlike a lot of banks, particularly some of the larger banks, we have not experienced any real growth in our line utilization since the onset of this crisis.\nThe majority of our C&I growth, as I mentioned, was not the result of draws.\nOur utilization ratio, which we track consistently throughout this process really hasn't moved too much during this entire thing, only by a few percentage points through the total period of time.\nIt has generally remained in line with our three-year averages with the exclusion of the mortgage warehouse business.\nI would like you to flip to Page 16.\nThis is what I was talking about at the beginning of the call.\nThese are the segments that we have sort of circled around and saying these are the portfolios that will have increased stress based on our estimation: this is retail in the CRE book; retail in the C&I book; the franchise finance that we've talked about to you in the last six months; hotels for obvious reasons, airlines, cruise lines and energy.\nSo in total, it's about 14% of our portfolio.\nWhat we're trying to show you here is what -- as of March, what part of these individual portfolios were past-weighted and what were classified, criticized and nonperforming.\nSo now let me say something sort of which is obvious, but I'll mention it anyway.\nJust because we have highlighted these portfolios, I'm not trying to say that loans on these portfolios are going to go back.\nWe also expect the large portion of these loans will be just fine.\nSponsors with deep pockets will be able to bear the brunt of the pain here.\nBut in terms of monitoring, we are calling these sort of the ones what we will monitor on a heightened basis because we think these are in harms' way more than other parts of the portfolio.\nBy the same logic let me say, it doesn't mean that anything that is outside of this portfolio is all fine.\nWe have to monitor everything because there will second, third, fourth quarter impacts in other parts of the business as well and we will monitor them, too.\nBut this is where that the heightened monitoring will be.\nSo it's too early to really see the impact of the COVID situation on risk rating migration.\nAnd you can see that, with the exception of franchise finance portfolio, substantially, most of these segments are past-rated at March 31st.\nWe did move a bunch in the franchise portfolio into those lower categories in the quarter.\nLet me talk a little bit about NPAs, a little bit of our course of actions and then charge-offs.\nNPAs -- of NPLs for this quarter, they were basically flat.\nNPAs were down a little bit, a couple of basis points.\nNPLs were also down a few basis points from 88 basis points to 85 basis points.\nAnd just to remind you that these numbers in NPAs and NPLs, the way we report them included guarantee portion of nonaccrual SBA loans.\nSo really just keep that in mind that the criticized classified this quarter went up by $269 million, $207 million of that $269 million was in the franchise portfolio.\nAnd 90% of that $207 million was really attributable to COVID as that kind of play itself out in the month of March.\nCharge-offs were 13 basis points.\nThey elevated from last quarter mostly because of one credit in BFG equipment where we took the charge-off, but we're already seeing recoveries from that situation this quarter.\nSo more detailed metrics are toward the end of the slide deck, Page 22, 23, 24 and 25.\nSo I will encourage you to spend some time on to those as well.\nTom, I mentioned these portfolios for heightened monitoring.\nSo, why don't you spend a few minutes and just give them a little more -- with a little more detail?\nSo we'd refer you to Slide 14 in the deck, which provides some additional detail around the level of deferrals and segments.\nBut through April 20, we have received request for deferrals from almost 800 commercial borrowers and approved modifications for about 500 of those borrowers, totaling a little over $2 billion.\nWe've also processed about $500 million in residential deferrals, excluding the Ginnie Mae that's early buyout portfolio, which would represent about 10% of that portfolio.\nThese deferrals typically take the form of a 90-day principal and/or interest payment deferrals for commercial loans, and those payments are generally due at maturity.\nFor residential borrowers, these payments are typically at the end of the deferral period consistent with deferral programs being offered by the GSEs.\nNow we'll obviously be reassessing each of these loans at the end of the 90 days and looking in making the best decisions we can at that point in time.\nAs you can see, the large amount of commercial deferrals is in the commercial real estate portfolio, particularly the hotel subsegment, where 90% of the borrowers, by dollars, have requested and been approved for deferrals, followed by the retail subsegment.\nWe have also received a high level of deferral requests from borrowers in the franchise finance portfolio, as we've mentioned, where 74% of the borrowers have been approved for deferrals.\nOn other C&I portfolio subsegments with this -- where we're seeing higher levels of deferral request include accommodation and food services, arts and entertainment and recreation and the retail trade.\nAt this point, and as of today, modification requests appear to be slowing over the last 10 to 15 days.\nStarting on Slide 17, we provide a little bit deeper dive into some of the higher-risk portfolios, subsegments that Raj has already mentioned.\nAnd in the retail segment, the CRE book contains no significant exposure to big box or large shopping malls.\nWe estimate that about 60% of the CRE retail exposure is supported by businesses that we would categorize as essential or moderately essential and the remainder we would categorize as nonessential businesses.\nWithin this segment, LTVs averaged 57.5%, and 84% of the total are below the 65% level.\nRetail exposure in the C&I book is well diversified with the largest concentration of being to gas station and convenience store owner operators.\nI'll refer you to page -- on Slide 18, where you could see further breakdown of the franchise portfolio, which is a fairly diverse portfolio, both by some concept in geography.\nWe saw over a $200 million increase in criticizing classified assets in this segment during the first quarter.\nApproximately 90% of these downgrades were directly related to the COVID-19 crisis.\nI'll also mention that the current environment to fitness center -- and to fit this sector, which up until now, has been really the better-performing sector in this book, is coming under stress as most of these are now closed with the social distancing guidelines.\nSome of the restaurant concepts actually may fare better, particularly those with heavy drive through exposure and good digital strategies.\nOn Slide 19, you can see that most of the hotel book represents well-known flags and is within our footprint.\nSo to be clearly -- on revenues in this segment have declined dramatically with the social distancing measures and travel restrictions that are currently in place.\nLTVs in this segment averaged 54% and 78% of this segment has LTVs under 65%.\nAnd finally, referring to Slide 20, our energy exposure, particularly in the loan portfolio, remains somewhat minimal.\nThe majority of this exposure relates to railcars in our operating lease portfolio.\nSo with that, I'll go back to Leslie for a little more detail on the quarter.\nI want to take a minute to discuss the unrealized losses on the securities portfolio that impacted other comprehensive income and our GAAP capital at March 31st.\nI'll remind you that these unrealized losses do not impact regulatory capital, and I'll be referring to Slides 26 and 27 in the deck for this part of the discussion.\nThe available-for-sale securities portfolio was in a net unrealized loss position of $250 million at March 31st.\nThese unrealized losses were mainly attributable to market dislocation and widening spreads reflecting the reaction of the markets to the COVID crisis.\nAs you can see on Slide 26, 90% of the available-for-sale portfolio is in governance, agencies or is now rated AAA.\nAt March 31st, we stressed the entire nonagency portfolio at the individual security level, modeling collateral losses that we believe to be consistent with levels reflecting the trough of the 2008 global financial crisis.\nBased on that analysis, none of the securities in this portfolio are expected to take credit losses.\nThe majority of the unrealized losses, as you can see, are in the private label CMBS and CLO portfolios.\nOn Slide 27, we show you the ratings distribution of these portfolio segments along with levels of credit enhancement compared to stress losses, illustrating the high credit quality of these bonds.\nWe also priced the March 31 portfolio as of April 22, and you can see that our results of that on Slide 26.\nAnd although unrealized losses remain significant, you can see that valuations have started to come back and to recover some.\nI also want to point out that none of our holdings have been downgraded since the onset of the COVID crisis.\nTo Provide a little more color around the NIM.\nThe NIM declined by 6 basis points this quarter from 2.41% to 2.35% compared to the immediately in the proceeding quarter.\nTo get a little bit into the components of that, the yield on interest-earning assets declined by 18 basis points.\nThat reflects a decline of 9 basis points in the yield on loans and a 37-basis-point decline in the yield on investment securities.\nThese declines related to, obviously, declines in benchmark interest rates and also reflect turnover of the portfolios at lower prevailing rates.\nThe decline in the yield on securities reflects the very short duration of that portfolio and to an extent, increases in prepayment speeds, which contribute about 5 basis points to the decline.\nThe cost of interest-bearing liabilities declined by 14 basis points quarter over quarter.\nI'll remind you that reductions in deposit costs that we have done in response to the Fed-reducing rates in late March were not fully felt this quarter.\nA couple of items I want to mention that impacted noninterest income and noninterest expense for the quarter.\nRaj already pointed out the unrealized loss on marketable equity securities that negatively impacted noninterest income in this quarter.\nOur largest contributor of the $6.8 million decline in the other noninterest income line compared to the immediately preceding quarter was a reduction in income related to our customer swap program, and this was really attributable just to lower levels of activity in that space during the quarter.\nEmployee compensation in benefits actually increased by $3 million compared to immediately our preceding quarter.\nAnd as Raj pointed out, there are always seasonal items that impact comp in the first quarter.\nSo, a better comparison might be to the first quarter of the prior year, and compensation expense declined by $6.3 million compared to the first quarter of 2019.\nWe'll try and wrap this up and open this up for Q&A.\nBut let me say regarding guidance, we are withdrawing our guidance that we gave you at the last earnings call.\nWe generally have a pretty good idea of what we're seeing in the business and the economies where we operate or we can look out about 6 months or so.\nBut at this time, it is very hard to look at a month or two.\nSo to try and give you guidance at really an uncertain time, it's very hard.\nWhat we can say is we are -- you will see a growth in PPP loans.\nLike I said, -- rough, so somewhere in the $800 million number is what will people end up with.\nMain Street Lending facility, we're still waiting a lot of details in that, but we hope to do some of those loans, but it's hard to tell you how much we will be able to do or what we would want to do.\nAnd even deposit growth can be hard to predict.\nBut so -- our priority is the deposit side will maintain, which is grow DDA and bring down cost of funds.\nWe feel fairly confident of that into this quarter.\nAnd in fact, I would even go as far to say that maybe for the full year, we'll be higher than what you saw for this quarter.\nAny question that you asked about CECL, the only thing we can say about CECL is provisioning going forward in the second quarter as the rest of the year is that it will be very volatile.\nGiven the fact that the economic environment is extremely volatile.\nAnd very importantly, we have not lost sight.\nOnce again, I will say, we've not lost sight of what we're trying to build in the long term.\nWe actually are fighting in this healthcare crisis in the short term, but in the medium and long term, we're still focused on building what we set out to build.\nSo whether it's BankUnited 2.0 or all the other things that we're working on, they continue.\nSome of the initiatives around BankUnited 2.0, especially around revenue might get pushed out by a couple of months because it's new products that are being launched.\nIt's going to be hard to try and launch them in the next couple of months when we are going through social distancing the way we are.\nBut overall, the numbers don't change, and it just gets pushed out a little more.\n", "role": "user" }, { "content": "bankunited q1 loss per share $0.33.\nq1 loss per share $0.33.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Let me talk a little bit about the environment before we talk about the results for the quarter.\nWe talked to you about 90 days ago.\nSo I'll try and draw comparisons to what I said 90 days back.\nI had an optimistic tone 90 days ago, I'm more optimistic today.\nWhat we're seeing, the data that is coming to us from every angle, whether it's around the vaccination and the pandemic or its economic data across the board, we're seeing more reasons to be optimistic for the remaining of this year and into next year than we were in January.\nIn January, we were fairly optimistic to begin with.\nSo the economy is opening up.\nFlorida is clearly much further along than other parts of the country.\nNew York is a little further behind than other parts of the country.\nBut overall, our franchise where we do business, we're seeing a lot of positive momentum.\nAnd then that -- those assumptions then get reflected in our financials, which we will talk to you in some detail.\nBut generally feeling very good about economic activity and about the economy opening up and the vaccine rollout.\nWithin the company also, I will say that we are trying to gather data on how many employees have been vaccinated.\nIt's self-reported data, so it lags a little bit.\nBut we're kind of matching up with where the country is.\nAbout 30% of our employees are either vaccinated or about to be fully vaccinated, and many more are in line.\nMost of the senior management team is now fully vaccinated.\nThe quarterly performance, we reported net income of about $99 million, 98.8% to be exact, $1.06 per share.\nThis compares to $0.89 that we reported to you last quarter.\nAnd obviously, last -- this time last year, the first quarter was a loss of $0.33.\nSo we've come a long way in a short few months.\nThe highlights of the quarter is, again, we'll go through a little bit about the P&L.\nI'll jump to the balance sheet after that.\nNet interest income continued to grow despite elevated levels of liquidity as is the problem across the industry.\nWe had NII of $196 million.\nThis compares to $193 million last quarter and $181 million compared to the first quarter of last year.\nAs we told you three months ago, we were positively biased where it came to NIM guidance, and NIM did expand from 2.33% last quarter to 2.39% this quarter.\nAnd that expansion really is a result of us executing on our deposit strategy.\nDeposits continue to grow and cost of deposits continue to come down.\nWe had another very, very solid quarter.\nNoninterest DDA grew by $957 million, which I'm very happy about.\nThe average noninterest DDA grew by $338 million.\nBut the number that really makes me happy is that noninterest DDA now stands at about 29% of our total deposits.\nJust in December, we were at 25%.\nAt the end of 2019, I think we were at 18%.\nAnd when we started this deposit-centric strategy about three years ago, we were in the mid-teens.\nI think we were 14% or 15%.\nSo we've come a long way, and I'm very, very proud of what the company has achieved.\nCost of deposits also declined by 10 basis points.\nLast quarter, we were at 43, we're down to 33 basis points for this quarter.\nAnd I'm very confident that second quarter, we will again show a fairly decent decline.\nAnd the reason I can say that is because on March 31, on a spot basis, we were already down to 27 basis points.\nSo we're starting second quarter at 27, so the number is going to be somewhere in the mid-20s.\nAnd the guidance that we gave that we will drop our cost of funds -- cost of deposits into the teens by the end of the year stands.\nSo overall, feeling very good about what we've been able to achieve on the deposit side.\nAnd the deposit growth was fairly widespread, came from every part of the bank.\nOn credit, the -- let me talk a little bit about loans.\nLoans were down about $500 million.\nMost of that decline was the continued drop in utilization rates online.\nSo, I think $425 million of that $505 million was directly attributable to less utilization.\nThis has been a negative surprise for us.\nWe had made assumptions when we did the plan at the beginning of the year that the line utilization will start to normalize slowly month by month.\nBut instead, we saw further declines in January.\nWe saw another decline further in February.\nIt's only in March where we've seen a slight uptick.\nOne month doesn't make a trend, but it's a positive number, and we're happy to see that.\nAnd hopefully, we'll see this stabilize from here on and we start to get back to normal.\nSo Tom will talk to you more about that, but that was what was the biggest driver.\nIn terms of credit, let me go over a few things, temporary deferrals and modified loans under CARES Act -- modification under CARES Act, that total number remains stable at about 3% of the portfolio.\nIt was 71 basis points last quarter, it's down to 67.\nBut if you actually exclude the guaranteed portion of SBA loans, it was 53 basis points.\nCharge-offs declined compared to all of last year.\nI think last year, we were running at about 26 basis point net charge-off rate.\nWe're down to 17 basis points this quarter.\nAnd for the first time since this pandemic hit us, our criticized and classified assets also started to decline.\nAnd as we see more good economic data come through, more importantly, as we start to see cash flow data come through, I expect this number to start declining a little more rapidly into the second and third quarter.\nSo overall, feeling pretty good capital.\nBy the way, needless to say, we're in a very strong capital position.\nCET1 ratio is at 13.2% for holdco and 14.8% for the bank.\nWe did buy back some stock.\nWe bought back about $7.3 million of stock this quarter.\nWe still have a little less than $40 million left in the buyback, and we plan to execute it against a buyback opportunistically.\nIt's a pretty volatile time in the stock market.\nSo we want to use that volatility to our advantage and buy back when they see dips in the stock.\nWe did declare a $0.23 dividend, and currently, we anticipate maintaining that level.\nOur book value per share is now at $32.83.\nTangible book values at $32 even.\nBoth are above the pre-pandemic levels.\nSo strategy stays the same, continuing to add one core relationship at a time, continuing to focus on noninterest DDA.\nI'll give you an example, something that just crossed my screen late last night.\nWe've been looking for this -- we've been calling on this client for a long time, and we're finally able to pry it away from one of the biggest banks in the country.\nIt's a firm -- mid-market firm based in Broward.\nThe relationship is coming over.\nI won't say from which bank, but it comes with $0.5 million loan and $26 million in deposits with a full suite of treasury management products.\nAnd a long-standing company, very successful in the community, and very happy to have them be a client of BankUnited.\nSo I see a deal or two like this every other day, and that's -- that really is driven by what really adds to the franchise value, and we're focused on that.\nWe'll also keep identifying niche markets and segments where we can grow.\nWe're now shifting focus.\nWe haven't hired very many producers over the course of last year through the pandemic, but we're now focused on bringing on more producers and are in discussions with a number of producers in different geographies.\nVery importantly, we'll continue to invest in technology and innovation.\nThis -- actually, I do want to say, this quarter marks the culmination of our two-year journey, the cloud journey, as we call it.\nWe are now officially out of the data center business.\nWe are a fully cloud-enabled bank.\nTook two years to put everything in the cloud and to be partnered with Amazon.\nThey've been great partners.\nAnd in terms of our capabilities, our infrastructure, and the capabilities that cloud provides us, we're in a very different place than we were two years ago when we started down this path.\nAlso, I want to announce that part of this was also the first cloud-native application that we developed, also a very big deal for BankUnited because we never really had any developers.\nWe've never developed anything in terms of products for delivering our deposit solutions.\nBut two years ago, we decided that mobile banking is such a core function that we cannot just outsource it to the same vendor which every other bank our size goes to.\nThat we needed to control this and needed to actually have this in-house.\nWe put a lot of effort into developing it.\nIt will develop, like I said, in the cloud, and we launched this just last weekend, and converted our entire customer base with no issues at all, and I'm very excited about this big investment that we made.\nAlso, let me talk a little bit about 2.0, and specifically 2.0 revenue initiatives.\nAs you know, they have been delayed given the pandemic.\nBut I'm happy to report that we are actually making progress and getting a lot of traction, all the various things that added up to that revenue target, whether it's a commercial card program, whether it's treasury management space.\nAnd you'll start to see some of that -- you already are seeing some of that in our P&L.\nDeposit service charges and fees this quarter were up 17% compared to the first quarter of last year.\nThis is -- a lot of that is coming from the 2.0 initiatives that we've put in place and more to come.\nAlso, the small business initiatives that were also part of 2.0 are now going to pick momentum.\nSmall business, as you can imagine, were distracted very much with PPP 1.0 and then PPP 2.0.\nAs the PPP and everything related to this gets behind us, we're going to start focusing on that and start delivering on those initiatives as well.\nSo overall, feeling pretty good.\nI think it was a pretty solid quarter.\nTom and Leslie are going to walk you in a little more detail on the businesses and also the financials.\nSo let's talk a little bit about the deposit side first.\nAnd obviously, another excellent, excellent quarter for us in NIDDA growth.\nAnd as Raj said, I think what's -- when we look back at this quarter, what's most satisfying is we're kind of building this wall brick by brick.\nAnd when we look at the results that you see in NIDDA, I think the thing that's most gratifying is how broadly it's based across our business lines and also just the number of new relationships that are contributing to this growth, which is where we're seeing the majority of the growth is just coming off of, what we would call, new logos for the quarter were across all business lines and kind of sweet spot type relationships for us that, none are particularly jumbo, the one that Raj mentioned is a little bit larger, but just a broad number of small business, middle market, commercial relationships is really adding to this NIDDA growth.\nSo average noninterest-bearing deposits grew by $338 million for the quarter and by $3.1 billion compared to the first quarter of 2020.\nOn a period-end basis, noninterest DDA grew by $957 million for the quarter, while total deposits grew by $236 million.\nSo we continue to allow more price-sensitive and broker deposits to run off as we've grown the NIDDA base.\nSo significantly, time deposits for the quarter declined by $1 billion.\nSo if you look at total cost of deposits, as Raj mentioned, declined to 33 basis points for the quarter, 27 basis points on a spot basis, down from 36 as of December 31, 2020.\nAnd reductions in cost of deposits continue to be broad-based across all product types and all lines of business.\nWe continue to forecast good growth in NIDDA, a good continuation of the momentum that we've had.\nEvery quarter may not be as strong as this one, but we expect that each quarter to be very good.\nAnd we also expect overall cost of deposits to continue to decline.\nAs Raj mentioned on the loan side, we were down $505 million.\nQ1 is not typically a strong quarter for us.\nWe did have $234 million of growth in the residential portfolio with the EBO Ginnie Mae portion contributing $341 million.\nAs Raj noted, the majority of our decline for the quarter was really attributed to line utilization, which has got hitting historic lows, but we anticipate that will pick up as we start to see the year unfold, the economy improve, people start to use more inventory purchases and other things happening within the portfolio.\nOne interesting sidenote, we looked in -- at our numbers for the quarter and we had a more historic level of line utilization, our commercial loans, our C&I loans would have actually been up.\nIt would have contributed another $800 million of base into the C&I portfolio.\nSo it gives you some kind of a dynamic for what the line utilization numbers look for.\nAs we look forward in the year, we're seeing good growth in pipelines in Q2.\nAs Raj noted, obviously, increased economic activity among our clients.\nSo we're anticipating, as the year develops, that we'll see growth in our residential teams, our small business lending, our commercial banking teams, core middle market teams, mortgage warehouse lending.\nSo we expect the remainder of the year to develop more strongly than we saw in the first quarter.\nJust an update on PPP loans.\nWe booked $265 million worth of PPP loans during the first quarter under the Second Draw Program.\nAnd in numbers of units, it's about 1/3 of what we did in the First Draw Program.\nAt this point, we're not accepting any more second draw PPP loans.\nOn the forgiveness front, we were -- we forgave $138 million in loans during -- that were made during the First Draw Program.\nWe have about $650 million remaining outstanding under the First Draw Program as of March 31.\nSwitching gears a little bit, some additional details around deferrals and CARES Act, modifications, Slide 16 in the supplemental deck also provides more details around this.\nThe levels of loans on deferral or modified basis remained relatively consistent with prior quarter.\nIn commercial, only $35 million of commercial loans.\nWe're still on short-term deferral as of March 31, $621 million of commercial loans have been modified under the CARES Act.\nTogether, these are $656 million or approximately 4% of the total commercial portfolio, which is pretty consistent with the levels since the end of the last quarter.\nNot unexpectedly, the portfolio segment most impacted has been the CRE, hotel book, where $343 million or 55% of the segment has been modified, also consistent with prior quarter end.\nResidential, excluding the Ginnie Mae early buyout portfolio, $91 million of the loans were on short-term deferral, an additional $15 million had been modified under longer-term CARES Act repayment plans as of March 31.\nThis totaled about 2% of the residential portfolio.\nOf $525 million in residential loans that were granted an initial payment deferral, $91 million or 17% are still on deferral, while $434 million or 83% have rolled off.\nOf those that have rolled off, 94% have either paid off or are making their regular payments at this time.\nAs it relates to the CRE portfolio, I wanted to spend a little time as we normally do going into some of the occupancy collection rates and some key data on some of the more impacted segments of the portfolio.\nSo on average, rent collection rates for the quarter, we continue to see good strength in the office market.\nWe saw collection rates of 96%, which were even for both Florida and New York.\nMultifamily loans were at 90% collection rate in New York and 92% collection rate in Florida.\nAnd retail has continued to improve and performed pretty well at 85% in New York and 99% in Florida.\nI think the big news on the hotel front is we're seeing a lot more strength in the hotel market.\nAll of our properties in Florida are open and have been for a considerable period of time.\nTwo of the three properties that we have in New York are open, with the third expected to reopen in June.\nOccupancy for the two hotels that are open in New York ran about 80% for March.\nAnd in Florida, occupancy rates for the entire portfolio, which is a little under 30 hotels in total, averaged 80% in March, with some reporting occupancy rates in the 90% range.\nFor those that have tried to find a hotel in Florida recently, it's not so easy to find any place that's now open in Florida.\nSo we've seen this improve from 46% last quarter, 56% in January, February was stronger, and March was up to the 80% level, and we're seeing forward forecast for most operators that continue to show strength as we get -- as we start to head toward the summer months.\nFrom a franchise perspective in the QSR portfolio, we're seeing the majority of our concepts are open, reporting strong same-store sales, particularly those with good drive-through delivery, pickup models.\nWe still have a couple of concepts that are predominantly indoor dining that are challenged, but I'd say, on a broad basis, the QSR portfolio is performing much better.\nStaffing is a challenge in this market.\nA lot of our QSR operators are reporting difficulty in bringing in staffing right now with stimulus payments and whatnot flowing through the economy.\nSo the labor market is a bit of a challenge.\nBut overall, revenue is strengthening in this segment.\nIn the fitness segment, Planet Fitness.\nWe have two concepts, as you know.\nPlanet Fitness, 100% of the stores are now open with payment systems turned on, retention is averaging 90% in that concept.\nAnd we now have all of our Orange Theory franchises open.\nThere's been some decline in membership, but operators are still expecting a full recovery.\nSome of them are still operating at lower capacity levels due to social distancing, but we're seeing a sizable pickup in the Orange Theory franchises as well.\nSo we're feeling much better about the QSR and franchise portfolio than we felt last quarter or the quarter before, so seeing a lot of strength there.\nSo with that, Leslie, we'll get into a little bit more detail about the quarter now.\nSo as Raj mentioned, net interest income grew this quarter, up about 1.5% from the prior quarter and up 9% from the first quarter of the prior year.\nThe NIM increased to 2.39% this quarter from 2.33% last quarter in spite of elevated levels of liquidity on the balance sheet, so we were pleased to see that.\nThe yield on loans increased to 3.58% this quarter from 3.55% last quarter.\nThe recognition of fees on PPP loans that were forgiven added about six basis points to that yield this quarter compared to three last quarter.\nSo as we pull that out, pretty flat quarter-to-quarter for the yield on loans.\nAnd $6.3 million of that relates to the First Draw Program.\nThe yield on securities declined by nine basis points to 1.73% for the quarter.\nSpreads remain really tight in the bond market, as I'm sure all of you know, and we continue to experience an accelerated level of prepayments on some of the higher-yielding mortgage-backed securities.\nSo those yields do remain under pressure.\nThe total cost of deposits declined by 10 basis points quarter-over-quarter with the cost of interest-bearing deposits declining by 13 basis points.\nWe do expect that to continue to decline given that the spot rate was 27 basis points at quarter end.\nIt's going to be at least somewhat lower than that, so we will see an additional decline this quarter, although maybe not as much as we've seen in the last two quarters.\nThe cost of FHLB borrowings did increase to 2.32% as the borrowings that were paid down were short-term lower rate advances compared to the hedged advances that remain on the balance sheet.\nIn the aggregate, there's about $1.6 billion of hedged advances that are scheduled to mature over the remainder of 2021, with a weighted average rate in excess of 2%.\nAnd we continue to evaluate the economics and whether it makes sense to terminate some of the longer-dated hedges that are out there.\nWe do expect the NIM to continue to increase, we expect it to grow next quarter.\nIt will be helped by PPP forgiveness, but even excluding that, we expect the NIM to continue to grow up -- to go up.\nShifting gears a little bit to talk about CECL and the reserve.\nOverall, the provision for credit losses for the quarter was a recovery of $28 million, compared to a recovery of $1.6 million last quarter, and obviously, a provision of $125 million in the first quarter of 2020, which was the quarter where we really booked our big provision related to the onset of COVID.\nThe negative provision this quarter primarily resulted from an improving economic forecast.\nAnd within the forecast, the improvement in outlook for unemployment was the biggest driver of the reserve release.\nThe reserve declined from 1.08% to 0.95% of loans, and Slides nine through 11 of our deck gives some further details on the allowance.\nMajor drivers of change, the reserve went down $36 million related to the economic forecast, again, primarily the change in unemployment.\nA decrease of $10.1 million due to charge-offs, most of which related to one BFG franchise loan that was having trouble even prior to COVID.\nA decrease of $12.8 million due to changes in the portfolio mix and the net decline in the balance of loans outstanding.\n$6.1 million increase in qualitative reserves.\n$9.6 million increase related to updates of certain assumptions, primarily updated prepayment speeds.\nAn increase of $6.8 million related to loans that were further downgraded to the substandard accruing category.\nSo those are the major components of the move in the reserve for the quarter.\nI do want to point out that the reduction in the reserve for the quarter was primarily related to the pass rated portion of the portfolio.\nThe reserve for pass rated loans declined from $137 million to $93 million, while the reserve for non-pass loans increased from $120 million to $128 million.\nSo as we move forward, our expectation would be if economic trajectory plays out as we think it's going to, we would expect to see some upward risk rating migration, and that should -- that would, in turn, result in some further reductions in the reserve.\nSome of the key economic forecast assumptions that drove the reserve, and I'll remind you that it's really a lot more complicated than this.\nThis is a very high-level look at some of the data points that are in the economic forecast.\nNational unemployment declining to 5% by the end of 2021 and trending down to just over 4% by the end of 2022.\nReal GDP growth of just over 7% by the end of 2021 and 2.3% for '22.\nThe S&P 500 index remaining relatively stable at around 3,700 and Fed funds rates staying at or near zero into 2023.\nLittle bit of detail on risk rating migration, and you can see a breakdown of all of this on Slides 23 through 26 in the deck.\nTotal criticized and classified assets declined by about $75 million this quarter, but we did see some migration into the substandard accruing category from special mention.\nWe do, again, expect to see some positive tailwinds here if the economy continues to improve, as we expect it to, as we move through 2021.\nIn terms of the migration to substandard accrual, the largest categories where we saw that were CRE, hotel, multifamily, New York, and office.\nNonperforming loans did decline this quarter, from $244 million to $234 million.\nJust to quickly wrap up, when I look forward to the rest of 2021, to reiterate Tom's comments, we do expect noninterest DDA growth to continue as well as total deposit growth.\nBut our focus remains on noninterest DDA, and we're more than willing, given our liquidity position, to allow more rate-sensitive and brokered deposits to run off.\nFHLB advances will continue to decline, and securities will probably grow in the low to mid-single digits, depending on our liquidity position.\nThe provision, always the fun one to try to forecast.\nUnder CECL, the provision should, in theory, be related to new loan production, while charge-offs should reduce the reserve.\nIf we do see positive risk rating migration as we currently expect, we'll see some further reserve release related to that.\nNet interest income should be up mid-single digits over 2020, as should noninterest income excluding securities gains which tend to be episodic, and we don't make any attempt to predict those.\nAnd with respect to expenses, I'd say the guidance we gave in January has not changed.\nLeslie, I'll just add to your little color.\nThis is a very hard time to try and predict what will happen.\nWe gave you guidance three months ago, and I look at various aspects of our guidance.\nOn the deposit side, we're way ahead of what we thought we would do, to be very honest.\nThis quarter was much better than what was in our plan.\nOn the loan side, we had also expected that we'll start bringing in -- increasing our line utilization, instead it actually declined.\nNow with the exception of March where it went up 0.5 point, so it sort of went in the right direction a little bit.\nBut December to Jan, Jan to Feb, it was just -- it surprised us because we were seeing economic activity around us, but we were not seeing the line utilization.\nSo, I think the guidance overall -- we still feel pretty good about where the trajectory will be for earnings.\nBut in terms of deposit, I think we will outperform.\nOn the loan side, I think we said low to mid-single digits, we'll probably be in the low single digits based on what we see now.\nAnd margin, we still feel pretty good.\nWe've already delivered a nice expansion in margin, and we'll continue to do that.\nSo overall, I feel fairly good.\nI was in Miami for the first time after 12 months, two weeks ago.\nI spent a few days there and -- just to see the hustle and bustle that is -- that I've been hearing about from everyone for the last several months now.\nBut to actually see it and feel it, I will tell you that if you are planning summer vacations, nobody can go to Europe and people are planning to go to either Hawaii or Florida or other places.\nNow is the time to book your hotels.\nYou are not going to find any hotel rooms if you wait another month.\nThat's how active Miami Beach and Miami generally is.\nSo very, very positive trends that we're seeing.\nSome silly things also happening in Miami Beach, but that just comes with the territory.\nBut let's turn this over and take some questions.\n", "role": "user" }, { "content": "q1 earnings per share $1.06.\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 for the quarter, earnings -- net income came in at $104 million, $1.11 per share compared to $98.8 million or $1.06 per share last quarter.\nThe -- for the full -- for the first six months of the year, this translates to an ROE of 13.2%, ROA of 115 basis points.\nI'm very happy with where things came out on the earnings front.\nNII, net interest income continued to grow despite tons and tons of liquidity on the balance sheet, which I think is a problem with every bank these days.\nOur NII came in at $198 million.\nLast quarter, it was $196 million.\nThis quarter last year, it was $190 million.\nNIM contracted a tiny bit from 2.39%, down at 2.37% mostly because of that elevated level of liquidity that I just mentioned.\nOn the deposit front, again, a very strong quarter.\nDeposit costs came down, the mix improved, the volumes grew.\nSo across the board, no matter how you measure it, the story of the deposit side was again very, very strong.\nSo just quickly getting into the numbers.\nOur cost of deposits dropped from 33 basis points to 25 basis points in the last quarter.\nThat's an eight basis point reduction.\nDDA grew by $869 million.\nAnd most of our growth was DDA again.\nAnd by the way, DDA now stands at 31% of deposits for -- it was 25% just at the end of last year.\nSo for those of you who have followed our story for some time, even as recently as a year or 1.5 years ago, we think of 30% as the profitability scale.\nI'm happy to report we're at 31%.\nBut that doesn't mean that we're not shooting for a higher number.\nAnd I think the bar just has been reset, and we think we can actually get -- improve the funding mix even beyond this 31% that we're at today.\nProvision for credit losses came in at a negative $27.5 million, and Leslie will get into the specifics of how that all evolved.\nOn the credit front, we again got some progress.\nCredit -- criticized classified assets dropped by $541 million.\nThat's a 21% drop.\nLoans that are either temporarily, deferred or modified under the CARES Act also declined.\nThey were $762 million last quarter, now they're down to $497 million.\nOur NPL ratio, however, went up a little bit from 1% of loans last quarter to 1.28%.\nIf you exclude the guaranteed portion of SBA loans, that number is 1.07%.\nThis increase is attributable to -- largely attributable to basically one credit.\nIt's a large credit, $69 million.\nIt's a relationship in the C&I business here in Florida.\nIt's a relationship that we had for almost a decade.\nAnd for the large part of that decade, the first seven years or so, it was -- we were the primary bank all in the last two or three years that we become a participant in a shared national credit because the company got so large that we couldn't really support them from their credit needs.\nSo one of the large banks in the country took over the primary, and we've been a participant, but it's a company that we've known for a decade.\nSome accounting irregularities came up over the last few weeks in the books of this business, which is why we took the stand of moving this to a nonperforming loan and taking a large reserve against it.\nA $30 million reserve against this loan.\nCapital -- by the way, net charge -- let's just move to financial then on the credit side.\nNet charge-off ratio was 24 basis points compared to 26 basis points for the full year of 2020.\nCapital, as you know, we have tons of capital.\nWe've announced a share buyback back in February, which is still outstanding by $37.7 million, still outstanding at that.\nWe are adding to that.\nAnd yesterday, the Board met and approved another $150 million on top of what was already left in the last authorization.\nSo I think over the last couple of earnings calls, I've mentioned that the stand we've taken with buybacks is that we will be more opportunistic rather than just steady buy a little bit every day.\nAnd the reason for that is we expect this to be a very volatile market.\nEven a little bit of bad news or good news can really move stock prices a lot, which is what we're seeing right now.\nSo we're going to use that to our advantage and be opportunistic.\nIt's -- with the stock trading, I guess it's a fairly easy decision for us to do.\nCET1, one capital, is 13.5% holdco; 15.1% for the bank.\nOur book value, again, continues to grow.\nBook value was $33.91 now.\nSo very happy about that continued progress upwards.\nThis quarter, after I think the longest hiatus we've ever had, this quarter, we are back in the hiring business and brought in producers both on the left and right side of the balance sheet across business -- the various business lines.\nWe have not done that for a full year, which, like I said, it was the longest we've ever gone without bringing in new producers.\nWe even launched a new business line.\nWe were always in this business, the HOA deposit business.\nWe've always been in this business but not organized as a separate business line, but we did that.\nWe see a big opportunity.\nWe've made a couple of hires again on the production side.\nAnd those hires will be starting soon.\nSo very excited about what that business will do for us over the course of the next three or four years.\nThe other thing is this quarter -- last quarter, excluding PPP loans, our loan growth was negative $500 million, round number.\nThis quarter, we still have a negative number, but it's small compared to how much decline we had in loans last quarter.\nAnd as I look forward to where the pipeline is, I'm actually very optimistic about what third quarter and fourth quarter would bring to us, especially in the commercial side, especially in the C&I business.\nLess on the CRE front where the pipelines are also getting better, but C&I pipelines are much better, and Tom will get into a little bit details of this a little more.\nBut as we see into the second half of the year, the best we can tell is we will most likely make up the reduction that we've had in loans, again, excluding PPP loans because that's just a different animal.\nSo the economy is healing both in New York and Florida.\nFlorida is further ahead than New York, like I've said in the past, but even New York is showing very good signs.\nWe are obviously watching how the healthcare numbers evolve.\nThat can change at any time, so we do keep an eye on that very closely.\nBut overall, it's been a very positive picture.\nWe have opened up and brought our employees back in a capsulated way.\nWe're not completely back into the office.\nBut by Labor Day, goal is to get to the new normal where a number of people will work in a hybrid fashion, others will work remote and some -- a few will work permanently five days a week at the office.\nSo all of those what we call RTO, or return to office, is being played out as we speak.\nAnd we expect that by Labor Day, we will be in the new normal.\nAgain, the caveat, obviously, is the healthcare crisis that we're watching.\nOne more thing, which Leslie just pointed out to me.\nThe other change on strategy that is very recent over the last three months or so is for the first time in the history of the company, we are beginning to think about geographies outside of just New York and Florida.\nIn the past, we've said New York and Florida is about as much of the market as we want because it's just hard just flying back and forth between these two markets.\nBut if the pandemic has taught us anything is that you don't have to fly back and forth all the time to cover two markets.\nIf that's the case, then there are other markets that will work well with our business model.\nGenerally, business dense urban markets where we are beginning to look and have discussions with to see if we want to expand into these markets.\nThere's nothing to announce.\nThese are in very early phases, but I wanted to share at least our thinking about geographic expansion much before it actually happens.\nSo when there is something more comprehensive, we'll come talk to you about it, but we are beginning to at least think in those terms that it's not just Miami and Manhattan, but other markets might also get added to this franchise over time.\nSo let's talk a little bit about the deposit side.\nFirst, overall average noninterest-bearing deposits grew by $673 million for the quarter or by $2.9 billion compared to the second quarter of 2020.\nOn a period-end basis, noninterest-bearing DDA, as Raj said, grew by $869 million for the quarter while total deposits grew by $877 million.\nNIDDA has now increased 26% on a year-to-date basis.\nSo what's really good about that is it's another quarter where we've seen really strong growth, really, in all of our business lines.\nIt's a broad-based support of the continuance of NIDDA new relationships.\nMost of the growth was driven by new logos coming into the organization, new treasury management relationships, which is showing up strongly in our fee income lines, which were up 31% in terms of service charges.\nSo we're seeing good support in all of these areas.\nTime deposits declined by $806 million.\nMoney market and interest-bearing checking grew by a total of $815 million.\nSo we're seeing some movement from time deposits to our money market product.\nAs we've lowered rates on the CD side, retention has been good.\nAnd actually, as I said, a lot of this money has been moving to the money market accounts.\nOn the loan side, I'll spend a little bit of time on this and follow up on some of Raj's comments.\nWhile we did have a decline, excluding the PPP loan forgiveness by $56 million, in the quarter, it began to feel like a more normalized quarter.\nResidential growth was $494 million for the quarter, including both the residential and the EBO side.\nAnd I think most importantly for us, as an indicator, C&I loans were up by $186 million for the quarter, which is really, really a good sign for us.\nIt's one of our major business lines.\nIt's the first time that this line has grown in the -- since the onset of the pandemic.\nSo that was really good to see.\nAlso even better or just as good as the $186 million, what was nice is there was a good blend of new relationships into the bank as well as existing clients increasing credit facilities during the quarter.\nSo utilization -- line utilization has been a challenge for the industry.\nIt's been a challenge for us.\nWe're at relatively low historic rates from a utilization perspective.\nSo it was nice to see clients start to move back to a more normalized basis, see transactions being done in the quarter, see M&A activity being done in the quarter.\nSo the blend was good, and we also -- within the C&I business, if we looked at the business, it was a strong back end of the quarter.\nJune was particularly strong and we saw transactions in a number of different industries.\nAt one point, I looked at the pipeline for closing in June, and we had something like 18 deals and all 18 were in different industries.\nSo that was nice to see from a diversity perspective.\nSo given the pipeline activity that we're seeing now, we expect to see growth in the second half of the year.\nWe will see a better commercial real estate environment.\nWe had $225 million of CRE runoff in the multifamily business.\nThat will pretty much taper off at this point.\nAs you can see from some of the supplemental information, our multifamily New York portfolio has now been kind of reduced to what I would call a pretty stabilized level.\nThis has been kind of a 5-year process of this reduction.\nAnd I think now we're kind of at a stabilized level.\nThe other thing that was good, as Raj mentioned, we've made a number of key hires.\nThe HOA segment on the deposit side, we brought in producers on both sides of the balance sheet.\nWe've been a strong player in this market, and I think this is an opportunity for us to really significantly grow this business over the next few years.\nWe also added capability to our healthcare practice team, which is important to us, and we hired several commercial producers in kind of our -- one of our core Florida C&I-type team.\nSo the cadence in the field, it feels like it's starting to return to kind of a normalized basis for us from a business, business production, calling perspective and whatnot.\nSo a little update on the PPP.\n$438 million of First Draw PPP loans were forgiven in Q2.\nAt June 30, there was a total of $209 million of PPP loans outstanding under the First Draw program and $283 million outstanding.\nUnder the Second Draw program, forgiveness applications are in process for the majority of the First Draw loan programs, and slide eight in the deck provides more detail on this.\nA quick update on deferrals and CARE modifications.\nslide 17 in the supplemental deck also provide some data on this.\nOn the commercial side, only $3 million of commercial loans are now in short-term deferral.\nAs of June 30, $436 million of commercial loans remained on modified terms under the CARES Act.\nThe largest group of loans still under the CARES Act is in the hotel portfolio.\nAlthough the total CARES Act modified loans in that portfolio declined from $343 million at March 31 to $225 million at June 30.\nWe've seen -- particularly in Florida where about 76% of our hotel portfolio is, we've seen a pretty strong rebound in tourism in Florida.\nAny of us who've been trying to book hotel rooms in Florida recently have found it pretty difficult to do at high rates.\nAnd we're seeing a strong rebound in occupancy, particularly travel-related beachfront property occupancy, within the overall Florida book.\nSo that led to the significant decline that we had there, and we expect to continue to see improvement in that.\n$218 million in commercial loans rolled off of deferral or modification this quarter.\n100% of these loans are either paid off or resumed regular payments.\nOn the residential side, excluding the Ginnie Mae early buyout portfolio, $59 million of the loans were on short-term deferral or had been modified under a longer-term CARES Act repayment plan at June 30.\nOf $532 million in residential loans that were granted an initial payment deferral, $493 million or 93% have rolled off.\nOf those that have rolled off, 93% have either paid off or making regular payments.\nJust some selected data on our CRE portfolio.\nRent collections on commercial properties remained very strong.\nWhen we looked at larger clients in selected data that we see in the office portfolio, it's -- rent collections have run 98%, actually.\nBoth in Florida and New York, it did do strong performance in multifamily, 96% in Florida, 91% in New York.\nRetail collections were 95% in Florida, 85% in New York, and we continue to see some improvement in the New York retail market.\nAs I mentioned a little bit earlier, the Florida hotel market is particularly back stronger.\nAll Florida and all New York properties are now open.\nOccupancy averaging 75% for the second quarter of 2021, excluding one New York hotel that did not open until the end of the second quarter.\nSo we're seeing a good overall rebound in that market.\nSo as Raj mentioned, NIM was down slightly this quarter to 2.37% from 2.39% in large part due to even stronger-than-anticipated headwinds from high levels of liquidity.\nCash was elevated and liquidity was deployed into the bond portfolio, which, while accretive to net interest income is not accretive to the margin.\nThe yield on loans this quarter increased to 3.59% from 3.58% last quarter.\nRecognition of fees on PPP loans that were forgiven added 11 basis points to that loan yield this quarter compared to six basis points last quarter.\nSo without the impact of PPP origination fees, the yield on loans would have declined by four basis points for the quarter just due to the turnover of the portfolio into lower-yielding assets in this environment.\nWe have $9.8 million of deferred fees on PPP loans that remain to be recognized.\n$1.1 million of this relates to the First Draw program, and I would expect most of that to come into income in the third quarter.\nAnd $8.7 million relates to the Second Draw program, and I really wouldn't expect to see much of any of that in the third quarter.\nThe yield on securities declined from 1.73% to 1.56%.\nThat was somewhat more than we had anticipated.\nRetrospective method accounting adjustments related to faster prepayments on mortgage-backed securities actually accounted for 10 basis points of that quarterly decline and the rest of the decline, obviously, just attributable to turnover of the portfolio in a lower rate environment.\nAs Raj said, the cost of -- total cost of deposits declined by eight basis points quarter-over-quarter with the cost of interest-bearing deposits declining by 10 basis points.\nWith respect to the FHLB advances, there's still $1.1 billion of cash flow hedges against FHLB advances that are scheduled to mature over the remainder of 2021 with a weighted average rate of 2.4%.\nWe estimate that -- we talked about the impact on the NIM with higher levels of liquidity.\nWe estimate that if we simply -- if we normalize elevated cash balances, that accounts for about eight basis points.\nSo even if cash balances have been normalized, the NIM would have been eight basis points higher.\nAnd we estimate that if we also normalize the level of securities, we would have seen 14 basis points.\nSo that impact on NIM of high levels of liquidity is somewhere between eight and 14 basis points depending on how you think about it.\nAs Raj said, we currently expect the cost of deposits to continue to decline next quarter, and we currently expect the NIM to be stable to slightly higher.\nHowever, liquidity may continue to be a headwind there.\nMoving on to the provision in the allowance.\nOverall, the provision for credit losses this quarter was a recovery of $27.5 million.\nslide s 10 through 12 of our deck provides some further details on the allowance for credit losses.\nThe reserve declined from 95 basis points at March 31 to 77 basis points at June 30.\nBiggest drivers of that change, $19.4 million of the decrease related to the economic forecast.\nThe largest impacts were improvement in the unemployment outlook and improving HPI in commercial property forecast.\nThe reserve decreased by $17.6 million due to net charge-offs and to $16.2 million due to portfolio changes, that bucket includes things like the net decrease in loans; shift into portfolio segments with lower expected loss rates, such as residential; as well as the impact of just loans moving in and out of the portfolio; and improving borrower financial statement spreads.\n$12.8 million decrease in the amount of qualitative overlays that had related to some uncertainties around the COVID pandemic that we -- that seem to be resolving themselves and an increase of $20.7 million related to risk rating migration, most of that was the $27.2 million increase in the reserve related to the $169 million commercial relationship that Raj spoke about bringing that reserve up to $30 million.\nThe largest component of the reduction in the reserve was the CRE portfolio because that model is particularly sensitive to unemployment and property forecast.\nSimilarly, we saw a reduction in the residential allowance, again, related to improving unemployment and HPI.\nThe C&I reserve actually increased this quarter on a loss rate basis, and that was again due to the large reserve on the one loan.\nTotal criticized and classified loans declined by $541 million; special mention, down by $282 million; and substandard accruing, down by $299 million; substandard non-accruing loans increased by $40 million, again, back to that one commercial loan that we've been talking about.\nA couple of notes on other income and expense.\nWith respect to operating expenses, we saw a decline in comp this quarter.\nAs expected, Q1 is always somewhat elevated.\nDeposit insurance expense came down correlating to a reduction in criticized and classified assets.\nWe continue to see increases in deposit service charges and fees stemming from our treasury management solutions initiatives that we initiated in conjunction with BankUnited 2.0.\nOne more thing I just want to mention real quick.\nWith respect to the tax rate, I would expect it to remain around 26%.\nConsistent with the uncertain tax positions disclosure we made in our last 10-K, we have very recently entered into discussions with the state of Florida regarding several outstanding tax matters.\nThere's a possibility that these discussions could result in recognition of a benefit somewhere in the next few quarters.\nThese discussions have just recently gotten underway.\nSo it's too soon for me to be much more specific than that.\nWhile Leslie was talking, I just looked up on my deposit report, which I get every day.\nAnd so as of last night, our deposit cost was at 20 basis points.\nSo I feel pretty comfortable in saying that we will be in the teens this quarter, might be in the teens as early as next week.\nSo I know in the past, I've said that we think we will end the year on a spot basis in the teens.\nI'm happy to say that we're about five months ahead of schedule.\nAnd by the way, deposits continue to grow.\nTruth be told, while I'm very excited about deposit growth that has come in, liquidity is a problem.\nSo it's -- this would have been an even better report if we had said to you that we actually kept the model as flat.\nSo we're trying to -- and we are succeeding in pushing out anything that we think is quite sensitive and will hurt us in the future when rates rise.\nSo we continue to increase the quality of the book because some day rates will rise.\nSo it is -- if I look back six months ago when we thought the year would play itself out, overall, on the deposit side, we're much further ahead of what we thought we could do this year.\nOn the loan front, we're further behind than what we thought we would do.\nBut I think about standing here over the next six months, I still see a lot of good news on the deposit front because the pipeline has still good money still coming in and cost of funds are still declining further than we ever thought it would.\nAnd on the loan side, pipelines are now beginning to look normal.\nSo also, a point that Tom made that I just want to repeat, it may have gotten lost.\nMultifamily in New York has been the big headwind for us.\nThe runoff from that portfolio has been a big headwind for us because exactly five years ago is when we changed strategy and deemphasized multifamily.\nThat 5-year anniversary is literally around maybe I think this month.\nSo as that portfolio matures and those payoffs and sort of natural runoff gets behind us, as I look forward, we don't see the same velocity of payoffs happening because that portfolio is kind of getting to a normalized place.\nSo that was also, from a payoff perspective, a good story.\nAnd I look forward over the next couple of quarters compared to the last couple over the last -- last couple of quarters over the last five years.\nSo I just wanted to make that point.\n", "role": "user" }, { "content": "bankunited q2 earnings per share $1.11.\nq2 earnings per share $1.11.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: I'll start by talking a little bit about the environment, the economy then we'll get into our numbers.\nSince we last talked to you three months ago really three big things have happened in terms of reducing uncertainty and reduced uncertainty is a good thing, always a good thing.\nSo the first and foremost and probably the biggest news of last year was the vaccine, which came out in November and is now being administered.\nObviously, we had the election uncertainty last time, we're past that now.\nWe also had the stimulus, which compared to the other two news is small news but nevertheless positive news.\nWe weren't expecting a stimulus to get done until the new administration takes over.\nBut I'm glad it was passed a few days -- a few weeks ago.\nSo with that as I look through 2021 it feels like a year with a very, very strong potential in the second half of the year possibly starting as early as second quarter.\nBut I do see a slow first quarter as all this good news is great but it actually has to get converted into reality.\nThe biggest risk obviously still remains vaccine distribution and to some extent a new variant of coronavirus.\nThere is still some uncertainty around it, but a hell of a lot less than this time 90 days ago.\nSo we're feeling very good as we put together our budget for the year.\nWe basically took assumptions that first quarter is always a slow quarter for us, but this year will be slow as well for all the reasons I just stated.\nBut then pipeline start to build up and we started executing on a growth strategy somewhere in the second quarter, but really bringing it in, in the second half of the year.\nQuickly looking back to this quarter, I'm very happy with the results where we announced $0.89 per share or $85.7 million in earnings.\nThat compares to $0.70 last quarter.\nAnd if you compare to the fourth quarter of 2019, which feels like a 100 years ago, it was $0.91.\nSo not bad for what we've gone through this year to come out just very close to where we were fourth quarter of 2019 from an earnings per share perspective.\nSorry, NII was $193 million and change, which was $6 million more than our last quarter, about $8 million more than fourth quarter of 2019.\nPPNR was down by $10 million compared to the last quarter, but showed a little increase compared to the fourth quarter of a prior year.\nLeslie will walk you through this, but there are some unique items in this in the expense category mostly having to do with compensation.\nWe had reduced our variable compensation accrual quite dramatically in the second and third quarter.\nAnd we've adjusted that back up, not all the way back up, variable competition will still be much lower than in previous years, but just not at the rate as we were accruing in the second and third quarter.\nThat's one part of that adjustment.\nThere's some -- we made a change in policy to give rollover pay time off due to the circumstances wherein to our employees that costs a couple of million bucks and then there's an accounting thing, which Leslie will walk you through -- smart enough to walk you through that.\nThe big story obviously continues to be deposit generation as well as deposit costs.\nWe had another solid quarter.\nTotal cost of deposits declined by 14 basis points.\nWe were at 57 basis points last quarter.\nThis quarter we ended up at 43 basis points.\nAnd if you look at our stock cost of funds at December 31, we were at 36 basis points.\nSo in other words we're starting this quarter already at 36 basis points and working our way down from there.\nSo I feel pretty good that this quarter will be another very strong quarter in terms of reducing cost of funds.\nI think we'll end up in the low 30s and on a spot basis I feel pretty confident that we will end up with a two handle.\nSo that's sort -- the one side but also our average DDA -- non-interest DDA grew by $966 million, which is again very, very strong.\nI will repeat what I've always said.\nOne quarter doesn't make anything.\nYou should always look at four quarter average or four quarter -- or last 12 month numbers to really get a feel for how the business is doing.\nBut no matter how you look at it this last four quarters or the last quarter has just been a very, very strong performance in the deposit side.\nOur non-interest DDA now stands by the way at over 25%.\nAnd I think a year ago we were at 18%.\nStill more work to be done here.\nWe are expecting this trend to continue into next year and for us to slowly work our way toward 30% DDA.\nAs we had predicted, risk rating migration has slowed quite significantly.\nI think for the first nine months of 2020 there was downward rating migration on $2.1 billion in loans.\nThis quarter it was $169 million.\nProvisioning came down very, very materially.\nIn fact, we have a net recovery of a small number of $1.6 million.\nAlso we had reported back in the summer, $3.6 billion in loans that were on deferral, if you remember.\nThat number is now down to $207 million or about 1% of total loans.\nWe do have $587 million in loans that were modified under the CARES Act.\nAs you know, under the CARES Act, we don't -- these don't show up as TDRs.\nBut nevertheless these modifications by the way are mostly IL modifications or 9 months to 12 months.\nA lot of these modifications are in the CRE, the hospitality portfolio, the hotel portfolio.\nAnd we believe that most borrowers who are going to come to us for temporary relief or deferral have been identified at this point.\nNPLs ticked up a little bit to $244 million, which is about 1.02% of loans but excluding the government guarantee sort of SBA loans that are in this bucket if you take that out, it's about 80 basis points.\nIn our C&I sub-segment, actually NPLs declined.\nThe net charge-off rate was stable at 26 basis points for the year.\nLet's talk a little bit about NIM.\nNIM was 2.33% for the quarter, I think last quarter was 2.32%, so 1 basis point improvement.\nTotal loans grew by $87 million and deposits grew $899 million total of which $219 million was non-interest DDA.\nThese are spot numbers.\nWhat I gave you earlier was average DDA.\nBook value is now up at $32.05, which is higher than what it was at this time last year, it was $31.33.\nCapital position is strong.\nThe board met yesterday and reinstated our share buyback program.\nIf you remember when we started we still had about $45 million left.\nSo, that hardly has been unfrozen.\nAnd then, the board wants us to get to this and then we'll meet again to talk about additional repurchases.\nCapital is -- CET1 is at 12.6% at holdco, it's 13.9% at the bank, and we, of course, declared our usual $0.23 per share dividend.\nStrategy for return to work; let me talk a little bit about this and going forward, not much has changed in terms of our positioning for return to what we still are working remotely and we expect to do that for at least the next two or three months and then make a decision beyond that at that time.\nThere have been multiple other cases in the company as you would expect in this quarter than in previous quarters, but none that are serious enough to have impacted any of our operations.\nThe strategy going forward again, we're waiting very anxiously for economic activity to pick up and for us to start participating in the next business cycle, which as we speak at the beginning right about now.\nThe focus will stay the same, which is to build a relationship-based commercial bank with a focus on small and middle market businesses, stay focused on building core business through non-interest DDA, identifying niche markets that the big guys don't pay much attention to, investing in technology and innovation and not just in branches and locations.\nThe game has really become about technology and solving customer pain points through innovation.\nAlso we haven't lost sight of all the initiatives we had in 2.0.\nThat was not just an exercise in time that you do and then forget about.\nIt really was about changing the culture and we will keep pushing forward on that front as well.\nWe did launch a new initiative earlier last year.\nIt's called iCARE, which stands for Inclusive Community of Advocacy Respect and Equality.\nIt is something that -- have been in the works since summer of last year, when we really announced it inside the company about two, two and a half months ago and gotten a very positive feedback.\nIt really is our effort as an organization to push and build a culture that celebrates and intentionally promotes diversity within the bank.\nThis is not just words.\nThis is, we're putting our money where our mouth is and taking on initiatives.\nWe think if we can do our bit and move things in the right direction by an inch and everyone does that, it will make a big difference in society.\nSo we're very excited about this.\nOur employees are very excited about this and more to come on this in the future.\nLet me see here.\nLet me turn this over to Tom.\nAnd he will walk you through a little more on the business side before Leslie gets into the numbers.\nSo let me start with deposits and a little bit more detail on the deposit book.\nAs Raj mentioned, total deposits grew by $899 million for the quarter and non-interest DDA grew by $219 million for the quarter.\nSo the deposit mix continues to improve.\nWe allowed higher cost deposits to run off this quarter, which we continued to do for the last few quarters as time deposits declined by $1.1 billion for the quarter.\nA little bit more detail on cost of funds.\nSo the total cost of funds plus cost of deposits declined to 43 basis points this quarter.\nOn a spot basis, the APY on total deposits was 36 basis points at December 31, which was down from a spot of 49 basis points at September 30, when compared to last year at December 31 it was 142 basis points.\nSo they continued progress there.\nThe spot rate on interest bearing deposits was 48 basis points as of December 31 compared with 65 basis points at September 30 and 171 basis points a year ago.\nSo we're seeing reductions in cost of deposits across all lines of business across all products that continues to be a very broad-based trend.\nAs we think about December 31, 2020, we had $1 billion of CDs in the book at an average rate of 1.61% that had not yet repriced since the last Fed cut in March of 2020.\nSo in the first quarter of this year, we have a significant amount of that just under $800 million that will reprice in this quarter.\nAdditionally, some CDs that matured and repriced early in the cycle will also reprice down again at their next maturity date.\nSo there's a very significant difference between what these will reprice at our current rates or running about 25 basis points.\nSo we right now continue to see good healthy pipelines and opportunities for core deposit growth across all business lines.\nIt's always a little bit more difficult to size deposit pipelines and timing of treasury management relationships coming onboard, but we continue to expect growth in non-interest DDAs at the levels that we're seeing now.\nIt's likely we'll see more time deposits run off at the same time as the mix of the overall book will continue to improve.\nWe are seeing some of the maturing CDs move into money market category as well, but obviously at significantly lower rates.\nSwitching to the loan side, as Raj mentioned in aggregate, total loans grew by $87 million in the fourth quarter and operating leases declined by $13 million.\nJust a little bit more detail on some of the segments, the residential portfolio grew by $408 million in the fourth quarter, of that $330 million was in the Ginnie Mae EBO segment.\nMortgage warehouse continued to perform well.\nTotal commitments grew by $90.5 million for the quarter and we ended the year at a little over $2.1 billion in mortgage warehouse commitments so the entire quarter and year was obviously very strong in the mortgage warehousing area.\nIn the aggregate, commercial real estate loans declined by $89 million for the quarter, multi-family declined by $171 million of which $151 million was in the New York market.\nSo beyond that, we had overall expansion in other segments of the real estate business, obviously.\nIf we look at loans and operating leases in aggregated BFG, including both franchise and equipment, we're down this year by -- down for the quarter by $124 million, given the COVID impact on the BFG portfolio in particular especially the franchise.\nWe've been focusing our efforts over the last couple of quarters really on portfolio management and exposure reduction versus new production.\nSo if we look into 2021 a bit and kind of break down sort of what we see happening in the different business lines.\nWe expect to see continued strong growth in the Ginnie Mae, EBO, and mortgage warehousing businesses.\nWe expect to see the C&I business start to return to a more normalized growth mode as the economy picks up and the vaccines and so forth are distributed.\nWe're seeing that as a high-single-digit growth for 2021 predominantly in the back end of the year.\nWe're forecasting a low-single-digit decline in CRE for 2021.\nWe continue to have some concerns about valuations in certain segments of the portfolio.\nClearly the hotel and retail segments will be challenged for a good portion of this year.\nSmall business lending is an area we expect to see good growth in 2021.\nWe've invested a lot of our technology and time and expanding small business area.\nAnd in the franchise area, we expect to see that continue to run off probably in the 20% kind of range in 2021 as we continue to work through that.\nPinnacle is expected to decline slightly mid-single digits but that may turn around if there are changes in corporate tax rates with the competitive landscape right now from an interest perspective.\nSwitching a little bit to the -- give you an update on PPP, I think the overall PPP process is going well.\nWe're in the forgiveness stage of -- on 3,500 loans that we originally made in round one to PPP, that's going very smoothly.\nWe probably have about 700 loans so far that have been forgiven and we expect that to continue in the first quarter of 2021.\nAnd we're participating in the Second Draw program to eligible businesses who were given First Draw PPP loans that just recently opened and we'll be open for clients in that phase.\nWe're expecting maybe a 50% to 60% Second Draw request from clients that we had in the First Draw.\nSo overall, I think PPP is going well.\nSome additional comments around loans that we've granted deferrals and I'd refer you to slide 16 in the supplemental deck for more detail around this as well.\nSo starting commercial, only $63 million of commercial loans were still under short term deferral at December 31.\n$575 million of commercial loans had been modified under the CARES Act.\nSo taken together this was $638 million or approximately 4% of the total commercial portfolio as of December 31.\nNot unexpectedly the portfolio segment most impacted has been the CRE Hotel segment, where $343 million or 55% of the segment has been modified as of December 31.\nI would remind you that the majority of our hotel exposure is in Florida.\nThe majority is in leisure properties.\nAnd so those are the segments that we're expecting to see rebound a bit more.\nAnd over the last few months, we've seen occupancy tick up to much better levels than we had seen a few months previous to that.\nAnd so we see in that segment more travel and leisure coming up and we also see some surveys that we've read recently about companies returning more back to the business travel segment as well.\nOur hotel book isn't really a business travel segment, but overall, we see the travel markets improving as we get into further deeper into 2021.\nOn the franchise side, 8% or $46 million of the franchise portfolio was on short-term deferral or had been modified as of December the 31 compared to $76 million or 12% that were on short-term deferrals as of September 30 and 74% that were granted initial 90-day payment deferrals.\n$48 million or 67% of our cruise line exposure has been modified under the CARES Act of December 31.\nAlmost 80% of the total commercial deferrals and modifications and almost 60% of the total loans risk rated substandard or doubtful are from portfolio segments that we had initially identified as -- meeting of heightened monitoring due to potential impacts from the pandemic.\nSo it continues to be those same segments that we're seeing all of this activity and we don't at this point see really any level of difficulties coming from other segments than the ones that we had at first identified.\nOn the residential side, excluding the Ginnie Mae early buyout portfolio, $144 million of loans are on short-term deferral, an additional $12 million had been modified under a longer-term CARES Act repayment plan at December 31.\nThis totaled about 2% of the residential portfolio.\nOf the $525 million in residential loans that were granted at initial payment deferral, $144 million or 27% are still on deferral, while $381 million or 73% of those loans have now rolled off.\nOf those that have rolled off, $362 million or 95% are now making regular payments while only 5% or $19 million have not resumed a regular payment program.\nJust as a reminder, when we refer to loans modified under the CARES Act we're referring to loans that have been excluded from modifications other than short-term deferrals and these are loans that if not for the CARES Act would likely to be classified as TDRs.\nAs Raj said most of these have taken the form of 9 to 12 months interest only deferrals.\nWithin the CRE portfolio we're still seeing overall good rent collections in the office market.\nDepending upon the geography we're seeing 90% or so in the New York market, 97% in Florida.\nSo we think the office collection rate is still running very well.\nMulti-family collections are running 90% in New York and about 96% in Florida and for our larger retail loans we're seeing -- sort of low 90% rates in the retail space.\nLittle bit more on what I mentioned earlier on hotel occupancy in the Hospitality segment.\nAll of our properties in Florida are now open.\nAnd two of the three properties that we have in New York are open.\nIn Florida, we're continuing to see improvement in occupancy.\nWe saw about a 46% average occupancy rate for the quarter.\nDecember is obviously a stronger travel month in Florida and we're coming into the better part of the season.\nIn December, we saw occupancy rates in some areas as high as the 60% range.\nBut generally we saw upper 40s to low 50s.\nSo the Hotel segment is gradually showing some improvement there.\nA little bit more detail about what we're seeing in the franchise space and in the fitness space.\nSo as we've said before when we look at concepts where there's significant drive through delivery capability those tend to be doing well.\nThings like pizza, chicken other more popular QSR concepts are doing very well.\nMany are posting now double-digit same-store sales increases.\nIn-dining concepts are obviously still struggling a bit and that's where we see some softness.\nCertain segments are a little bit divided depending upon whether those concepts in certain locations have delivery type economic models or whether they're in malls or things like that.\nThose are a little bit up and down.\nBut overall we're seeing improvement within the franchise area.\nFitness has taken some steps forward, since our last call.\nAt this point all of our stores are open with the exception of those that are in California, particularly those around the Los Angeles area.\nSo basically 90% of our stores are open at this point.\nThey're not all operating in a 100% level, but this is the highest rate of openings that we have seen since the pandemic started.\nSo with the exception of just California, at this point of 280 stores that we have 90% of them are open.\nSo that gives you I think a good sense of what we're seeing in the restaurant and the fitness area.\nSo I'll start with everybody's favorite subject, CECL and the reserve.\nOverall the provision for credit losses for the quarter was a net credit or recovery of $1.6 million compared to a provision of $29.2 million last quarter.\nThat $1.6 million consisted of a $1.2 million provision related to funded loans and a recovery of $2.9 million related to unfunded commitments.\nThe reserve, the ACL declined from 1.15% to 1.08% of loans this quarter primarily because of charge-off, which is exactly what we would expect to happen under CECL, less charge-offs are taken the reserve would come down.\nSlide 9 through 11 of the supplemental deck provides some details on changes in the reserve and the composition of the provision and the allowance.\nCharge-offs totaled $18.8 million for the quarter, which reduced the reserve.\n$13.8 million of this related to the writedown to market of some loans that we sold during the quarter or that were moved to held for sale right at quarter end and those were sold in January.\nA $34.1 million and all of the rest of the stuff that ran through the provision, the $34.1 million decrease in the reserve and provision related to the improvement in the economic forecast.\nOffsetting that was a $32.8 million increase related to increases in some specific reserves and that risk rating migration.\nWe had an $11.4 million reduction in the amount of qualitative overlays.\nThis is exactly what we would expect.\nWe expect that qualitative overlay to come down as more facts are known about individual borrowers and more that gets captured in the quantitative modeling.\nAnd then we also had an increase of $15.2 million related to more conservative modeling assumptions that we've made around behavior of certain residential borrowers that had been on payment deferral so all of that going in opposite directions kind of netted down to that provision of basically zero for the quarter.\nThe decrease in the reserve percentage also reflects the fact that Ginnie Mae EBO mortgages are a larger component of total loans and those carry basically no reserve.\nSome of the key economic forecast assumptions and I'll remind you this is a really high level look.\nThe models are really -- processing literally hundreds if not thousands of regional and other economic data points.\nBut our forecast is for national unemployment at about 6.7% for the first quarter of '21, remaining stable through 2021 and then trending down to 5.4% by the end of 2022.\nReal GDP growth reaching 4.1% in 2021 and 4.7% by the end of 2022 and S&P 500 Index remain relatively stable around 3,500 and stabilizing Fed funds rate staying at or near zero into 2023.\nThe franchise finance portfolio continues to carry the highest reserve level at 6.6%, followed by CRE at 1.5% and C&I at 1.3%.\nThe reserve on the residential portfolio remained relatively stable quarter-over-quarter.\nReductions resulting from the improved economic forecast were offset by changes in modeling assumptions.\nAs to risk rating migration on slides 23 through 26 in the deck, we have some detail around this not surprisingly as we continue to move through the cycle and get more detailed information about borrowers.\nWe did see some additional downward migration this quarter although as Raj pointed out the pace of this has slowed considerably as we would expect and we hope to see some positive tailwinds as the economy continues to improve as we move through 2021 as we're expecting it to.\nIn terms of migration to substandard accrual, the largest categories were in CRE and that would be in the hotel, multi-family New York and retail segments and we downgraded some of the cruise line credits this quarter.\nOverall, in franchise the level of criticized and classified assets actually declined this quarter.\nBut we did see some fitness concepts move from special mention to substandard.\nNon-performing loans increased by about $44 million this quarter, the largest increases being in multi-family.\nResidential, as we had some loans come off of deferral and failed to resume a regular payment schedule and a little bit of franchise finance in the fitness segment.\nAs expected, we continue to see recovery in the fair value mark on the investment portfolio this quarter.\nThe portfolio is now in a net unrealized gain position of $85.6 million and we expect no credit losses related to any of the securities in that portfolio.\nConsistent with the guidance we provided last quarter, the NIM increased by 1 basis point this quarter to 2.33%.\nThe yield on earning assets declined by 12 basis points and this was -- there's still pressure on asset yields, but this was a much lower -- a smaller decline than we had experienced the quarter before.\nSo that's good to see.\nObviously, this is just due to run off of higher yielding older assets that were put on in a higher prevailing rate environment.\nCost of deposits declined by 14 basis points quarter-over-quarter.\nAnd as Tom pointed out, I'll remind you that almost $800 million of those time deposits are scheduled to mature and price down in Q1.\nWe did adjust our variable compensation accruals by $6.6 million as operating results in the back half of the year.\nWe're far better than we had initially expected.\nI would call that a first world problem.\nGlad to see those revenues up allowing us to do a little more for our employees in the way of variable compensation.\nA $2.2 million accrual for some roll over vacation time that we made the decision to allow our employees due to the COVID pandemic and the difficulty people have had using their vacation time.\nAnd we also had an increase in an accrual related to some RSU and PSU awards that resulted from the increase in the stock price, another first world problem.\nSo that's kind of what went on in compensation expense.\nA little bit of guidance looking forward to 2021, I will preface my remarks by saying this is maybe the most challenging environment in which I've ever had to forecast what was going to happen over the course of the coming year.\nSo all of this guidance is predicated on a lot of assumptions about the economy, interest rates, tax rates, the competitive environment, the regulatory environment and any of that could change.\nBut as of now what we see is mid-single digit loan growth more of that concentrated in the back half of the year.\nAs Raj said, we don't expect much in the first quarter.\nAnd that's excluding run-off of PPP loans by the way that mid-single digits excluding that run off of PPP loans.\nAgain mid-single digit a little bit higher than loan growth, mid-single digit deposit growth but double-digit mid-teens non-interest DDA growth as we continue to remix that portfolio and let those higher cost rate sensitive customers run off and grow non-interest DDA.\nWe expect the NIM to increase for the year and we would expect that PPP forgiveness to be largely a first quarter 2021 event so the NIM in the first quarter will get a lift from PPP forgiveness.\nI think there's about $11 million worth of unrecognized fees still remaining to flow through that will come through in the first and maybe some in the second quarter.\nThe provisions, so under CECL in theory, the provision should be related only to new loan production and charge-offs should increase -- should reduce the reserves.\nAnd if the world didn't change that's what would happen.\nWe have not attempted to forecast changes in the economic forecast but if the economic forecast doesn't change the provision for the year should be modest and it would be higher in the second half of the year as loan growth picks up and any charge-offs taken should reduce the allowance and we would expect net charge-offs to exceed the provision for the year and the reserves to come down.\nIf our prognostication about the economy is true, we would expect over time if we return to an environment similar to what we were in right before the time we adopted CECL, we would expect the reserve to return back to those levels.\nNon-interest income for next year, we do expect to see some increase in deposit service charge and commercial card revenue materialize in 2021 and for lease financing income to stabilize after some decline in the first quarter.\nExpenses, overall, in the aggregate we would expect probably a mid-single digit increase and that's going to come from two areas.\nOne is comp, part of that is just a natural normal merit increases and inflationary salary increases, which we think will resume.\nWe actually hope will resume in 2021 as the as the economy recovers.\nBut we do expect it to remain below 2019 levels.\nAnd we also expect technology-related costs to increase as we continue to invest in some important initiatives that Raj alluded to.\nTax rate, we would expect to be around 25% excluding discrete items, if there's no change in the corporate tax rate.\nThe other -- the one other thing that I will point out to you, we had about 3 million dividend equivalent rights outstanding that expire in the first quarter of 2021.\nAnd that'll add $0.02 to $0.03 per quarter to EPS.\nSo I just want to make you're aware of that.\nThere's so much information to give you these days that these calls end up taking way too much time in the first half.\nI see a line already.\n", "role": "user" }, { "content": "compname posts q4 earnings per share $0.89.\nq4 earnings per share $0.89.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Before Ana Graciela delves into key aspects of our earnings results for the fourth quarter, I would like to discuss with you the economic and business environment in Latin America, important developments that took place during the quarter, and the impact of these events on our perception of risk and financial results.\nDuring our third quarter 2018 conference call, we mentioned that the credit quality of our portfolio, cost structure, and allowances for expected credit losses, set the base to improve our earnings generation capacity.\nOur fourth-quarter results are the first step in that direction.\nOn our last call, we also identified key events that were impacting emerging markets, Latin America, and commodity-related industries.\nNamely, the effect of higher US interest rates and a strong US dollar, protectionist rhetoric on trade and tariffs from the US, along with political and macroeconomic uncertainty and overall lower growth prospects for key countries in Latin America.\nSome of these trends from the third quarter 2018 continued into the fourth quarter.\nIn December, the Federal Reserve raised interest rates for the fourth time in 2018 responding to strong US growth, low unemployment and core inflation readings above 2%.\nHigher interest rates brought about weaker financial market conditions with 10 year US treasuries over 3% and LIBOR reaching its highest level in the last 10 years; equity markets started showing signs of stress.\nIn fact, December 2018 was the worst US stock performance of any December since the Great Depression.\nEurope was also showing signs of significant deceleration which coupled with the stronger US dollar and weakening commodity prices, led to slower fund flows to emerging markets in general and Latin America in particular.\nChina was also a source of uncertainty as the government's effort to curtail corporate debt-driven growth are slowing the Chinese economy.\nMacroeconomic global risks are intensifying.\nWe now need to add the prospects of slowing economies in Europe and China, and maybe also the US to attempt from the protectionist trade environment.\nToday we know that the Fed is taking deep developments into account with a more dovish outlook on the potential for future rate increases and a slowdown in the unwinding of its $4 trillion balance sheet.\nAlthough a highly controversial candidate, Jair Bolsonaro hit the ground running with several market-friendly announcements to open the Brazilian economy and introduce fiscal adjustments particularly focused on pension reform.\nPositive investment and portfolio fund flows ratcheted up growth expectations to close to 3%, growth rates Brazil hasn't seen in more than four years.\nThe USMCA was another bright spot in an otherwise grim picture from Mexico, but more about that later in the call.\nContinuing with the positive news from the fourth quarter, Argentina completed the final agreement with the IMF, and although it significantly tightened monetary policy and established strict fiscal spending controls, it did not lead to the social unrest some feared.\nEven Costa Rica which stretched the patience of the rating agencies managed to approve in their famous Sala IV, a fiscal reform package.\nAlthough the package was deemed actions insufficient by the rating agencies which proceeded to downgrade its credit rating, the colon recovered a significant part of its devaluation, and the government managed to repay an extraordinary loan it took from the central banks.\nAll these developments are setting the stage for some growth out of the region for 2019.\nAlthough still subpar, growth rates of 2% or slightly higher are now possible for Latin America.\nThat said, problem spots persist.\nMexico, for example, seems to be on a path of reversing or at a minimum challenging established macroeconomic policies.\nRecent developments such as the cancellation of the new airport project, uncertainty over the fate of energy reform threatening to curtail bank fees and potential government intervention in the writing of its independent entity, or a stark departure of what investors have come to expect from Mexico over the last 20 years.\nAnother potential source of volatility is Argentina with significant political uncertainty as the recession generated by restrictive IMF policies, is hitting Argentine purchasing power.\nWe have elections coming up in October, but the primaries in August will also be important as these will determine if we will see a less than market-friendly candidate from the Peronist block.\nWhat does this all mean for Bladex?\nA macroeconomic context that offers no room for complacency as risks of major economies slowing and trade sanctions continuing our partially counterbalanced by a somewhat better macroeconomic picture from some key countries in Latin America.\nWe still see tepid growth in credit demand in sufficient liquidity in most countries in the region.\nNevertheless, our book of business is prudently growing.\nWe are identifying new prospects, we are increasing share of wallet with our existing client base and are structuring value-added transactions with key clients.\nAlthough our year-end headline margins were impacted by low yielding liquidity due to higher-than-expected central bank deposits, Bladex continues to improve its origination.\nWe have a better mix of medium to short term loans, lengthening the average life of our portfolio and increasing our origination margin.\nOn the cost side, net-op restructuring and other nonrecurring charges, our recurrent expenses continue to decline.\nAs you'll hear from Ana Graciela, our NPLs declined significantly due to asset sales, restructuring, and partial write-offs.\nOur Tier 1 capital ratio remains strong, our book value remains solid above $25 per share, and that is why our Board of Directors approved to maintain a $0.358 per share dividend.\nAgainst this backdrop, the management of Bladex as well as its Board of Directors is cautiously optimistic for the first quarter of 2019 and look forward to an improvement in profitability throughout the year.\nFirst, let me highlight on page 4 the banks return to profitability, recording a fourth-quarter 2018 profit of $20.7 million or $0.52 per share in the improvement of quarter on quarter top line revenue by 13%, mainly on account of increased loan average portfolio balances and higher fees as well as the normalization of credit provisioning.\nThese results represent a significant improvement from third-quarter 2018 results and an increase in quarterly trends denoting the absence of nonrecurring charges and were relatively stable year on year.\nFor the year 2018, profits of $11.1 million reflect impairment losses on financial instruments and nonfinancial assets for a total of $68 million.\nThese impairment losses relate to the bank's credit per loan, which we also refer to as nonperforming loans or NPL.\nIn addition, and to a lesser extent, impairment losses also relate to charges associated to the disposal of obsolete technology in line with the bank's objective to optimize its operating infrastructure.\nNow I will refer to the evolution of net interest income and financial margins on pages five and six.\nNet interest income for the fourth quarter of 2018 increase by 2% quarter on quarter to $28 million, mainly driven by 4% increase in average loan balances in the absence of NPL's interest reversal, partly affected by higher low yielding liquid assets.\nHere in liquidity balances were above historical levels as the bank scheduled its funding sources anticipating a potential temporary decline of its deposit space.\nAlthough average deposits declined by 12% quarter on quarter, this trend was reverted by the end of the year resulting in a 7% quarter on quarter increase.\nConsequently, liquid balances represented 22% of total assets at December 31, 2018.\nThe bank expects to bring back the ballad of liquid assets to normalized levels during the first quarter of 2019.\nOur estimation is that this temporary excess liquidity had a negative impact of approximately 17 basis points in net interest margin for the quarter.\nHence, the 13 basis points quarter on quarter declined in net interest margin to 1.61% is mostly attributable to these effects.\nExcluding this impact, financial margins for the quarter were supported by a quarterly increasing trend in average lending balances and lending credit spread, the latter of which started to revert its negative trend during the fourth quarter of 2018.\nThroughout the year, lending spreads were pressured downward on account of better quality loan origination as the bank increased its lending share to financial institutions, sovereign and quasi-sovereign entities, while origination in the corporate sector remained focused on top-quality exporters with US dollar generation capacity.\nAs a result of this overall decline and an average lending spreads throughout the year 2018, net interest income of $110 million represented a year on year decrease of 8%, and annual net interest margin of 1.71% declined by 14 basis points.\nOur lending spreads for the gear were partly upset by the net positive effect of an increase in the interest rate environment.\nThroughout the year, the bank's assets and liabilities reprised at a similar pace given its narrow interest rate gap structure resulting in a net positive effect on the banks higher yield on equity invested in financial assets.\nDuring the quarter, the bank originated $3.1 billion in loans, exceeding maturities by $54 million.\nLoan disbursements for the year 2018 total $14.3 billion as we continue to perform well on our short-term origination capacity and we are also able to deploy longer tenor transactions with our traditional client base of top-quality financial institutions, exporting corporations, and multilatina.\nAs a result, our loan portfolio increased by 1% on ¼ on quarter basis and by 5% year on year to $5.8 billion as of December 31, 2018.\nNow moving on to page 7, fees and commissions were relatively stable year on year at $17.2 million for 2018.\nFee income from letters of credit and contingencies performed well with quarter on quarter increase of 25% to $3.5 million.\nOn an annual basis, fees from this line of business increased by 12% to $12.3 million.\nQuarterly fees from syndication, the other main component of degeneration for the bank, increased to $1.9 million in the fourth quarter and totaled $4.9 million for the year 2018, a 26% decrease from the previous year denoting that transaction based on even nature of this business.\nThe bank has positioned itself as a relevant player in originating syndicated transactions across the region and was able to close seven transactions during 2018 for a total of $847 million.\nOn pages eight and nine, the commercial portfolio including loans, letters of credit, and contingencies remained well diversified across countries and industries.\nOverall exposure to financial institutions, sovereign and quasi-sovereign, represented 67% of the total commercial portfolio at year-end 2018 from 45% in 2015, denoting a continued improvement in portfolio quality over the last four years.\nFinancial institutions alone, the bank's traditional client base accounted for predominant 52% of total exposure in 2018.\nIntegrated oil and gas sector exposure accounted for 10% of the total portfolio as of December 31, 2018 and is mainly concentrated in quasi-sovereign entities which constitutes long-standing business relationships of the bank.\nThe remaining overall exposure is well diversified among several industry sectors, none of which exceeded 5% of total exposure as of December 31, 2018.\nIn terms of country exposure, Brazil represented 19% conmetric with the size and prospect of its economy and its relevance in international trade flows.\n86% of Brazil's exposure is with banks, sovereign, and quasi-sovereign.\nThe average remaining tenor of the country's portfolio is approximately 14 ½ months with 67% maturing in 2019.\nWe are closely monitoring our exposures in Mexico, which constitutes 40% of total exposure, Argentina with 10%, and Costa Rica with 6%; countries in which the bank has identified very good business opportunities cognizant of relative and certainly that should start to unveil throughout 2019 such as possible adverse economic policies and outcomes of the newly established government in the case of Mexico and presidential elections in Argentina, which are critical to the continuity of recently implemented economic reform and adherence to the IMF accord.\nIn Costa Rica, we are monitoring the implementation and success of the recently approved fiscal reform.\nThe bank's tactical approach in these three countries is to focus on short tenor origination in winning sectors that should remain resilient, even in the case of economic and political downturn.\nTotal commercial portfolio continued to be mostly short-term with an average remaining tenor of close to 11 months and with 74% maturing in 2019.\nTrade-related loans represented 59% of the short-term bank portfolio at year-end.\nOn to page 10, we present the evolution of NPL and allowances for credit losses.\nDuring the fourth quarter of 2018, the bank was able to reduce its NPL levels by $54 million as a result of the sale of an NPL and the restructuring of another.\nOf the $54 million reduction during the quarter, the bank collected sales proceeds of $12 million, wrote up principal balances for $33 million against individually allocated credit allowances and recognized the new financial instrument at fair value for $9 million after restructuring terms.\nNPL's then total $65 million in represented 1.12% of the loan portfolio at December 31, 2018, with ample reserve coverage of 1.6 times.\n96% of banks NPL constitutes a single $62 million loan in the sugar sector in Brazil which significantly deteriorated during the third quarter of 2018 and was then classified as NPL.\nThis loan, individually provisioned at 75%, accounted for most of the increase in the allocated reserve for loan losses categorized as stage III under accounting standard IFRS-9.\nStage II depicts performing exposures showing some credit quality deterioration since origination due to the weakening of financial conditions of the borrower placed on watchlist category or to increase levels of the exposure's country or industry risk.\nAt December 31, 2018, stage II exposure totaled $389 million of which $58 million corresponded to seven individual credits on the watchlist category which are performing but in runoff mode.\nThe remaining exposure represents performing credit in countries that the bank downgraded in its internal country rating review as was the case with Costa Rica in the fourth quarter of 2018.\nStage I exposure, which relates to the performing portfolio with credit conditions on change since origination showed an increasing annual trend in represented93% of total exposure.\nOn page 11, quarterly operating expenses of $12.4 million showed ¼ on quarter seasonally high level.\nAnnual expenses totaling $48.9 million for 2018, increased by 4% year on year, mainly on nonrecurring expenses related to personnel restructuring and compensation of infrastructure platform.\nRun rate base of annual operating expenses are estimated at approximately $46 million for 2018.\nEfficiency ratio of 38% for the year 2018 reflects these nonrecurring expenses as well as lower topline revenues alluded to this board.\nNow on page 12, I would like to summarize the main aspects for fourth-quarter and full-year 2018 results.\nIn the fourth quarter, the bank got back on a profitable track with a $20.7 million net income on the backdrop of quarter on quarter increase in topline revenue and portfolio average balances coupled with the normalization of credit provisioning.\nAnnual profits up $11.1 million were mostly impacted by credit impairments and to a lesser extent operational charges, all of which totaled $68 million.\nAnnual revenue decreased by 8%, mostly on account of lower average annual lending spread reflecting improved quality of the commercial portfolio although we saw a stabilization of credit spread in the last month of the year.\nThe decreasing trend in NPL at year-end with proactive management of these few exposures involving sales restructuring and partial write-offs.\nOperating expenses for the year include nonrecurring restructuring and optimization charges with a decrease in the level of run rate expand base.\nCapitalization remains solid at 18.1% Tier 1 ratio, while our Board of Directors capped our quarterly dividend unchanged at $0.385 per share.\nTravis, you can now open the Q&A session.\n", "role": "user" }, { "content": "compname reports q4 profit of $20.7 million, or $0.52 per share.\ncompname announces profit for the fourth quarter 2018 of $20.7 million, or $0.52 per share.\nfull-year 2018 profit of $11.1 million, or $0.28 per share.\nq4 earnings per share $0.52.\nnet interest income (\"nii\") for 4q18 increased 2% quarter-on-quarter to $28.0 million (-1% yoy).\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: Core in this case means designated financial metrics excluding the impact of the recent S::can and ATI acquisitions.\nWe believe this reference point is important for year-over-year comparability.\nIn summary, I'm pleased with our results for the quarter, delivering sales and earnings per share growth, margin expansion, and robust cash flow.\nMost exciting we experienced record order rates for our smart water solutions across both lines of business as the underlying growth drivers for our digital solutions are embraced by customers.\nThe well-publicized and widespread electronic supply shortages limited our conversion of these record orders into sales in the quarter.\nTempering core sales growth but resulting in a record-high order backlog heading into the second quarter, which bodes well for the balance of the year.\nOur recent acquisitions delivered strong top-line results with net profitability muted as expected as a result of purchase accounting items.\nOverall, our acquisition integration activities are progressing as expected.\nI'll talk about the current environment and our outlook later in the call.\nAs you can see on Slide 4, total sales for the first quarter were $117.8 million compared to $108.5 million in the same period last year, an increase of 9%.\nIn utility water, overall, sales increased 12% reflecting the addition of the s::can and ATi acquisitions, which contributed approximately $10 million of sales in the quarter.\nExcluding acquisitions, core revenues in the utility water product line were essentially flat year-over-year despite record orders due to the Internet and electronic supply component shortages and logistics challenges that limited manufacturing output.\nScarce capacity of electronics is a pervasive market issue impacting many industries and is not isolated to Badger Meter.\nWe did experience growth in overall meter sales and BEACON software as a service revenue and we benefited from strategic value-based pricing actions.\nAs Ken noted, we ended the quarter with strong order momentum and a record backlog, which gives us confidence in our sales outlook moving forward.\nAs expected the flow instrumentation sales rate of change improved sequentially from down 10% last quarter to down 3% year-over-year, with the majority of end markets served experiencing recovering demand trends.\nWe expect to return to overall growth moving forward as a result of improving demand conditions and easier comparisons.\nWe are pleased with the operating profit improvement delivering a 30 basis point increase in margins to 15.1% from 14.8% in the prior year.\nGross margin for the quarter was 41.9%, up a healthy 200 basis points year-over-year.\nThe core business delivered higher gross margins due to positive sales mix, namely higher SaaS revenues along with favorable pricing, which continued to offset the impact of higher brass costs in the quarter.\nMargins also benefited from favorable acquisition mix.\nYou may recall from last quarter we described the water quality acquisitions of s::can and ATi as having higher than line average gross margins combined with higher SEA as a percent of sales and therefore with a net EBITDA range for the combined businesses in the mid-teens.\nThe positive acquisition mix benefit to gross margins was muted by the amortization of inventory fair value step-up in the quarter, but that's mostly behind us moving forward.\nCopper prices continued their upward trajectory after our last earnings call in late January when they were averaging approximately $3.60 a pound to now near $4.20 a pound.\nThis obviously increases the potential cost headwind for the year that we had estimated at $4 million to $5 million to closer to $7 million to $8 million on a year-over-year basis if it were to stay in that $4.20 range.\nWe have executed well in implementing appropriate pricing mechanisms to offset this inflation as evidenced by our first quarter results and will continue to remain nimble and actively addressing inflation.\nTurning to SEA expenses, the first quarter spend of $31.6 million increased $4.3 million from the prior year.\nThis includes a full quarter of SEA spending for both s:can and ATi along with the higher level of acquired intangible asset amortization.\nBeyond the impact of acquisitions, higher personnel costs were more than offset by lower travel trade show and other ongoing pandemic impacted expenses, the decrease of which we will anniversary starting next quarter.\nThe income tax provision in the first quarter of 2021 was 22.2%, slightly lower than the prior years' 25.6% rate.\nIn summary, earnings per share was $0.47 in the first quarter of 2021, an increase of 15% from the prior year's earnings per share of $0.41.\nWorking capital as a percent of sales was 24.3% down from 25.5% at calendar year-end despite the addition of ATi, largely due to working capital initiatives in the quarter.\nOur free cash flow of $28.8 million was consistent with the prior year.\nIn early January we deployed $44 million net of cash acquired for ATi and currently have cash on the balance sheet of approximately $51 million.\nAlong with the untapped revolver, we have significant financial flexibility to execute our growth strategies.\nTurning to Slide 5.\nWe don't provide guidance but believe it is important to bring awareness to the increased level of unevenness we're likely going to see in our top line as this year unfolds.\nI want to spend just a minute highlighting comparative sales data to provide a clear picture of the varied influences on the quarterly sales growth trend lines and discuss the optimism we have for our results for the remainder of the year and beyond.\nThis chart depicts the quarterly sales growth rate of our core business in 2020 and into the first quarter of 2021.\nAs you can see by the various call-out boxes, we had some specific dynamics in 2020 with COVID and now in the first quarter of 2021 that we need to be mindful of as we look at the rest of the year comparisons.\nNamely, we will have an easier comp for our upcoming Q2 versus the 2020 COVID lockdowns combined with a portion of the record backlog converting to sales given the anticipation for some modest improvement in electronic supply.\nAs we move into Q3, we'll have a difficult comparison based on the post-COVID lockdown order rate and manufacturing recovery last year.\nThe bottom line to all of this is that we continue to have strong momentum and robust bid activity, order rates and backlog consistent with our long-term outlook for mid-single-digit growth.\nFrom a top line standpoint, the acquisitions are performing in line with their historic growth patterns and our integration teams are working to begin putting the steps and processes in place to realize future growth synergies.\nTurning to our outlook.\nThe underlying market drivers for smart water solutions remain intact and in fact, as we've discussed, COVID has spotlighted the benefits of AMi for common utility challenges such as remote work efficiencies and regular and automated consumer engagement tools.\nWater quality and security concerns also are driving accelerating interest in our real-time digital solutions.\nWe saw evidence of that during the recent climate events in Texas and other Southern U.S. States which experienced the debilitating deep freeze with a number of customers describe the real-life benefits of having our cellular AMi solution deployed which remained in service due to the criticality and cellular networks.\nThese utilities were able to obtain real-time mission critical data which help identify potential main breaks, pipe freezes and bursts keeping safe water supply available for their end consumers.\nNow surprisingly, one of the most common outlook questions we get from investors relates to the potential impact of the recent infrastructure proposal from the Biden administration, specifically the portion of the plan that calls for $56 billion of spending to upgrade and modernize America's drinking water, wastewater and stormwater systems and additional $10 billion in part to invest in rural small water systems.\nAs we have repeatedly stated, the underlying secular trends driving demand for our digital water solutions are already evident and growing.\nStimulus investments could perhaps accelerate or add to those underlying drivers, but are not necessary for us to realize our long-term growth plans.\nIn fact, as we stated over the past couple of quarters, it's the widespread availability of vaccinations that are most relevant to near-term demand patterns.\nIt's too early to tell if a potential pause in spending might occur as utilities weight and digest the implications of the stimulus proposals.\nOur view is that if a pause would occur it would simply be a matter of timing and not a change to the long-term structural growth of our business.\nWe will as always focus on the elements of our business within our control.\nOur teams have done an outstanding job managing value-based pricing initiatives, which have mitigated the significant increase in brass costs, our sourcing and supply chain teams have their hands full actively managing the varied ramifications of the wide-ranging and Universal Electronics shortages along with certain logistics bottlenecks, including those at West Coast ports.\nWhile these circumstances are not unique to Badger Meter, I am confident that we will be able to adequately support customers despite these many challenges.\nWe will continue to manage working capital and drive cash flow in order to support our investments in both organic and acquisition-driven growth.\nOur focus remains on enhancing the product and software offering serving water-related markets and applications globally.\nFinally, I want to provide an update on our ESG activities notably establishing our first greenhouse gas intensity reduction target.\nThis represents an important step on our ESG journey as we work to mitigate the impact we have on the environment and continue to be good stewards of the resources we use in our operations.\nThe 15% intensity reduction goal by 2030 was developed through a strategic initiative to capture baseline greenhouse gas data globally and identify opportunities to reduce energy and consumption and other Level 1 and 2 emissions.\nWe will set annual smart goals to monitor progress and we'll report externally on our efforts in our biennial sustainability report.\n", "role": "user" }, { "content": "q1 earnings per share $0.47.\nq1 sales rose 9 percent to $117.8 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: I hope you are all healthy and staying safe and we certainly appreciate you joining our call today.\nLet me start by expressing my sincere appreciation to our global team for their extraordinary commitment during this unprecedented time.\nWe made every effort to keep our employees and other stakeholders safe as we've navigated the COVID-19 pandemic and I'm very proud of the collective role our team members played in supporting our customers in the critical water industry.\nWe continue to follow all health and safety measures according to health organization recommendations and local government regulations.\nAt our sites, key actions have been taken to include steps to ensure employees are practicing social distancing, on-site temperature monitoring, use of face coverings, enhanced cleaning and sanitation efforts and staggered production schedules.\nAll of our manufacturing and distribution locations are operational.\nThe majority of our non-production employees continue to work from home.\nThe potential for order delays and operations and supply chain disruptions that I mentioned during last quarter's earnings call gradually diminished throughout the quarter.\nWe remain encouraged by the backlog and funnel of project opportunities and our balance sheet is in excellent shape to weather whatever lies ahead, recognizing conditions and potential business impacts are continuously evolving.\nBob will walk you through the details of the quarter and after that I'll come back and talk further about the market outlook and what we're hearing from customers in the current environment.\nI want to begin by stating it is incredibly difficult to quantify the specific impact of COVID-19 on our financial results in the quarter.\nClearly it was far-reaching in terms of customer order patterns, supply chain logistics and capacity interruptions and ultimately costs, including the various implemented cost savings actions.\nSo, similar to the release, my comments will not include that break down or level of granularity.\nGiven our sales concentration in the U.S. market, it is not surprising that the month of April marked the low point for us in terms of both orders and sales as the vast majority of states were under government lockdown restrictions.\nCustomers were definitely taking a pause in determining the impacts to their operations, how to operate remotely, how to continue with projects and how long the restrictions would last.\nMunicipal water demand began to improve to become less worse, if you will, as the lockdowns began to be lifted in mid-May and into June.\nIn municipal water, overall sales decreased 9% with April representing the largest year-over-year decline with sequential improvement off of that bottom to a more stabilized level as the quarter progressed.\nI would not characterize it as back to normal, but definitely off of the April bottom with relative consistent.\nIn addition, backlog grew as orders exceeded sales in the quarter due to a number of factors.\nThese included manufacturing disruptions from stay-at-home orders in the U.S. and Mexico, higher rates of intermittent employee absenteeism and early supply chain challenges, all of which combined to limit output at certain of our manufacturing facilities.\nAdditionally, the sequential demand ramp impacted order timing and our ability to convert orders into sales late in the quarter.\nOn a positive note, revenue mix trends toward adoption of smart metering solutions including BEACON service revenue along with ultrasonic meter penetration continued.\nIn contrast, flow instrumentation sales declined 22% year-over-year with April again representing the most difficult demand level.\nAs expected, demand trends improved from April -- from the April low, but at a very modest pace, reflective of the significantly challenged industrial markets served and our continuing view of this product line being lower for longer, compared to the more resilient municipal water trend.\nOperating profit as a percent of sales was 13.9%, a 60 basis point decline from the prior year 14.5%.\nAs we discussed on our last call in mid-April, we enacted a number of temporary cost containment measures to mitigate the impact of the rapid sales decline to both profitability and cash flows.\nThese included reductions in discretionary spending, a hiring freeze, reduced work hour furloughs and executive salary reductions among others.\nWhile the reduced work hour and salary reductions were initiated -- initially targeted for five weeks, we did extend those reductions for an additional four weeks through mid-June.\nThe combined actions helped to contain the decremental operating margin impact from the rapid sales decline to approximately 20% in the quarter.\nGross margin for the quarter was 39.3%, up 40 basis points year-over-year despite the sales decline and once again in the upper half of what we would call our normalized range of 36% to 40%.\nThe implemented cost actions helped to offset lower production volumes.\nAdditionally, positive sales mix, notably, the overall trends of ultrasonic meter adoption and higher BEACON service revenues, along with lower commodity costs, benefited gross margins in the quarter.\nSEA expenses for the second quarter were $23.2 million, down $2 million year-over-year resulting from the net benefit of the implemented cost actions, partially offset by higher investments in certain business optimization initiatives.\nThe income tax provision in the second quarter of 2020 was 24.3%, slightly higher than the prior year's 23.8% rate.\nIn summary, earnings per share was $0.33 in the second quarter of 2020, a decline of 15% from the prior year's earnings per share of $0.39.\nWorking capital as a percent of sales was 22.9%, in line with the prior sequential quarter.\nFree cash flow of $20.1 million was just $700,000 below the prior year comparable quarter despite lower earnings and was due primarily to the working capital differential between quarters and deferral of our quarterly federal income tax payment under the CARES Act.\nWe continue to monitor customer cash receipts and supplier payment terms and we have not experienced any significant collectability or other issues.\nWe ended the quarter with approximately $85 million of cash on the balance sheet and a net cash position of approximately $81 million.\nIn addition, we have an untapped credit facility of $125 million.\nWe believe we have ample liquidity to fund operations, our dividend and other capital allocation priorities under a wide range of potential economic scenarios.\nWe participated in a number of virtual investor conferences during the quarter, so I thought I'd start by addressing the common questions and themes from those discussions.\nSo let's start with the current environment.\nAs we discussed in the release and in our earlier remarks, we do believe we are entering the new normal after the shock in April and early May when most of the U.S. was shut down.\nWhile some of the municipal water activity never stopped, there was definitely a break as our customers, like all of us, had to figure out how to navigate the COVID-19 pandemic and the rapid pace of changing government rules and requirements globally.\nOnce that settled a bit and gradual reopenings occurred, we started to see activity improve off the April bottom.\nI can't say we're completely back to normal, but activity has steadied on a relative basis.\nCustomers are requesting in-person meetings and site visits, bid tenders and awards are proceeding, some projects have accelerated despite others being temporarily deferred.\nWe have not experienced any outright cancellations.\nAs it relates to supply chain and logistics, we commented last quarter that it could potentially create operating challenges.\nWhile there was and still is a significant amount of active management, it was not a major factor.\nAs Bob noted, we did however experience manufacturing disruptions from the stay-at-home orders in the U.S., various government mandates in Mexico related to vulnerable populations and intermittent employee absenteeism, as well as early logistics and supply chain glitches, all of which contributed to slightly lower than expected output at our manufacturing facilities.\nThese impacts continue to lessen in severity and we expect them to be behind us shortly, barring any new currently unforeseen developments.\nWe previously outlined a series of temporary cost reductions that were instituted in mid-April.\nAnd as Bob mentioned, we did extend the reduced work hour and salary reduction measures into mid-June.\nNot surprisingly, we continue to manage hiring and discretionary spending action given continuing market uncertainty.\nWhile painful in the short term, we believe these steps were both necessary and adequate to responsibly manage the cost structure of the company during the worst of the impact.\nWe obviously continue to stay close to the rapidly changing implications of the pandemic and are prepared to take additional actions if they become warranted.\nTurning to the outlook.\nWhile the economic environment appears more stable, there is certain market data and sentiment that points to the potential for a protracted recovery from COVID-19 and this continued uncertainty could weigh on customer demand and municipal budgets moving forward.\nWe cannot confidently predict the degree or duration of the impact.\nSo therefore we continue to focus on the items we can control.\nWe are actively investing in and launching new products, an example of which is our recently released E-Series Ultrasonic Plus Meter with integrated control valve, which allows water utilities to remotely restrict water flow.\nWith multiple valve positions, this safe, humane and efficient solution to controlling water service and residential applications improves utility efficiency, expenses and safety.\nIt addresses one of the two longer-term trends we believe could accelerate as a result of COVID-19, the other being accelerated AMI adoption.\nOur operations teams are adapting manufacturing processes to increase output while optimizing safety.\nWe do expect to recover the majority of the backlog built in the second quarter during the third quarter.\nWe are managing cash flow and working capital with $85 million of cash on the balance sheet and a $125 million of revolving credit available to fund capital allocation priorities including the dividend.\nFinally, we continue to pursue strategic tuck-in M&A that will expand our offerings in attractive adjacencies serving our critical and essential markets.\nIn summary, I'm pleased with the resilience of our business model and our financial performance in relation to the economic severity of this unprecedented crisis.\nOur organization is prepared and well-positioned to successfully manage the uncertain days ahead, remaining nimble and reactive to our market trends.\n", "role": "user" }, { "content": "q2 earnings per share $0.33.\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 earnings slides provide a reconciliation of the GAAP to non-GAAP financial metrics used.\nCore means designated financial metrics excluding the impact of the recent s::can and ATi acquisitions.\nWe believe this reference point is important for year-over-year comparability.\nI couldn't be more pleased with the dedication and execution demonstrated by our team supporting our customers and delivering record sales in the face of widespread supply chain inflation and logistics challenges.\nOur strong order momentum from the first quarter continued into the second, and even with that strong execution, our backlog reached another record high as we exited the second quarter.\nOur two water quality acquisitions s::can and ATi delivered strong top line performance above our expectations with solid earnings per share accretion.\nOverall, it was a great quarter, due in large part to the activity in the trenches day in and day out.\nAs you can see on Slide 4, total sales for the second quarter were $122.9 million compared to the coronavirus impacted trough of $91.1 million in the same period last year, an increase of 35%.\nOverall utility water sales increased 38%.\nExcluding the approximately $12 million of sales from s::can and ATi acquisitions, core utility water revenues increased 22% year-over-year.\nComparing back to the pre-COVID impacted second quarter of 2019, core utility water sales increased 11%.\nAs Ken noted, we continue to experience robust orders, however supplier allocations of certain electronics and other components along with logistics challenges again limited manufacturing output in deliveries.\nWe did experience growth in overall meter sales and BEACON software as a service revenue and we benefited from strategic value-based pricing actions.\nWe exited the quarter with another record high backlog, which bodes well for our sales expectations moving forward.\nAs anticipated, the flow instrumentation product line sales rate of change returned to growth with a 22% year-over-year improvement, stabilizing demand trends across the majority of global end markets and applications as well as an easier comp influenced the increase.\nWe were pleased with the operating profit margins generated in the quarter in light of the significant and varied inflationary forces.\nThe quarter's operating margin was 15.2%, an increase of 130 basis points year-over-year.\nGross margin for the quarter was 40.8%, an increase of 150 basis points year-over-year.\nMargins benefited from favorable acquisition mix as well as the higher volumes and positive product sales mix, namely higher SaaS revenues, along with favorable value-based pricing realization.\nCombined, these drivers tempered the cost headwinds from higher brass and other component and logistics inflation.\nTaking a closer look at copper, prices have settled back down into the $4.30 range after escalating to about $4.80 earlier in the quarter.\nThis is generally in line with our most recent year-over-year headwind estimate, which was approximately $7 million to $8 million on a full year basis unmitigated.\nAs our margins demonstrate, we have executed well in implementing appropriate pricing mechanisms to offset this inflation and we will continue to actively monitor pricing in light of the inflationary pressures.\nTurning to SEA expenses.\nThe second quarter spend of $31.4 million was sequentially in line with the $31.6 million from Q1 2021 and represents an increase of $8.2 million from the prior year.\nYou may recall, the prior year included the benefit of various cost reduction actions taken at the onset of COVID-19 including temporary furloughs.\nThe SEA run rate includes both the s::can and ATi along with the higher level of acquired intangible asset amortization, and is in line with our ongoing expectations of normalized SEA leverage in 25% to 26% range over time.\nThe income tax provision in the second quarter of 2021 was 25%, slightly higher than the prior year's 24.3% rate.\nIn summary, earnings per share was $0.48 in the second quarter of 2021, an increase of 45% from the prior year's earnings per share of $0.33.\nWorking capital as a percent of sales was 24.3% on par with the prior quarter-end.\nInventory increased due to the manufacturing output constraints as well as commodity inflation as described earlier.\nFree cash flow of $11.9 million was lower than the prior year, the result of higher cash tax payments and the increase in inventory.\nOn a year-to-date basis, free cash flow conversion of net earnings is sitting at 147%.\nWe took the opportunity to upsize the facility to $150 million and to add additional flexibility in the form of leverage covenants and an accordion feature among others.\nOur strong cash flow combined with our borrowing capacity provides us with ample liquidity to fund our ongoing capital allocation priorities.\nTurning to Slide 5.\nWe updated the chart we introduced last quarter with actual second quarter data.\nGiven the number of different variables at play in both the current year and prior year comparables, we think this chart can be helpful in understanding the uneven results we have and we'll continue to see in our sales.\nThe robust growth rate we experienced this quarter excluding the acquisitions was the result of continued strong order rates as well as the record high backlog with which we started the quarter.\nNot surprisingly, it was also due in part to the easier comp from the most significantly COVID-19 impacted second quarter last year.\nAs we enter the back half of the year, the strong order momentum and record high backlog will be supportive of our growth outlook.\nThe third quarter will see a difficult comp, both in terms of sales and profitability based on the post-COVID lockdown recovery in both manufacturing output and orders last year.\nOur supply chain team continues to work tirelessly at [Indecipherable] with the varied electronic and other component shortages.\nWhile we don't expect to be back to normal, we do expect further backlog conversion as the year moves ahead.\nWe are very pleased with the results from the last two water quality acquisitions this quarter contributing just over $12 million of revenue in the quarter, a pro forma growth rate in the double-digits.\nTheir underlying performance along with the integration work underway to establish and cross-trained sales resources and harmonized product offerings within water quality validates our confidence in the underlying strategy of combining water quantity with quality in order to accelerate our customers' digital transformations.\nIn summary here on Slide 6, the step change in order rates over the past several quarters confirms the fundamental market demand for intelligent water solutions to monitor, manage and support operational efficiencies throughout the water distribution system.\nWe are uniquely positioned with a full line of smart water offerings encompassing both water quantity and quality to serve utility and industrial customers alike.\nA record backlog is one of those good problems to have and the challenge we expect will persist for some time as we migrate through the second half of the year and beyond.\nElectronic and other component suppliers are making good progress in restoring and building capacity, however, the rate of recovery is fluid and will continue to be uneven until inventory levels are able to be -- to fully meet demand.\nDespite the component availability, inflation and logistics challenges, our teams are working hard to build supply chain resiliency and actively communicate to suppliers and customers to proactively manage expectations.\nOur effective sourcing strategies, market driven innovation and operational agility are supporting Badger Meter's profitable business growth and delivering value for shareholders.\nFinally, I want to highlight several additional ESG related disclosures that we've added to our website.\nOne is an outline of how Badger Meter works to align our ESG efforts with the United Nations Sustainable Development Goals, notably Goal 6, 3 and 11 that focus on water, health and safety and sustainable cities.\nThe second is a stand-alone SASB focused report providing annual metrics and other information for 2020, which is cross-referenced to GRI.\nBadger Meter continues to advance its ESG journey as we work to understand and mitigate the most material and impactful risks of climate change and preserve and protect the world's most precious resource.\n", "role": "user" }, { "content": "compname reports q2 earnings per share $0.48.\nq2 earnings per share $0.48.\nq2 sales $122.9 million versus refinitiv ibes estimate of $118.4 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 hope you are all doing well and staying safe.\nObviously, there are many aspects of 2020 that we, along with many of you, are happy to turn the page on as we focus on a safer and healthier 2021.\nIn summary, we were pleased with our fourth quarter results, which demonstrated the continued stability and resiliency of our utility water end market.\nAs anticipated, flow instrumentation sales were less worse sequentially but still down year-over-year.\nWe delivered gross margin improvement, continued cash flow generation and earnings per share growth, albeit with a number of moving parts that Bob will walk through in more detail.\nI'm extremely pleased with our ability to complete two meaningful acquisitions over the past several months that are strategic growth drivers for Badger Meter.\nEarlier this month, we acquired Analytical Technologies, Inc, or ATi, combined with s::can, which we purchased in November 2020, we now have a great foundation in which to build a real-time, on-demand water quality monitoring offering to customers in both utility water and industrial markets.\nI'll talk about the water quality offering in more detail later on the call, as well as the current environment and what we see looking out into 2021 and beyond.\nAs you can see on Slide 4, total sales for the fourth quarter were $112.3 million compared to $107.6 million in the same period last year, an increase of 4%.\nThis reflects the activity stabilization we experienced in the third quarter, which has essentially continued despite the resurgence of COVID-19 cases and various regional restrictions.\nIn utility water, overall sales increased 8% against a difficult comparison in Q4 last year, which was also up 8% over 2018.\nThe acquisition of s::can completed in November 2020 contributed approximately 3 points of the current quarter's revenue growth, with core organic revenues in utility water up 5% year-over-year.\nOn an organic basis, this quarter's sales were the second highest in history, second only to the third quarter of 2020, which of course included a sizable chunk of pandemic-induced backlog catch-up as we discussed at the time.\nPositive revenue mix trends continued with further adoption of smart metering solutions, including increased ORION Cellular radio sales and BEACON software-as-a-service revenue, along with ultrasonic meter penetration.\nWe also ultrasonic meter penetration.\nWe also had the benefit of strategic pricing initiatives, which I'll discuss shortly.\nAs anticipated, flow instrumentation sales were sequentially less worse, down 10% year-over-year compared to the 18% decline experienced in Q3 2020, although activity levels continue to reflect the broadly challenged markets and applications served globally.\nOperating profit as a percent of sales was 15.1%, a modest 10-basis-point decline from the prior year's 15.2% with a number of moving parts at the gross profit and SEA line that I will dissect in more detail.\nGross margin for the quarter was 39.2%, up 100 basis points year-over-year.\nMargins benefited from higher sales volumes, strategic pricing actions and positive sales mix as previously discussed.\nThese favorable gross margin drivers were offset by a discrete network sunset provision recorded in the quarter as well as the natural post-acquisition drag to gross margins caused by amortization of the inventory fair value step-up recorded for the acquisition of s::can.\nI'm going to spend a bit of extra time today on three of these items, price cost, the acquisition impact to margins and the discrete network sunset provision, to help walk you through the impact in the quarter and thereafter as applicable.\nStarting with price cost.\nAs I'm sure you've seen copper prices, which are a proxy for our recycled brass input costs, have increased significantly.\nCurrently averaging around $3.60 per pound, this represents over a 30% increase year-over-year.\nWe've reminded investors that while meaningful, the impact of recycled brass on our cost structure has been moderating over time as we sell more software and radios versus primarily meters in the past.\nI will also remind you that we have and continue to offer polymer, mechanical and ultrasonic meters as part of our choice matters go-to-market philosophy.\nTo give you some level of sensitivity, if copper prices stay in this range for the entire year, it could be a potential cost headwind of about $4 million to $5 million year-over-year.\nThe other side of that price -- cost equation is price.\nAnd as we have done with working capital and operating metrics like SQDC, safety, quality, delivery and cost, we have designed more robust processes and metrics to actively manage strategic pricing for the evolving and valued solutions that we offer to customers.\nIn doing so, we have proactively implemented a number of strategic pricing actions that resulted in positive net benefit from price in the fourth quarter, in advance of the lagging headwind from input cost increases, principally copper.\nIt would be our expectation that we are largely able to offset commodity inflation with price during the year with perhaps some minor manageable lag effects.\nThe second topic is acquisitions and their impact to margins.\nIn the fourth quarter, s::can results were included for two months.\nSo these two months, as expected, totaled approximately $2.5 million in revenues.\nWe recorded the typical amortization of inventory fair value step-up and acquired intangible assets, which all told, resulted in a modest loss in Q4 2020 for the short stub period.\nAs we look to 2021, the combination of s::can and ATi, with total acquired revenue of approximately $37 million, we expect to be earnings per share accretive.\nThe first quarter of 2021 will include the remaining s::can, plus a full quarter of ATi inventory step-up amortization, but we expect normalized profitability in the remaining quarters.\nKen will discuss the longer-term opportunities for these acquisitions in his remarks.\nFinally, turning to the non-recurring discrete network sunset provision.\nThis relates to the sunsetting of the CDMA cellular network for the early adopters of our original cellular radio offering.\nThis sunset is a carrier event that is part of the natural evolution of technology and impacts a variety of IoT devices across an array of industries.\nAs the innovator in cellular radios for water metering applications and as a company focused on customer care, Badger Meter provided protections for such circumstances.\nUntil recently, firm's sunsetting plans by the carriers were not in place.\nNow that these plans appear more firm, we have taken this provision, which reduced gross margins in the quarter by approximately 300 basis points to cover future radio upgrades for these early cellular customers.\nTo be crystal clear, there is no defect in the radio itself.\nThe logical question then follows.\nWill this continue to be an ongoing challenge with cellular radios?\nThe short answer is no.\nThe CDMA network was already well established when Badger Meter introduced its first cellular radio.\nThese first networks had been in service nearly 20 years at that point.\nSubsequently, we have moved ahead of the technology curve, as demonstrated by the launch of ORION LTM [Phonetic] in 2019 and our continued innovation around cellular radio technologies.\nThese technologies will be supported by multiple generations of cellular networks.\nTurning to SEA expenses.\nThe fourth quarter's spend of $27.1 million increased $2.3 million from the prior year.\nThis includes the addition of s::can for two months, including the resulting intangible asset amortization.\nMore broadly, higher personnel costs were partially offset by lower travel, trade show and other pandemic-impacted expenses.\nIncluding both s::can and ATi in 2021, we expect ongoing SEA as a percent of sales to average in the 25% to 26% range.\nThe income tax provision in the fourth quarter of 2020 was 22.6%, slightly lower than the prior year's 24.3% rate.\nWith the additions of s::can and ATi, we don't expect a significant change in our normalized tax rate in 2021, absent any new statutory US tax code changes.\nIn summary, earnings per share was $0.45 in the fourth quarter of 2020, an increase of 7% from the prior year's earnings per share of $0.42.\nWorking capital as a percent of sales was 26%, with about 1% of that associated with the addition of s::can.\nOn an organic basis, primary working capital as a percent of sales declined about 200 basis points year-over-year.\nOur full-year free cash flow of $80.5 million was 10% higher than the prior year's $73.2 million and represents approximately 163% conversion of net earnings.\nOur cash flow focus will not abate and we anticipate free cash flow conversion to exceed 100% in 2021.\nHowever, I would caution we do not expect to see the conversion at the robust levels of the past two years, given the structural change in working capital already achieved.\nWe ended the year with approximately $72 million of cash on the balance sheet after taking into account the s::can acquisition.\nIn early January, we deployed $44 million net of cash acquired for ATi, remaining in a net cash positive position.\nAlong with the continued full access to our untapped $125 million credit facility, we have ample financial flexibility to continue executing on our capital allocation priorities.\nTurning to Slide 5, I'd like to highlight the two transactions we completed since our last earnings call and how we believe they bring significant value to the Badger Meter portfolio.\ns::can acquired in November of 2020 and Analytical Technology, Inc, or ATi, acquired just a few weeks ago are both pioneers in providing real-time water quality monitoring solutions.\nThis is differentiated from traditional water quality testing because these solutions capture real-time data through sensors and systems that do not rely on labs, reagents or other consumables resulting in lower capital and operating cost for customers.\nJust as water quality -- just as water utility billing moved from manual reads to advanced metering infrastructure or AMI, we believe water quality monitoring will evolve from lab sample testing to online real-time collection, monitoring and reporting.\nAdding real-time water quality parameters to Badger Meter's core flow measurement, pressure and temperature sensing capabilities as to the scope of actionable data for utilities to improve operating efficiency and for industrial customers to monitor both process and discharge water.\nWe see multiple avenues for growth synergies by bringing together these two acquisitions into Badger Meter.\nFor example, from a water quality sensor standpoint, with this combination, we have a full product offering of both electrochemical and optical sensors.\nFrom a geographic standpoint, where ATi is strong in the US and UK, s::can has an installed base in 50 countries.\nFrom a scale and coverage standpoint, leveraging customer relationships, inside sales, rep networks and distributors will create a greater ability to cross-sell throughout the water ecosystem, including water utilities, wastewater treatment and industrial water applications.\nThere is no question it will take time and investment in order to realize these long-term growth synergies.\nWe need to advance our communications to capture quantity plus quality data parameters, online real-time VR industry-leading ORION Cellular radios.\nWe will need to augment BEACON and EyeOnWater to store, integrate, analyze and visualize information, providing a holistic view of the water network.\nThis is no small undertaking but one that we are organized to execute.\nIn the near-term, it is business as usual for the two acquired businesses.\nThe combined acquired annual sales of approximately $37 million with EBITDA margins in the mid-teens will be earnings per share accretive to our results.\nNow turning to our outlook on Slide 6.\nWhile we were all hoping that turning the calendar 2021 would also turn the page on COVID-19, that is obviously not the case.\nDespite the continued uncertainty, we remain fully prepared to manage safely in support of our customers in the essential water sector, as we did throughout much of 2020.\nThere has been no significant change in customer tone regarding utility budgets with spending on critical and necessary activities, which includes metering solutions required for billing and reducing non-revenue water.\nAs we have stated, our large and diverse customer base will have different needs, circumstances and priorities.\nBut as a whole, utility water bid tenders and awards are largely continuing with their normal processes with limited extended timelines or deferrals.\nWhile we don't provide guidance, Bob will walk through the detail on a few of the items that will impact us in 2021, including price/cost, SEA levels and the expected impact of recent acquisition activity.\nObviously, we had some significant quarterly swings on the top-line throughout 2020, so the growth rates that are uneven in normal circumstances will be more so during 2021.\nWe will continue to drive cash flow, which is the fuel to invest in and grow our business.\nThis includes both organic and acquisition-driven growth with a focus on additional product and software offerings serving water-related markets and applications.\nFor example, expanding functionality of our EyeOnWater software app that helps drive consumer engagement.\nFinally, we will continue to advance a variety of priorities on the ESG front, including relentlessly focusing on employee safety, reducing greenhouse gas emissions, fostering our culture of inclusion and of course promoting water conservation and quality.\nDespite the unprecedented backdrop of a health and economic crisis, we have delivered utility water revenue growth, SaaS revenue as a percent of sales growth to now 5%, strong EBITDA margin expansion, robust working capital management and cash flow and successful execution of two accretive acquisitions.\nIt's a true testament to the criticality of the water industry and the exceptional Badger Meter team.\n", "role": "user" }, { "content": "q4 sales $112.3 million versus refinitiv ibes estimate of $109.2 million.\nq4 earnings per share $0.45.\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 Aaron Levie, our CEO; and Dylan Smith, our CFO.\nWe'll also post the highlights of today's call on Twitter at the handle @boxincir.\nThe impact of the KKR-led investment in Box and any potential repurchase of our common stock.\nThese statements reflect our best judgment based on factors currently known to us and actual events or results may differ materially.\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 our GAAP results.\nUnless otherwise indicated, all references to financial measures are on a non-GAAP basis.\nWith that, let me hand it over to Aaron.\nI'm incredibly proud of our team at Box and our strong start to FY 2022, delivering a 200 basis point improvement in our revenue growth rate versus the previous quarter, 24% billings growth and 20% growth in RPO year-over-year.\nWith the strong momentum we're driving, we are confident in our ability to achieve accelerated growth and higher operating margin now and in the years ahead.\nAs a result, we are raising our revenue guidance for the full year.\nDylan will go over the financial results and guidance in more detail.\nBut before I hand it over to him, I'd like to talk about our strategy, the value that our Content Cloud brings to our customers and the positive impact we're seeing in the market as a result of our strong execution.\nOur strategy is well aligned to three major trends that are driving the future of work.\nFirst, work is being defined by hybrid work environment.\nIn a recent Gartner study, more than 80% of company leaders surveyed said they plan to allow employees to continue working remotely at least some of the time.\nEven as offices open back up, traditional physical boundaries will continue to blur and enterprises will need to empower collaboration both internally among virtual and distributed teams, and externally with partners, customers and suppliers to get work done from anywhere.\nSecond, we know that the future of business will be cloud and digital first.\nCustomer and partner interaction will increasingly be executed digitally from the onboarding of employees to automating workflows with partners.\nThese workflows must function using multiple cloud-based application, access to content in a single unified platform across a multi-cloud environment is critical to ensure productivity and business success.\nAnd finally, data security, compliance and privacy remain more important than ever.\nGovernments across the world are enacting new data privacy requirements and as recent cyber attacks, such as the SolarWinds and Colonial Pipeline events have shown, cybersecurity threats are affecting all enterprises, and creating significant business disruption.\nContent integrity is an absolute requirement.\nContent is the lifeblood of a company and any breach that threatens the security of content can cause irreversible damage to the enterprise.\nAt the heart of the challenges is how companies work with their most valuable content.\nGreat content is how the best movies get made.\nHow is that sales pitches are done?\nHow marketing campaigns drive customer engagement?\nAnd how the next new product breakthrough is ideated and ultimately delivered to market?\nToday, enterprise has spend tens and billions of dollars every year just to store and manage content in fragmented legacy systems, like network storage, and document management systems.\nThere is simply no way enterprises can get the value of the content that they have with these approaches.\nThat's where Box comes in.\nOur platform offers more critical functionality designed for the multi-cloud hybrid work environment in a seamless secure user experience than any other solution in the market today.\nWe are building the leading Content Cloud for enterprises.\nOur strategy is to power, automate and integrate the complete content lifecycle.\nFrom the moment content is created through the entire content workflow in a single platform that enables our customers to thrive in a work from anywhere, digital first, highly insecure world.\nOur Content Cloud moves beyond legacy content management systems by automating workflows between cloud-based applications, through integrations with the apps our customers are using to get their work done, like Salesforce and Microsoft Teams.\nWe're building deep functionality in the key areas of the content lifecycle, such as our advanced workflow solution with Box Relay, and e-signatures with Box Sign.\nWe have natively built advanced security into the platform, so that our customers' content stays safe and compliant.\nAnd now we're making it easier than ever for our customers to move content in the box with Box Shuttle.\nCombined with our cloud-first approach, Box is the only platform that enables customers to work in and across cloud-based applications without fragmented content architectures.\nBox provides a seamless, simple and intuitive experience that drives productivity for users every time wherever they are.\nOur vision for the Content Cloud is resonating with customers.\nMore and more our customers are recognizing the strategic importance of consistent content availability and integrity, whether they're collaborating on a project in Zoom, closing a quarter using Salesforce, or building a new product with Autodesk.\nThis is illustrated in Q1 by the 48% year-over-year growth in enterprise deals over $100,000.\nAdditionally, our multi-product suite sales are gaining strength, with our customers adopting and leveraging more of our Content Cloud functionality.\nAs proof of this, we have experienced a record 49% attach rate of our suites this quarter in $100,000 plus deals, and we anticipate the growth of our multi-product plans continuing in the future.\nIn Q1, we continued to build on our leadership position in cloud content management, and transform how enterprises work.\nFirst, we expanded our product portfolio with the acquisition of SignRequest, a leading cloud-based electronic signature company to develop Box Sign.\nBox Sign is expected to be available this summer.\nIt will be natively embedded in the Box, and included in all Box business subscription plans, with additional levels of functionality being available in our enterprise plans and suites.\nThis will enable all of our customers to have access to the value of Box Sign, while also enabling us to monetize the higher end e-signature use cases that leverage advanced functionality in API's.\nAnother exciting announcement we made in Q1 was the availability of the all new Box Shuttle.\nFor many organizations moving to the cloud has been a priority, but the cost and complexity of content migration has been a major impediment to cloud adoption.\nThe new Box Shuttle can migrate some of the most complex and large scale content management environments at a lower cost and faster than ever.\nWe also announced significant updates to our security products this spring.\nBox Shield, which helps customers reduce risk and proactively identify potential insider threats or compromised accounts, remains the fastest growing product in Box's history.\nWe continue to rapidly innovate on Box Shield advanced machine learning technology to help protect our customers most important IP.\nFinally, we announced updated partnerships with both Microsoft and Cisco.\nWe continue to hit enhance our integrations with Microsoft Teams, Office and Microsoft Information Protection suite.\nAs customers adopt a multi-cloud strategy, they need to access and work with content across a range of applications.\nAnd Box helps bridge content management between Microsoft and other platforms.\nSimilarly, we've updated our partnership with Cisco Webex to make it even easier for users to create workflows that span our two platforms.\nTurning to our customers, we have seen some outstanding examples of how organizations are utilizing Box to run their businesses and drive productivity such as a global leader in the financial sector through embedded Box to deeper into its business with a seven figure expansion in Q1.\nFor this leading enterprise Box manages its business critical content empowers encrypted document sharing between clients and financial advisors at scale, while adhering to the highest standards of data privacy, protection and security.\nAnd a government agency who selected Box in Q1 to Power Secure collaboration for their hybrid work environment, as well as drive critical processes to the delivery and sharing of public health research.\nOver 100,000 customers rely on Box to Power Secure collaboration and its critical business processes across their organizations in Q1.\nAnd we close wins and expansions with leading organizations such as D.A. Davidson Companies, IQVIA, Isuzu Motors and Penguin Random House.\nOur strategy is working, as demonstrated by our strong results, including the improvement in our revenue growth this quarter in addition to the very strong billings in RPO growth.\nWe are committed to our FY 2024 targets of delivering a growth rate of 12% to 16% in operating margin in the range of 23% to 27%.\nWe are going after one of the largest markets in software attacking a total addressable market of over $55 billion in spend on content management, collaboration, storage and data security annually.\nAnd with the addition of e-signature capabilities, our market is only getting larger.\nWe're also confident that we have the right team and Board of Directors to take full advantage of this opportunity and drive significant shareholder value going forward.\nWith the addition of John Park, who brings significant software growth investing experience and the expertise and resources of KKR, we have eight independent directors who are former or current operators of high growth and highly profitable SaaS and enterprise software companies, including three former or current public software CEOs, and two former public CFOs.\nThroughout this year, we will continue to build out our industry-leading Content Cloud.\nWe will expand data migration and workflow automation.\nGo deeper with our data security and compliance offerings, enable new ways to collaborate and publish content on Box and enhance insights and analytics, so customers can get the most out of their content.\nWith over 100,000 customers on our platform, and exciting roadmap and a strategy that is already yielding results.\nWe are building on our leadership in cloud content management and driving the next phase of growth.\nWith that, I'll hand it over to Dylan.\nIn Q1, we are pleased to have exceeded our guidance across all key metrics.\nOur acceleration in revenue growth, billings growth, RPO growth, and the operating profit clearly demonstrates the strong trajectory of our business.\nAs a result, we are raising our full-year revenue guidance.\nWe delivered revenue of $202 million up 10% year-over-year, a 200 basis points improvement from the 8% growth we delivered in the previous quarter.\nOur Content Cloud offerings are increasingly resonating with our customers, as demonstrated by the strong add-on product traction and large deal growth we achieved in Q1.\nAs Aaron mentioned, we're excited by the early customer response and demand for native e-signature capabilities in Box, and we're on track to make Box Sign generally available this summer.\nAs our customers are increasingly adopting products with more advanced capabilities, 60% of our revenue is now attributable to customers who have purchased at least one additional product up from 54% a year ago.\nIn Q1, we closed 59 deals worth more than $100,000 up 48% year-over-year.\nImportantly, 49% of these six-figure deals included one of our multi product suite offerings, a new record for us and up significantly from 28% a year ago.\nWe ended Q1 with remaining performance obligations or RPO of $865 million, up 20% year-over-year, exceeding our revenue growth by 1000 basis points and an acceleration from the prior quarters RPO growth rate.\nQ1s RPO growth is comprised of 15% deferred revenue growth, and 23% backlog growth, demonstrating Box's stickiness as we continue to sign longer term agreements to support our customers content strategies.\nWe expect to recognize more than 60% of our RPO over the next 12 months.\nQ1 billings of $159 million were up 24% year-over-year, and a significant improvement from Q4's growth rate.\nThis result reflects the impact of a few early renewals from customers who had been set to renew in Q2, shifting roughly $5 million in billings from Q2 to Q1.\nOur net retention rate at the end of Q1 was 103%, up from 102% in Q4.\nThis result was driven by strength in customer expansion and a stable annualized full churn rate of 5%.\nBased on the strong momentum, we're seeing in customer expansion and retention, we expect to deliver additional improvement in our net retention rate over the course of this year.\nTurning to margins, our non-GAAP gross margin came in at 73% in line with the same period a year ago.\nQ1 gross profit of $148 million was up 10% year-over-year consistent with our revenue growth.\nWe expect gross margin to increase over the course of this year and for it to come in at roughly 74% for the full year as we continue to deliver infrastructure efficiencies.\nOur ongoing efforts to improve profitability are paying off.\nIn Q1, we delivered significant bottom-line improvements through our continued focus on profitable growth and disciplined expense management.\nAdditionally, our investments in building out our Engineering Center of Excellence in Poland will help us drive additional operating leverage and efficiencies over time.\nQ1 operating income doubled year-over-year to $34 million, which in turn drove a 760 basis points improvement in Q1 operating margin to 17%.\nAs a result, in Q1, we delivered $0.18 of non-GAAP earnings per share above the high end of our guidance and a strong 80% improvement from $0.10 a year ago.\nI'll now turn to our cash flow and balance sheet.\nIn Q1, we delivered record cash flow from operations of $95 million, up 53% from the year ago period.\nWe also generated record free cash flow of $76 million a year-over-year improvement of 91%.\nCapital lease payments, which we include in our free cash flow calculation, were $13 million versus $17 million in Q1 of last year.\nAs a reminder, we expect our capital lease liabilities and payments to continue decreasing steadily in the coming years as we continue to drive infrastructure efficiencies and leverage our public cloud partnerships.\nFor the full year of FY 2022, we continue to expect CapEx and capital lease payments combined to be roughly 7% of revenue.\nCash from investing in Q1 reflects $57 million in M&A related payments, primarily driven by the acquisition of SignRequest.\nAs a result, we ended the quarter with $612 million in cash, cash equivalents and short-term investments.\nBefore I turn the guidance, I'd like to discuss the accounting impact resulting from the preferred stock issuance that we closed earlier this month, combined with our anticipated repurchase of common stock via a self tender offer, which we expect to launch next week.\nDue to the required accounting treatment for these transactions based on our current expectations.\nThis will result in the following earnings per share impacts.\nFirst on a quarterly basis, until conversion of the preferred stock and the common stock are roughly $0.025 reduction due to the non-cash accounting impact related to the preferred stock dividend, which we anticipate settling and shares of common stock.\nSecond for Q2 and FY 2022 a $0.02 reduction due to a temporarily elevated share count during the period between our recent preferred stock issuance and the completion of our anticipated share repurchase.\nCombined, these items will result in a $0.04 reduction to earnings per share in Q2 and a $0.09 reduction to earnings per share for the full year.\nThis preferred stock dividend will appear below the net income line in our P&L and in the earnings per share note accompanying Box's financial statements.\nNote that this will have no impact on net income.\nWith that, I would like to turn to our guidance for Q2 and fiscal FY 2022.\nBased on our strong Q1 results and forecast, we are raising our full year revenue guidance.\nOur underlying profitability expectations for FY 2022 are also now higher than our initial expectations.\nFor the second quarter of fiscal 2022, we anticipate revenue of $211 million to $212 million representing 10% year-over-year growth.\nWe expect non-GAAP operating margin to be in the range of 18% to 18.5%, representing a 150 basis points sequential improvement at the high end of this range.\nIncluding the $0.04 impact I just discussed.\nWe expect our non-GAAP earnings per share to be in the range of $0.17 to $0.18 and GAAP earnings per share to be in the range of negative $0.13 to negative $0.12, on approximately 167 million and 160 million shares respectively.\nWe expect our billings growth rate to be in the mid single-digit range, which includes the $5 million impact from early renewals that I mentioned earlier.\nCombined with our strong Q1 billings results, this would result in year-over-year billings growth of roughly 13% for the first half of FY 2022 ahead of revenue growth and an acceleration from our billings growth in the first half of last year.\nFor the full year, ending January 31, 2022.\nWe are raising our full year revenue guidance and we now expect our FY 2022 revenue to be in the range of $845 million to $853 million, representing approximately 11% year-over-year growth at the high end of this range.\nWe expect non-GAAP operating margin to be in the range of 18% to 18.5% above our initial FY 2022 expectations.\nThe high end of this range represents a 320 basis point improvement from last year's results of 15.3%.\nOur stronger business performance drives a $0.04 improvement in our earnings per share expectations for FY 2022 versus our initial guidance.\nAt the same time, our full year earnings per share guidance incorporates the $0.09 reduction for the preferred stock accounting charges that I mentioned previously.\nAs a result of these various factors, we now expect our FY 2022 non-GAAP earnings per share to be in the range of $0.71 to $0.76 on approximately 161 million diluted shares.\nOur GAAP earnings per share is expected to be in the range of negative $0.50 to negative $0.45 on approximately 154 million shares.\nWe continue to expect billings growth to be slightly above revenue growth for the full year of FY 2022 and for the back half of FY 2022 our billings growth should be roughly in line with revenue growth.\nWe expect RPO growth to outpace both revenue and billings growth for the full year of FY 2022.\nQ1 was an excellent start to our fiscal year fueled by strong momentum in large deals and suites attach rates.\nOur results, most notably accelerated revenue billings and RPO growth, combined with significant operating margin improvements, clearly indicates that our strategy is working as customers are placing more emphasis on the value of their content.\nAs the leading Content Cloud, Box is uniquely positioned to solve a wide variety of high value use cases for our customers.\nAs we build on this leadership position, we're very confident in achieving our FY 2024 targets two years from now of a 12% to 16% growth rate and operating margin in the range of 23% to 27%.\n", "role": "user" }, { "content": "compname reports q1 non-gaap earnings per share of $0.18.\nsees q2 non-gaap earnings per share $0.17 to $0.18.\nsees q2 gaap loss per share $0.12 to $0.13.\nq1 non-gaap earnings per share $0.18.\nq1 gaap loss per share $0.09.\nsees q2 revenue $211 million to $212 million.\nsees fy revenue $845 million to $853 million.\nsees fy 2022 non-gaap earnings per share $0.71 to $0.76.\nsees fy 2022 gaap loss per share $0.45 to $0.50.\nbillings for q1 of fiscal year 2022 were $159.4 million, up 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: I'm Cynthia Hiponia, Vice President, Investor Relations.\nOn the call today we have Aaron Levie, our CEO; and Dylan Smith, our CFO.\nHowever supplemental slides are now available for download from our website.\nWe also posted the highlights of today's call on Twitter at the handle, @boxincir.\nThe timing and market adoption of and [Phonetic] benefits from our new products, pricing and partnerships.\nThe impact of our acquisitions on future Box product offerings, the impact of the COVID-19 pandemic on our business and operating results.\nThe KKR-led investment in Box and any potential repurchase of our common stock.\nThese statements reflect our best judgment based on factors currently known to us and actual events or results may differ materially.\nIn addition, during today's call, we will discuss non-GAAP financial measures.\nThese non-GAAP financial measures should be considered and in addition to, not as a substitute for or in isolation from our GAAP results.\nUnless otherwise indicated, all references to financial measures are on a non-GAAP basis.\nLastly, while we recognize, there has been news around our upcoming Annual Meeting on September 9.\nThe purpose of today's call is to discuss our financial results.\nWith that now let me hand the call over to Aaron.\nWe achieved strong second quarter results across all metrics, marking our fifth consecutive quarter of achieving both revenue and non-GAAP earnings per share above our guidance.\nWe delivered second quarter revenue growth of 12% year-over-year, a second consecutive quarter of accelerating revenue growth, billings growth of 13% and RPO growth of 27%.\nFrom our business performance and building momentum, it's clear that enterprises are increasingly making strategic, long-term decisions on how to support a remote workforce and digital processes while still maintaining a high level of security and compliance policies.\nAs a result, more customers are turning to the Box Content Cloud to deliver secure content management and collaboration built for this new way of working.\nOur strong momentum is best illustrated by our customer deal metrics in the second quarter.\nOur net retention rate was 106%, up from 103% in the prior quarter.\nWe had 74 new deals over $100,000, up 16% year-over-year.\nAnd we had a 73% attach rate of Suites on deals over $100,000 in the quarter, up from 49% in the prior quarter and up from 31% in Q2 fiscal '21.\nWe view these strong customer metrics is evident that we are executing on the right product strategy, one that is well aligned with the three major changes happening around the future of work and the enterprise.\nFirst, hybrid work is going to be a necessity going forward; second, digital transformation is driving significant change across all industries; and third, cyber security and privacy threats are increasing at a growing rate as we've seen with recent ransomware attacks.\nThese trends have major implications for how companies work with their content.\nToday enterprises have to purchase and integrate a mix of solutions from disparate vendors to solve the entire content management lifecycle.\nThis leads to broken processes for users, security risk due to the gaps between tools, fragmented data and increased cost for enterprise customers.\nOur vision for the Box Content Cloud is to integrate, empower the complete content lifecycle from the moment content is created through the entire content workflow.\nBy leveraging our product leadership and content management, our Content Cloud will continue to extend in the key elements of this lifecycle including e-signature, content publishing, deeper content workflows, new collaboration experiences, analytics, data privacy and advanced security.\nCritical to our success is our ability to execute on our product roadmap which expands our total addressable market and adds value to our core platform with new product innovation.\nThis is why we were pleased to deliver on our product road map with the launch of Box Sign to select customers in late July, capitalizing on the trend of more transactions moving from paper-based manual workflows to the cloud, while also addressing an incremental multi-billion dollar market.\nBox Sign was developed through the acquisition of SignRequest, a leading cloud-based electronic signature company and a good example of our disciplined approach to M&A.\nOur decision to acquire this particular technology versus developing internally was driven by time-to-market with e-signature being the number 1 requested feature from customers last year.\nInitial response from customers has been very positive and we are rolling our Box Sign to all business and enterprise customers throughout this fall with a significant roadmap of innovation ahead.\nAlso over the quarter, we made meaningful updates to our governance functionality to help support customers' legal hold and document retention needs as well as new features within Box Shield to protect the flow of content with advanced machine learning based security features.\nOur security, compliance, data governance and privacy capabilities remain one of the most critical reasons customers choose the Box Content Cloud and our innovation here is only accelerating.\nIn addition to these and many other product updates in the quarter, we continue to integrate deeply across the SaaS landscape, a key part of our content product value proposition, interoperability and strong partnerships with leading technology companies.\nThis is critical to our success at scale, building on the great work we've done with so many amazing partners, including Slack and Microsoft.\nIn the second quarter, we announced a new integration with ServiceNow legal service delivery application to modernize legal operations which benefit customers by bringing together ServiceNow's advanced workflow expertise to minimize manual processing while ensuring confidential legal content is secured on Box's Content Cloud.\nAnd we also announced new and deepened integrations with Box for Cisco Webex and make it easier for customers to work securely and effectively in the cloud.\nAnd we're just getting started to address our $50 billion plus market opportunity, we are building the end-to-end platform for managing the lifecycle of content and continue to be regarded by customers and analysts as the leading independent vendor for Cloud Content Management.\nOf course, evolving our product strategy to meet today's enterprise, remote and hybrid workforce needs and strengthening our partnerships with leading technology companies are only part of our strategy to drive growth.\nWe have also been methodically enhancing our land and expand go-to market model to deliver our full platform to our customers.\nTo accelerate growth, over the past couple of years, we've been actively implementing a number of strategic go-to-market initiatives including optimizing pricing and packaging, improving sales segmentation and territory planning, driving efficient marketing programs and pipeline generation, increasing sales enablement and doubling down our focus on key verticals such as life sciences and financial services in the federal government and the success of our go-to-market initiatives and the growing demand for our more advanced capabilities drove our strong Suites adoption in the second quarter.\nThis is why we've been working aggressively to sell the full Box platform through our Suites' offering to bring all the Box has to offer to our customers.\nWe know that when a customer adopts our multi-product offerings, we see greater total account value, higher net retention, higher gross margin and a more efficient sales process.\nBuilding on the success of Suites, in late July, we also announced a new simplified product addition for our enterprise customers called Enterprise Plus which includes Shield, Governance, Relay, Platform, Box Sign, the ability for large file uploads and enhanced important consulting credits.\nYou can see the success of our go-to-market efforts most clearly when looking at our Q2 customer expansion.\nFor instance, one of the largest banks in the world purchased a seven figure deal with multiple products including KeySafe, Governance, Relay, Shield and Platform to support new use cases for Box including claims processing and loan origination in a more secure virtual environment.\nThe bank has also standardized on Box for internal and external collaboration.\nAn innovative biopharmaceutical company did a six figure expansion with Box to support its growing workforce following multiple acquisition to help power its mission to transform the way the drugs are manufactured in the US.\nWith Box, the company's workforce is able to improve collaboration, security and GST compliance providing with them with a scalable and secure foundation that allows them to work faster.\nAnd finally, a global leader in energy services that has been a Box customer since 2017 expanded its use of Box with a six figure ELA and the purchase of Enterprise Plus.\nThis will enable them to have a proactive approach to internal threat detection on content, be more prescriptive with security controls around content and automate more than a dozen critical business workflows.\nThese deals showcase the simplicity and power of our business model.\nWe are focused on expanding our customers through additional seed growth by going wider within organizations, as well as adding more value through additional feature enhancements and new products that drive up customer value and retention.\nOver the past year, we have been executing on our strategy to reaccelerate growth while also driving continued operating margin improvements and our results in the second quarter demonstrate that our strategy is working.\nAs a result, we have raised our guidance for the full fiscal year 2022 and are reiterating our long-term target for the 12% to 16% revenue growth and 23% to 27% non-GAAP operating margin in FY '24.\nOur strong second quarter results and our confidence in our outlook for this fiscal year and beyond are the direct result of the leadership of our board and the hard work and execution we've been driving as a company.\nI could not be prouder of the team at Box and while we still have so much we want to accomplish, I am confident that we have the right team and leadership to execute on our strategy and targets going forward as well as a world-class Board of Directors that is focused on and committed to driving enhanced value for shareholders.\nAs Aaron mentioned, we are proud to have delivered strong top and bottom line results in Q2.\nWe drove an acceleration across key metrics, revenue growth, net retention and operating profit, clearly demonstrating strong business momentum as we build on our Content Cloud vision.\nRevenue of $214 million was up 12% year-over-year, an acceleration from our Q1 revenue growth of 11% and above the high end of our guidance.\nOur Content Cloud offerings are increasingly resonating with our customers as shown by the strong Suites traction and net retention rate we achieved in Q2.\nAs our customers are increasingly adopting products with more advanced capabilities, 61% of our revenue is now attributable to customers who have purchased at least one additional product, up from 56% a year ago.\nIn Q2, we closed 74 deals worth more than $100,000, up 16% year-over-year, a record 73% of the six-figure deals were sold as a Suite, up from 49% in Q1 and from 31% in the year-ago period.\nSuites have enabled us to streamline our sales process and drive greater adoption of multi-product solutions, resulting in customers who are larger, stickier and have a greater propensity to expand over time.\nWe couldn't be more encouraged by our traction here.\nWe ended Q2 with remaining performance obligations or RPO of $922 million, up 27% year-over-year, an acceleration from the prior quarter's RPO growth rate of 20% and exceeding our revenue growth by 1,500 basis points.\nQ2's RPO growth is comprised of 16% deferred revenue growth and 37% backlog growth demonstrating Box's stickiness as we continue to sign longer term agreements to support our customers' content strategies.\nWe expect to recognize more than 60% of our RPO over the next 12 month.\nQ2 billings of $213 million were up 13% year-over-year and well ahead of our previous expectations to deliver a growth rate in the mid-single-digit range.\nThis billings result reflects the strong sales execution that we saw in the enterprise and SMB with both teams generating double-digit year-over-year sales productivity improvement.\nOur net retention rate at the end of Q2 was 106%, up 300 basis points from 103% in Q1.\nThis result was driven by strength in customer expansion and a stable annualized full churn rate of 5% based on the strong momentum we're seeing in customer expansion and retention, we expect to deliver additional improvement in our net retention rate over the course of this fiscal year.\nGross margin came in at 74.5%, up 100 basis points from 73.5% a year ago.\nQ2 gross profit of $160 million was up 13% year-over-year, exceeding our revenue growth rate.\nWe continue to benefit from both our ongoing shift to cloud data centers and the hardware and software efficiencies we're generating in the infrastructure we manage.\nOur gross margin expectations for the full year of FY '22 continue to be approximately 74%.\nOur ongoing efforts to improve profitability are paying off as we continue to unlock leverage in our operating model.\nQ2 operating income increased 47% year-over-year to $44 million which in turn drove a 500 basis point improvement in Q2 operating margin to 20.6%.\nWe continue to deliver profitable growth and disciplined expense management.\nThis year, we've made significant progress in building out our Engineering Center of Excellence in Poland, which will help us drive additional operating leverage and efficiencies over time as we transition certain engineering functions away from higher cost California locations.\nThis resulted and are delivering $0.21 of diluted non-GAAP earnings per share in Q2 above the high end of our guidance and up from $0.18 a year ago.\nI'll now turn to our cash flow and balance sheet.\nIn Q2, we delivered cash flow from operations of $45 million, up 39% from the year-ago period.\nWe also generated free cash flow of $30 million, a year-over-year improvement of 124%.\nCapital lease payments, which we include in our free cash flow calculation were $13 million down from $14 million in Q2 of last year.\nFor the full year of FY '22, we continue to expect capex and capital lease payments combined to be roughly 7% of revenue.\nAs a result, we ended the quarter with $779 million in cash, cash equivalents and restricted cash.\nWe completed our modified Dutch Auction Tender Offer at the end of June for an aggregate cost of approximately $238 million and our Board subsequently authorized a $260 million share repurchase program.\nAs of August 24, 2021, we had repurchased 2.9 million shares of Class A common stock at a weighted average price of $23.89 for a total of $70 million.\nCombined with the modified Dutch Auction tender, we have repurchased a total of 12.2 million shares for a total of $308 million.\nWith that, I would like to turn to our guidance for Q3 and fiscal 2022.\nAs we announced a few weeks ago, based on our strong Q2 results and our continued business momentum, we raised our full year revenue, operating margin and earnings per share guidance.\nNote that our share count and earnings per share expectations factor in only the shares that we have already repurchased to date.\nWhile we expect to opportunistically purchase additional shares through the remainder of the year under our ongoing share repurchase program, the amount could vary significantly based on market conditions and other factors.\nTherefore, we're taking a prudent approach and not assuming any future repurchases in our Q3 or FY '22 outlook.\nFor the third quarter of fiscal 2022, we anticipate revenue of $218 million to $219 million, representing 12% year-over-year growth and a third consecutive quarter of revenue growth acceleration at the high end of this range.\nWe expect our non-GAAP operating margin to be approximately 20%, representing a 200 basis point improvement year-over-year.\nWe expect our non-GAAP earnings per share to be in the range of $0.20 to $0.21 and GAAP earnings per share to be in the range of negative $0.09 to $0.08 on approximately 162 million and 154 million shares respectively.\nWe expect our Q3 billings growth rate to be roughly in line with our revenue growth for the full fiscal year ending January 31, 2022, we have raised our full year revenue guidance and we expect FY '22 revenue to be in the range of $856 million to $860 million, up 11% year-over-year.\nThis is an increase from last quarter's guidance of $845 million to $853 million and represents an acceleration from last year's revenue growth.\nWe expect our non-GAAP operating margin to be approximately 19.5%, representing a 410 basis point improvement from last year's result of 15.4% and a sizable increase over our previous guidance of 18% to 18.5%.\nDue to our strong top and bottom line momentum, we now expect our FY '22 non-GAAP earnings per share to be in the range of $0.79 to $0.81 on approximately 166 million diluted shares.\nOur GAAP earnings per share is expected to be in the range of negative $0.34 to $0.32 on approximately 158 million shares.\nWe continue to expect our billings growth rate to be above our revenue growth rate for the full year of FY '22 and for RPO growth to outpace both revenue and billings growth for the full year of FY '22.\nWe will provide further details into our Q4 expectations on our Q3 earnings call.\nFinally, our FY '22 revenue growth rate combined with FY '22 free cash flow margin is now expected to be at least 32%, an increase over our previous guidance of at least 30%.\nBox today is not the Box of 2019.\nOur strong Q2 performance is the result of the business transformation we began two years ago.\nThis year, we're delivering both revenue acceleration and increased operating leverage for our shareholders, proving that our Content Cloud platform is resonating with customers.\nWe are well on our way to delivering against our previously stated target of 12% to 16% revenue growth and 23% to 27% operating margin in FY '24, two years from now.\nIn FY '24, we're also committed to delivering revenue growth plus free cash flow margin of 40%.\nBefore we conclude, I'll hand it back to Aaron for a few closing remarks.\nBefore we open it up to questions, we wanted to share that on October 6, we will be hosting 10s of thousands of attendees at BoxWorks which will be an all digital event for the second year in a row.\nThis year will be another incredible event where we'll share more on our vision for the Content Cloud and we'll showcase major product advancements.\nAttendees will also be hearing from an outstanding slate of speakers including the CEOs of Okta, Slack and Zoom as well as IT [Phonetic] leaders from enterprises like Lionsgate, State Street, USAA and World Fuel Services among many others.\nQ2 was a strong quarter, not only in terms of achieving quarterly revenue and non-GAAP operating results that were above our original guidance, but also in our metrics that show the power of our Content Cloud platform.\nNet retention rate, billings and RPO growth are all leading indicators that show the success of our strategy, not only retaining customers, but expand our solutions, within our existing customer base to drive revenue growth and operating margin improvements and ultimately shareholder value.\n", "role": "user" }, { "content": "‍​q2 revenue was $214.5 million, up 12%; q2 billings were $213 million, up 13%.\n‍​qtrly loss per share $0.08; qtrly non-gaap earnings per share was $0.21.\n‍q2 remaining performance obligations of $922.4 million, up 27%.\nremain confident in our ability to execute on long-term financial targets for fy24.\nfy22 revenue guidance expected to be in range of $856 million to $860 million.\nsees q3 revenue in range of $218 million to $219 million.\nfy22 gaap net loss per share expected to be in range of $0.34 to $0.32; fy22 non-gaap earnings per share is now expected to be in range of $0.79 to $0.81.\nbox - q3 gaap net loss per share expected to between $0.09 to $0.08; q3 non-gaap diluted net income per share expected to be between $0.20 to $0.21.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Also, please note that this teleconference is copyrighted by Brady Corporation and may not be rebroadcast without the consent of Brady.\nAs such, your participation in the Q&A session will constitute your consent to being recorded.\nEven in this challenging environment caused by the ongoing impacts of the COVID-19 virus and the associated inflation and logistical challenges, the Brady team once again performed quite well.\nI'm proud of how the team was able to navigate this challenging economic environment and deliver for both our customers and our shareholders.\nThis quarter, we grew sales by a very healthy 16% and we increased earnings per share by 4.7%.\nIf you exclude the impact of amortization, then our earnings per share was up even more significantly at 9.1%.\nIn addition to this solid revenue and earnings growth, we have a rock solid balance sheet.\nThis quarter, we returned more than $30 million to our shareholders in the form of dividends and buybacks.\nAnd we're still in a net cash position of more than $90 million.\nIn our WPS business, sales were down by 7.8%.\nThis sales reduction was almost exclusively the result of very challenging comparables.\nLast year, our WPS team did an excellent job of providing COVID-related products to our customers.\nThe sale of these products, which included social distance signage and personal protective equipment, has since waned, thus resulting in challenging comparables.\nThe best way to look at our WPS business is to compare sales to the pre-COVID period of fiscal 2020, which would show that our current sales levels exceeded those historic pre-COVID levels.\nIn our Identification Solutions business, we continue to post excellent results with sales growth of 25.4% and segment profit growth of 21.2%.\nAnd if you exclude the impact of amortization expense, segment profit would have been up a robust 26.4%.\nOur Identification Solutions business is a very strong franchise and continues to perform extremely well.\nAs we look ahead, our priorities are the first to drive organic sales growth and ensure we are serving our customers extremely well during this period of challenging logistics.\nSecond, it is to take the necessary cost and pricing actions to offset the impacts of this inflationary environment and return to pre-pandemic gross margin levels.\nThird is to integrate our recent acquisitions, and finally, to deploy our capital to drive long-term shareholder value.\nIn our ID Solutions Business, we're embracing these priorities by increasing our investments in R&D, including the incremental R&D necessary to fully realize the benefits from our recent acquisitions.\nWe are certainly seeing benefits from our historical R&D focus as we're launching new products at an increasing rate, and we're continuing to distance ourselves from our competitors who neither have the scale nor financial wherewithal to invest as heavily in R&D.\nWe're also improving our online presence by upgrading our websites and investing more in digital marketing talent all while expanding our sales force and expanding geographically into underserved markets.\nWe're driving significant automation enhancements within our factories and distribution centers, which in a period marked by scarcity of labor and rising costs, this continuous push to drive automation is critical.\nOur strong new product lineup, investments to drive sales and our positive momentum in driving efficiencies give us confidence that our ID Solutions Business will continue to generate strong organic sales growth with very healthy margins in fiscal 2022 and beyond.\nIn our Workplace Safety business, we're capitalizing our common web platform by using our much stronger market intelligence to quickly adapt to changing market dynamics.\nWe've increased our investments to new product development and the pace of new product launches in an effort to increase the percentage of proprietary high-value products sold to our customers which will have a positive impact on our profit margins.\nAnd we're intensely increasing our advertising spend and our head count in certain businesses that have lagged in an effort to drive future revenues.\nThese investments resulted in reduced segment profit this quarter but will result in increased revenues as we progressed throughout the fiscal year.\nOur Workplace Safety business is headed in the right direction, and I'm confident that the changes we've been implementing and the investments we've been making will help drive long-term sales and profit growth.\nWhile we're investing in organic sales, we're also working to streamline our SG&A cost structure so that we can fund our sales growth initiatives while still driving down SG&A expense.\nAnd we're focused on becoming a more efficient manufacturer by automating wherever we can.\nIn addition to our focus on driving organic sales growth and becoming a more efficient organization, we're also actively integrating the three acquisitions that we completed in the fourth quarter last year which includes building out our industrial track and trace solution set.\nMuch of the increased R&D that you see relates to the investments necessary to build out a comprehensive solution that will help move us into faster growing end markets and accelerate sales growth for years to come.\nI'm confident we'll continue to see revenue growth in future quarters.\nHowever, we're seeing inflationary pressures across many different cost categories from wages to freight to raw materials, and we've had challenges securing supply of certain products including chips and selected products for our supply chain originates in Asia.\nIn general, we've been overcoming these shortages, but it has resulted in increased freight charges as we've used airfreight more than we have in the past.\nEven with these inflationary pressures, our gross profit margin was still an enviable 48.2%, which was right in line with the 48.2% experience in the fourth quarter of last year.\nBut our cost increases have neither been large enough nor fast enough to fully keep up with rising costs, resulting in our gross margins being down around 70 basis points and year-over-year basis.\nAs such, we're putting through additional price increases across many of our product lines to try to catch up with the rapidly increasing costs.\nWe believe that these gross margin challenges are temporary and that in the near term we'll return to our historical gross margin levels of close to 50%.\nEven with this challenging logistical environment, Brady is well-positioned as we look to the rest of this fiscal year and beyond.\nI'm confident in our ability to deliver results to our customers, our employees and, of course, our shareholders.\nThen I'll return to provide specific commentary about our Identification Solutions and Workplace Safety businesses.\nI'll start the financial review on slide number 3.\nSales in the first quarter were $321.5 million, which was an increase of 16% when compared to the same quarter last year, and GAAP pre-tax earnings increased 5.8% to $44.7 million.\nImpacting earnings this quarter was a significant increase in amortization expense from the acquisitions completed at the end of last year.\nIf you exclude amortization expense from all periods presented, and our pre-tax earnings would have increased by 11.3% to $48.5 million.\nGAAP diluted earnings per share was $0.67, which was an increase of 4.7% over last year's first quarter.\nAnd if you exclude amortization expense, then earnings per share would have increased by 9.1% to $0.72 this quarter compared to $0.66 in the first quarter of last year.\nSo, financially, Q1 was another strong quarter even with the logistical challenges and the inflationary pressures that Michael just mentioned.\nMoving to slide 4, you'll find our quarterly sales trends.\nOur 16% sales increase consisted of organic sales growth of 7%, and increase from acquisitions of 8.3% and an increase from foreign currency translation of 0.7%.\nOrganic sales growth in our ID Solutions Business was a robust 13.2% in Q1.\nOur Workplace Safety business benefited from strong COVID-related product sales in last year's first quarter, thus creating tough comparables.\nAs a result of these tough comparables, we saw a decline in WPS organic sales of 8.6% this quarter.\nIf we compare our sales levels to the pre-pandemic period, which for us would be the first quarter of fiscal 2020, you'll see that our total sales are up a full 12% over pre-pandemic levels.\nAnd if you compare sales by division, you'll see that Identification Solutions is 15.6% above pre-pandemic levels and workplace safety is 1.2% above pre-pandemic levels.\nThis strong performance not only against last year, but also against the pre-pandemic period, is a direct result of the investments that we've been making and the strong sales momentum that we developed just before the pandemic hit.\nTurning to slide number 5, you'll see our gross profit margin trending.\nOur gross profit margin was 48.2% this quarter, compared to 48.9% in the first quarter of last year.\nAs Michael mentioned, we're seeing inflationary pressures, and we're finding it difficult to fill open manufacturing roles.\nBut we're automating wherever we can, we're driving efficiencies at a strong pace, and we're putting it through targeted price increases.\nOn slide number 6, you'll find our SG&A expense trending.\nSG&A was $96.7 million this quarter, compared to $83 million in the first quarter of last year.\nSG&A was heavily impacted by a full quarter of expense from the three acquisitions completed near the end of last year along with the increase in amortization expense that I just mentioned.\nAmortization expense was $1.4 million in the first quarter of last year and was $3.8 million in the first quarter of this year.\nAnd as a percent of sales, SG&A was 30.1% this quarter, compared to 30% in the first quarter of last year so effectively, right in line with the prior year.\nHowever, if you exclude amortization expense from both the current year and the prior year then SG&A would have declined from 29.5% of sales last year to 28.9% of sales this year.\nSlide number 7 is the trending of our investments in research and development.\nThis quarter, we invested $13.9 million in R&D.\nWe're committed to increasing our R&D investments as we continue to see opportunities for incremental R&D within our core business and, specifically, in building out a comprehensive industrial track and trace platform that encompasses our printers, high-quality materials, RFID scanners, and barcode scanners.\nThese investments in R&D are critical to help propel Brady's long-term sales growth and protect our gross profit margins.\nSlide number 8 illustrates our pre-tax income trends.\nPretax earnings increased 5.8% on a GAAP basis and increased 11.3% if you exclude amortization expense from all periods.\nSlide number 9 illustrates our after-tax income and earnings per share trends.\nAs I mentioned, our GAAP earnings per share was $0.67 this quarter compared to $0.64 in last year's first quarter, an increase of 4.7%.\nAnd if you exclude the after-tax impact of amortization, our earnings per share would have increased by an even stronger 9.1%.\nOn slide number 10, you'll find a summary of our cash generation.\nWe generated $27.5 million of cash flow from operating activities and free cash flow was $16.2 million this quarter.\nOur underlying cash flow was strong, but we intentionally invested in both inventories as well as capital expenditures.\nThis quarter, we purchased two previously leased manufacturing facilities for a total cash outlay of $7.6 million.\nBoth of these facility purchases were ROI positive and will help secure our long-term future.\nThis quarter, we also continued to increase inventories as we've been intentionally prioritizing customer service and product availability over trying to optimize inventory levels and risk running out of critical materials.\nOver the last six months, we've increased our inventories by approximately $30 million.\nEven after returning more than $30 million to our shareholders in the form of dividends and buybacks, having heightened capex and intentionally increasing inventory levels, on October 31, we were still in a net cash position of more than $90 million.\nOur strong balance sheet puts us in a fantastic position to execute additional value-enhancing activities, including investing in R&D, completing additional acquisitions, and returning funds to our shareholders.\nOur approach to capital allocation has not changed and has been serving us well.\nFirst, we use our cash to fully fund organic sales and efficiency opportunities throughout the economic cycle.\nThis includes investing in new product development, sales-generating resources, IT improvements, capability-enhancing capital expenditures, and capex to further automate our facilities.\nWe will also -- sorry -- we will absolutely keep funding these investments where it makes sense and where the investments are ROI positive.\nAnd second, we focus on returning cash to our shareholders in the form of dividends.\nWe've now increased our annual dividend for 36 consecutive years, which puts us in a pretty elite group of companies.\nAfter fully funding organic investments and dividends, we then deploy our cash in a disciplined manner for either acquisitions, where we believe that we have strong synergistic opportunities or for buybacks when we see a disconnect in our view of intrinsic value versus Brady's trade-in price.\nSlide number 12 summarizes our guidance for the year ending July 31, 2022.\nOur full-year diluted earnings per share guidance, excluding amortization remains unchanged at a range of $3.12 to $3.32 per share.\nOn a GAAP basis, our full-year diluted earnings per share guidance also remains unchanged at a range of $2.90 to $3.10 per share.\nIncluded in our GAAP earnings per share guidance is an increase in after-tax amortization expense of approximately $6 million.\nAfter-tax amortization increases from about $5.5 million in fiscal 2021 to about $11.5 million in fiscal 2022, which is a delta of about $0.12 per share.\nAs we look at staging throughout the rest of this fiscal year, we anticipate our short-term gross profit margin challenges to persist throughout our fiscal second quarter, and history shows that our second quarter is seasonally our lowest quarter of the year and generally has earnings per share below that of Q1.\nAs we move beyond the second quarter, we expect to see increased benefits from our pricing actions as well as increased benefits from our many efficiency and automation projects.\nAs a result, we continue to expect that the majority of our earnings-per-share growth will come in the third and fourth quarters of this year.\nWe also expect total sales growth to exceed 12% for the full year ending July 31, 2022, which is inclusive of both organic sales growth as well as sales growth from the recently completed acquisitions.\nWe'll continue to make the investments necessary to drive organic sales growth, we'll continue to search for acquisitions that advance our strategies, and we'll continue to drive sustainable efficiency gains while being tight on non-revenue-generating expenses.\nAs for capital allocation, we'll keep investing in our organic business.\nWe'll keep investing in our industrial track-and-trace initiatives.\nWe'll continue to return funds to our shareholders through dividends and opportunistic buybacks.\nWe did just buy back $18.9 million worth of shares last quarter, and we'll continue to look for acquisitions where the price is right and the strategic fit is clear.\nWe have a strong balance sheet, and we'll use it as a tool to drive long-term shareholder value.\nPotential risks to this guidance, among others, include the strengthening of the US dollar versus other major currencies such as the euro or the British pound, worsening logistics that don't allow us to meet our commitments to our customers, and further inflationary pressures that we cannot offset in a timely enough manner.\nSlide number 13 outlines the first quarter financial results for our Identification Solutions business.\nIDS sales increased 25.4% to $248.6 million.\nThis very robust sales growth is comprised of organic growth of 13.2%, acquisition growth of 11.6% and an increase of 0.6% from foreign currency translation.\nOrganic sales in our IDS division were once again very strong, not only versus the first quarter of last year but also against previous sequential quarters.\nAnd on the cost side, our strong focus on sustainable efficiency gains partially offset the input cost increases that we've been experiencing.\nSegment profit as a percentage of sales was 19.6%, which was down from 20.3% last year.\nHowever, if you exclude the sizable increase in amortization that Aaron mentioned, then segment profit as a percentage of sales would have increased from 21% of sales to 21.1% of sales, so an increase of about 10 basis points compared to the first quarter of last year.\nRegionally, organic sales in Asia were strong this quarter with growth of over 15% compared to the first quarter of last year.\nThis is the fourth consecutive quarter of Asian organic sales growth in excess of 10%.\nOrganic sales were also up more than 15% in EMEA despite several lockdowns continuing throughout most of the first quarter.\nOur European team once again did an excellent job driving sales growth while handling the period interruptions caused by the lockdowns.\nWe also had organic sales growth of nearly 12% in the Americas.\nWe saw growth in all product lines and geographies throughout the quarter and we were especially pleased with the bounce back in our healthcare product line where organic sales growth increased approximately 11%.\nIn general, the sales trends and ideas are very positive.\nOur commitment to R&D remains a high priority.\nWe've ratcheted up our investments to build a complete industrial track and trace solution.\nAnd although we're probably a full two years away from having a complete track and trace solution, we've already been experiencing very nice synergies from our recent acquisitions and we expect these sales synergies to only increase from here on out due to the complementary nature of our product portfolios and the more complete product offerings that Code, Magicard and Nordic ID bring to Brady.\nThese acquisitions are performing slightly better than expected and bring us valuable technologies that help us round out our product offerings and make Brady more valuable to our customers.\nClearly, we're devoting a significant amount of time and money to our track and trace product offerings.\nBut we are not sacrificing R&D investments in other areas such as printers and materials.\nWe continued our steady stream of new printer introductions by launching the J4300 Brady Jet Label Printer.\nThis inkjet printer combines with pretty high efficiency proprietary materials to balance the safety and complexity of compliance labels with the demands of industrial environments.\nOur industrial inkjet printers save our customers time by quickly and easily creating compliant, long lasting photo quality labels, signs and tags that are needed to create a safer, more efficient workplace.\nIt's a combination of our steady It's a combination of our steady stream of best-in-class printers, plus Brady's high-performance materials that sets Brady apart from our competition, from barcodes to extremely small text, to perfect photo quality images, our customers most important information needs to be visible and needs to stay put in any type of environment.\nSimply stated, Brady's printers and materials are all about high performance in the harshest of environments.\nOur R&D pipeline is strong and we continue to launch innovative new solutions that help our customers solve problems and be more efficient and effective.\nI'm excited about what we're doing in an ID Solutions business and how our acquisitions of Code, Nordic ID and Magicard will further accelerate our growth.\nWe're improving our customer service, investing in our future and streamlining the rest of our cost structure.\nThese positive revenue trends combined with our strong cost discipline, will help offset inflationary pressures and paint a bright future for our IDS division.\nMoving to slide number 14, you'll find a summary of Workplace Safety financial performance.\nWPS sales declined 7.8%, which consisted of an organic sales decline of 8.6% and an increase from foreign currency of 0.8%.\nThis sales decline was primarily driven by challenging comparables to last year's first quarter.\nOur WPS business performed extremely well and supplied our customers with a great deal of COVID-19-related products during the pandemic last year, and the demand for these types of products has declined substantially since then.\nOur WPS sales were $72.9 million this quarter, which were above the pre-pandemic sales experienced in the first quarter of fiscal 2020.\nEven in these challenging times with periodic shutdowns, our European WPS team did an outstanding job of increasing its customer base.\nAnd for those customers who initially came to us to purchase COVID-related products, our team has done a nice job providing these same customers with our core safety and identification products as well.\nOur Australian business performed similarly to our European business.\nDuring the pandemic, our Australian business grew organic sales over 10% in last year's first quarter.\nLooking back the challenging comparables, we were pleased with this quarter sales volumes as they were above pre-pandemic levels.\nOver the last several quarters, we've increased our Australian customer base and we continue to find opportunities to enhance our digital marketing approach to ensure that we retain our new customers and turn them into long-term repeat customers.\nThe sale of COVID-related products declined in North America as well this quarter, and this decline was not fully offset by our non-COVID product offerings thus leading to a decline in organic sales in the Americas.\nAnd as I alluded to earlier, we've made investments to improve certain of our lagging businesses in WPS including our business in the US that primarily serves micro businesses.\nWe've incurred start-up costs to open a new facility in the US, we've invested in head count, and we're also investing in additional advertising.\nAll in, these incremental investments were approximately $2.5 million.\nThese investments negatively impacted WPS' profitability this quarter, but we believe that these investments are critical to return our WPS business to sustainable, long-term, profitable growth.\nIn addition to these investments, our WPS business also experienced gross margin compression as a result of raw materials, freight and wage inflation as I mentioned.\nSimilar to our IDS business, we're taking actions to offset these cost increases.\nWPS' segment profit was $2.3 million, compared to $8 million in last year's first quarter.\nThis reduction in segment profit was directly related to the reduced sales volumes, the incremental investments that I just mentioned, as well as significant cost pressures.\nOur WPS team members are listening to their customers to identify what they need.\nThey're modifying their marketing campaigns to reach entirely new customers and entirely new industries, and they're working hard to address underperforming businesses within the portfolio.\nOur Workplace Safety business has one more quarter of moderately difficult comparables ahead of it, but we're laying the foundation for a solid recovery.\nI'm proud of the role that Brady played and continues to play in this long, ever-changing fight against COVID-19.\nIdentification Solutions and Workplace Safety products help companies with social distancing.\nOur products help schools reopen safely and safety and identification products were used by our frontline workers all around the globe.\nAnd now, our products are helping our customers increase efficiency to help them meet their own set of customer demand.\nThis pandemic is not over, and the financial impact stemming from the pandemic are certainly not over.\nThroughout the pandemic, we invested in growth and efficiencies, and it's this continual level of investment that will enable us to keep this strong positive momentum.\nBrady is in an enviable financial position.\nWe're coming off of record earnings per share here.\nOur earnings are up, and our balance sheet is very strong.\nWe're in a net cash position even after making three acquisitions toward the end of last year and returning more than $30 million to our shareholders in the form of buybacks and dividends this quarter.\nWe will continue to invest in R&D, sales-generating resources and capacity-enhancing capex, all while being very tight on non-revenue-generating expenses and aggressively working through global logistical issues and inflationary forces.\nI'm very proud of how our team performed throughout this challenging period.\nTheir ability to deal with uncertainty, think on their feet and solve problems quickly all while never compromising the long term has built a solid foundation for Brady's future.\nWith that, I'd like to now start the Q&A.\nOperator, would you please provide instructions to our listeners?\n", "role": "user" }, { "content": "compname reports q1 diluted earnings per share of $0.67.\nq1 sales $321.5 million.\ndiluted earnings per share in q1 fiscal 2022 is $0.67.\nco's earnings per diluted class a nonvoting common share, excluding amortization guidance for year ending july 31, 2022 remains unchanged.\ncompname says earnings per diluted class a nonvoting common share on a gaap basis remains unchanged at $2.90 to $3.10 per share for fiscal 2022.\nsupply chains for certain components remain tight.\nexperiencing inflation in many areas including wages, freight, utilities, and raw materials.\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: Q2 was a very strong quarter, and it's the best in the history of Brown & Brown.\nOur performance for the first six months of 2021 is due to the tremendous effort of our talented 11,000-plus teammates that deliver creative risk management solutions for our customers.\nEach of our segments delivered impressive results with strong top and bottom line growth due to more new business, good customer retention, increased premium rates across most lines of coverage, and higher exposure units driven by continued economic expansion.\nThese results reflect the strength and diversity of our operating model as well as the power of a performance-based culture.\nNow let's transition to the results for the quarter.\nI'm on slide number three.\nWe delivered $727 million of revenue, growing 21.5% in total and 14.7% organically.\nThis is the strongest organic growth that we've ever delivered.\nI'll get into more details in a few minutes about the performance of our segments.\nOur EBITDAC margin was 32.9%, which is up 340 basis points from the second quarter of 2020.\nOur net income per share for the second quarter was $0.49, increasing 44% on an as-reported and adjusted basis, with the latter excluding the change in estimated acquisition earn-out payables.\nIn summary, we're very pleased with our strong performance and believe we're well-positioned to continue delivering best-in-class solutions for our customers.\nI'm on slide four.\nLet's start with the economy and what we saw during the quarter.\nAs companies continue to reopen and strengthen, business confidence is improving.\nHowever, not all companies are back at 100%, and we continue to hear about struggles with certain customer segments in hiring workers.\nWe think this will work itself out over the coming months and quarters, but these open roles are serving as a bit of a governor on the speed of recovery.\nDue to this uncertainty, customers remain very focused on their insurance spend and therefore managing their deductibles and aggregate limits.\nRates were generally in line with what we experienced in the first quarter.\nHowever, we started to see some moderation to the level of increases in certain admitted and non-admitted lines.\nCertain customers and industries with high losses remain a placement challenge.\nHowever, we continue to see carriers seeking higher rate increases on renewal business while quoting at or below expiring rates for new business of a similar risk profile.\nAdmitted rates continue to be up 3% to 7% across most lines.\nthe outliers are workers' compensation rates which remain down 1% to 3% and commercial auto rates which were up 5% to 10%.\nFrom an E&S perspective, most rates are up 10% to 20%.\nCoastal property, both wind and quake, are up 15% to 25%.\nHowever, near the end of the quarter, we started to see less upward rate pressure on renewals.\nProfessional liability for most accounts remains challenging, the SPAC market in particular.\nProfessional liability rates are generally up 10% to 25%-plus, cyber rates are generally up 10% to 20%-plus, with increased underwriting questions and some reduction in coverage availability.\nAlso, excess umbrella coverage remains very difficult to place.\nFor both of these lines, we're seeing carriers reduce overall limits while seeking significant rate increases.\nIn the E&S space, California and Florida personal lines continues to be the most challenging.\nThe appetite for personal lines in CAT areas will continue to be constrained through at least the end of '21.\nFrom an M&A perspective, we closed two transactions during the quarter with the annual revenues of, approximately, $11 million.\nOur pipeline remains full, and we feel good about the level of activity engagement with prospective sellers.\nSlide five, let's discuss the performance of our four segments.\nRetail delivered an outstanding organic growth of 17.6% for the second quarter.\nThe performance was driven by growth across all lines of business and most customer segment through a combination of strong new business, good retention, rate increases, and higher exposure units as a result of the economic recovery.\nNational Programs grew 13.3% organically, delivering another great quarter.\nOur growth was driven by strong performance from most programs due to robust new business, good retention, and rate increases.\nThe Wholesale Brokerage segment delivered a solid quarter with 12.3% organic growth.\nBrokerage continues to perform very well, delivering strong growth in new business and realizing continued rate increases for most lines of coverage.\nBinding Authority had a good quarter, driven by new business and continued economic recovery and personal lines in California and Florida remain very difficult to place, and we don't expect carrier appetite to change in the second half of the year.\nThe Services segment had a good quarter and delivered organic revenue growth of 4.6%, primarily driven by claims processing revenue.\nThe growth for the quarter was partially offset by continued headwinds within the Advocacy businesses, primarily the Social Security space.\nOverall, it was a very strong quarter across the board.\nLike previous quarters, we'll discuss our GAAP results and certain non-GAAP financial highlights.\nWe're on slide number six.\nFor the second quarter, we delivered total revenue growth of $128.5 million or 21.5% and organic revenue growth of 14.7%.\nEBITDAC increased by 35.4%, which expanded EBITDAC margin by 340 basis points, despite lower margin associated with certain acquisitions completed in the past few quarters and slightly higher travel costs.\nThe EBITDAC growth was driven by the continued leveraging of our expense base and lower non-cash stock-based compensation.\nIncome before income taxes increased by 44%, growing faster than EBITDAC due to a lower growth rate in amortization and interest expense, as well as a decrease in acquisition earn-out payables.\nNet income increased by $42.5 million or 43.9% and our diluted net income per share increased by 44.1% to $0.49.\nThe effective tax rate for the second quarter of this year and last year was 25.2%.\nWe continue to anticipate our full-year effective tax rate for 2021 will be in the 23% to 24% range.\nOur weighted average number of shares increased slightly compared to the prior year and our dividends per share increased to $0.093 or 9.4% compared to the second quarter of 2020.\nMoving over on slide number seven.\nThis slide presents our results after the adjustment to remove the change in estimated acquisition earn-out payables for both years.\nFor the second quarter of this year and last year, the impact was minimal with the adjusted and as-reported diluted net income per share of $0.49 growing 44.1% over the prior year.\nMoving over to slide number eight.\nThis slide presents the key components of our revenue performance.\nFor the quarter, our total commissions and fees increased by 21.3% and our contingent commissions and GSCs increased by 2.2%.\nOrganic revenue, which excludes the net impact of M&A activity and changes in foreign exchange rates, increased by 14.7%.\nOver to slide number nine.\nThe Retail segment delivered total revenue growth of 28.3%, driven by acquisition activity over the past 12 months and organic revenue growth of 17.6%, which was driven by growth across all lines of business.\nOrganic growth for the quarter was positively impacted by, approximately, 300 basis points due to the $8 million adjustment recorded in the second quarter of last year for the economic disruption associated with the pandemic.\nEBITDAC margin for the quarter increased by 510 basis points and EBITDAC grew 55.1% due to the leveraging of higher organic revenue along with a gain on disposal associated with the sale of certain books of business.\nThe growth was partially offset by recent acquisitions that have margins lower than the average, higher non-cash stock-based compensation, and slightly higher travel cost.\nIncome before income tax margin increased 580 basis points, growing faster than EBITDAC, driven primarily by amortization and intercompany interest expense growing at a slower rate than EBITDAC.\nMoving over to slide number 10.\nOur National Programs segment increased total revenue by 14% and organic revenue by 13.3%.\nRegarding outlook for the last two quarters of 2021, we wanted to highlight that we anticipate approximately $4 million to $6 million of revenue shifting from the third quarter to the fourth quarter due to renewal timing for certain accounts.\nEBITDAC increased by $7.9 million or 12.6%, growing slightly slower than total revenues due to incremental costs associated with onboarding new customers, increased non-cash stock-based compensation, and slightly higher variable cost.\nIncome before income taxes increased by $18.4 million or 38%, growing faster than EBITDAC, primarily due to lower estimated acquisition earn-outs payable and lower intercompany interest expense.\nOver to slide number 11.\nThe Wholesale Brokerage segment delivered total revenue growth of 17.7% driven by acquisitions in the past 12 months and organic revenue growth of 12.3%.\nEBITDAC grew by 19.1% with a margin increase of 40 basis points, even with lower guaranteed supplemental commissions, slightly higher variable operating expenses, and incremental non-cash stock-based compensation.\nIncome before income taxes grew by 6.9%, which was slower than total revenue growth primarily due to higher intercompany interest expense and a change in estimated acquisition earn-out payables.\nOver on Slide 12.\nOur Services segment increased total revenue and organic revenue by 4.6%.\nRegarding outlook, we anticipate organic revenue growth to be flat or down slightly for the second half of the year due to continued headwinds in processing claims by the Social Security Administration.\nFor the quarter, EBITDAC grew by 9.8% driven primarily by leveraging organic revenue growth.\nIncome before income taxes increased by 19.8%, growing faster than EBITDAC due to lower intercompany interest expense and amortization.\nA few comments regarding liquidity and cash conversion for the quarter.\nWe experienced another strong quarter of cash flow generation and have delivered $466 million of cash flow from operations through the first six months of 2021, growing $50 million or 12% as compared to the first six months of 2020.\nOur ratio of cash flow from operations as a percentage of total revenue remained strong at 30.2% for the first six months of 2021.\nWith the combination of our cash generation and capital availability, we are well positioned to fund continued growth.\nFrom an economic standpoint, we continue to believe the economy will improve over the coming quarters.\nThis should drive increased confidence among business owners and how they invest in their companies.\nA few items we believe will impact the speed and trajectory of the economy are, in no particular order: one, the ability to hire workers in certain industries; two, supply chain issues that continue to constrain production and sales; three, the spread of and response to the delta variant; and four, the impact of inflation.\nHow these play out will influence the bumps in the road to recovery.\nAt this stage, we believe there should be further economic improvement throughout the remainder of '21 and into 2022 but not at the same pace experienced in the second quarter.\nAs a result, we anticipate some moderation of our organic revenue growth during the back half of the year compared to what we delivered in the first half.\nAs it relates to the underwriting process, we continue to anticipate our carrier partners to be competitive for new business and accounts with low losses.\nWe also expect rate increases will be fairly similar to the first half of the year with maybe some moderation.\nFrom an M&A perspective, we believe the market will remain very active.\nThere are a lot of companies looking to do transactions, and we feel that we are well positioned with a good pipeline to attract great companies to join the Brown & Brown team.\nWe will continue to follow our disciplined approach of focusing on culture and financial alignment as these have been the key to our long-term success in delivering shareholder value.\nWe've been talking over the last few earnings calls about our technology initiatives and how these are advancing.\nWe're very pleased with our progress and the teams are doing a great job.\nOur holistic focus is to improve the experience for our customers, carrier partners, and teammates.\nTo achieve this goal, we have prioritized the following areas: optimize and enhance our utilization of data and analytics; expand our digital delivery capabilities around products and services; and engage in initiatives designed to drive greater efficiency and velocity through our underwriting processes.\nIn summary, we couldn't be happier with the financial performance of the second quarter and the first half of the year.\nThe results are just outstanding.\nOur team is doing an incredible job of leveraging our wide-ranging capabilities to win new customers and retain our existing customers.\nWe're well positioned to continue delivering good profitable growth.\n", "role": "user" }, { "content": "compname announces quarterly revenues of $727.3 million, an increase of 21.5%, and diluted net income per share of $0.49.\nq2 earnings per share $0.49.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: Before we get into the results for the quarter, I want to make some high level comments.\nThey continue to be laser focused on delivering innovative solutions for our customers.\nOperating in the current environment is not easy, but our team finds creative ways to serve and support our existing customers engage with new prospects.\nI'm very impressed with how our teammates are leveraging the investments we've made in technology over the past few years to enhance our capabilities and customer interactions.\nThese include everyone from producers, service, marketing, brokers and underwriting teammates.\nAt this stage, we do not see face-to-face interactions returning to the pre-pandemic levels for quite some time and more than likely the new normal will be different than in the past.\nAs we navigate our way through the pandemic, I'm confident that we will continue to leverage innovation in our sales and service model to help further our growth and support our customers.\nWe've talked a lot in the past about how we're built for the long term and think about delivering shareholder value.\nOn Tuesday of last week, our Board of Directors increased our quarterly dividend by 9%.\nWith this increase, we are now on our 27th year of consecutive increases, something we're very proud of.\nNow let's transition to the results of the quarter.\nI'm on slide number three.\nWe had a great quarter and I'm very pleased with our results.\nWe delivered $674 million of revenue, growing 8.9% in total and 4.3% organically.\nI'll get into more detail in a few minutes about the performance of our segments.\nOur EBITDAC margin was 32.8%, which is up 130 basis points from the third quarter of 2019.\nOur net income per share for the third quarter was $0.47, increasing 14.6% on an as reported basis.\nOn an adjusted basis, which excludes the change in acquisition earn-out payables, our net income per share was $0.52, an increase of 33.3% over the prior year.\nOur team has done an outstanding job of growing our revenue while managing our expense base in response to the dynamics associated with COVID-19.\nDuring the quarter, we completed another six acquisitions with annual revenues of approximately $31 million.\nFrom a capital perspective, we issued $700 million of 10.5-year bonds in September.\nWe're very pleased with a coupon of 2.375%, particularly considering that we issued bonds in March of 2019 with a coupon of 4.5%.\nOur insurance was very well received by the debt markets, which we believe is a true reflection of Brown & Brown's credit quality.\nWith this capital and our cash flow generation, we're well positioned to further invest in a disciplined manner in our business and deliver future results.\nIn summary, we're very pleased with the strong performance for the quarter as the strength of our operating model continues to perform well through these unprecedented economic times.\nI'm on slide number four.\nAs you may remember, in April, we thought our third quarter would be the most challenging due to the expected decrease in exposure units for our customers.\nAnd then we performed slightly better than anticipated in the second quarter and during our second quarter earnings call, we indicated that third quarter would not be as low as originally anticipated.\nAs a result of good new business, higher retention and rate increases, we had a really good third quarter.\nWe saw companies doing their best to restart their businesses, which included some rehiring of employees or taking them off furloughed.\nWe saw employers and we saw individuals who start to lose employee benefits coverage through layoffs or reductions in force, which would also drive a decline in workers compensation coverage.\nWe saw this in certain industries.\nHowever, there are many industries that have been quite resilient or have even grown over the past six months.\nAs a result of our diversification across geography, customer size, industry lines of coverage and capabilities, we've continued to grow.\nPlease don't take my comments out of context.\nWe have customers that are struggling, and we're doing our best to help them.\nWe believe that there is going to be challenges over the coming quarters and consequently expect there will be ups and downs in the path to recovery.\nDuring the quarter we saw rate increases similar to the last few quarters and in some cases, they've increased slightly.\nFor the most part admitted market rates are up 3% to 7% across most lines.\nCommercial auto rates were the exception, as they remain up 10%.\nThere is a lot of talk about workers compensation rate starting to turn positive during the quarter.\nWe're not seeing this across the board.\nGenerally workers' compensation rate are not declining as fast as they were in previous quarters.\nFrom an E&S perspective, most rates are up 10% to 20%.\nCoastal property, both wind and quake are up 15% to 25%.\nProfessional liability is generally up 10% to 25%, depending on the coverage in the industry.\nFor both of these lines there can be outliers.\nOne area where we're seeing the most pressure right now is personal lines in California, Florida and the Gulf Coast States.\nThe continued reduction in carrier appetite has been caused by fires and tropical activity, resulting in a reevaluation of all CAT-exposed property.\nWe believe the reduction in personal lines capacity in CAT areas will continue to decrease in the near term.\nIn connection with the increasing rates, the placement of coverage for many lines, certain industries where customers with significant losses continues to be challenging.\nThis would include access or umbrella coverage where a carrier or carriers might want to reduce their limit by half, but keep the premium constant.\nJust to give an example.\nWe do not expect this trend to change for the next few quarters.\nWe've been active in the M&A space closing six transactions during the quarter with annual revenues of approximately $31 million.\nDuring the first three quarters, we closed 16 transactions with annualized revenues of approximately $117 million.\nAnd in addition, we've already closed a few deals for the fourth quarter.\nI'm now on slide number five.\nLet's discuss the performance of our four segments.\nOur retail segment, organic revenue grew by 4.1% in the third quarter.\nIt's a really strong performance recognized across substantially all lines of business, driven by a combination of good retention, improving new business wins and continued rate increases.\nWe're very pleased with how our team is prospecting new account in both the traditional face to face model, as well as virtually.\nOur National Programs segment grew 8.4% organically, delivering another impressive quarter.\nOur growth was driven by continued strong performance from many of our programs, including our lender place, our commercial and residential earthquake and our wind programs, just to name a few.\nOur Wholesale Brokerage segment grew 8.2% organically for the quarter.\nWe realized improving new business and continued rate increases for most lines of coverage.\nBrokerage was the fastest growing, while our binding authority business delivered modest growth as many main street businesses are not back to full operation and we experience continued headwinds in the personal line space.\nWe expect this rate pressure to continue for at least the next few quarters until carriers reevaluate the risk appetite or allocate more capacity to this challenged area.\nThe organic revenue for our services segment decreased 13.1% for the quarter.\nThe main drivers of the decline were lower claims volume for our social security advocacy businesses, a prior year terminated customer contract and lower claims for many of our other businesses related to COVID-19.\nWe expect organic revenue in the Services segment will be down in the low to mid single-digit range for the fourth quarter.\nLike previous quarters, we'll discuss our GAAP results and certain non-GAAP financial highlights, including our adjusted results, excluding the impact of the change in acquisition earn-out payables.\nWe're over on the slide number six.\nFor the third quarter, we delivered total revenue growth of $55.3 million or 8.9% and organic revenue growth of 4.3%.\nOur EBITDAC increased by 13.2%, growing faster than revenues as we were able to leverage our expense base and further manage our expenses in response to COVID-19.\nBoth of these factors were able to offset the headwinds associated with certain non-recurring items related to legal cost, the write-off of uncollectible receivables for one of our programs, increased non-cash stock-based compensation and a gain on the disposal of businesses recognized in the prior year.\nA quick comment regarding our employee compensation and benefits and other operating expenses as a percentage of revenues.\nThe employee compensation and benefits ratio increased slightly as compared to the prior year, driven by higher non-cash stock-based compensation cost as we were performing above the targets for our long-term stock incentive plans.\nIn addition, with the market recovery during the quarter, there was an increase in the value of deferred compensation liabilities.\nPlease remember, the impact on EBITDAC margin is substantially zero as this increase was offset within other operating expenses.\nThe ratio of other operating expenses decrease due to the continued management of our variable expenses in response to COVID-19 and to a lesser extent, the benefit of the aforementioned change in deferred compensation cost.\nOur income before income taxes increased by 4.3%, growing at a slower pace than EBITDAC.\nThis was driven primarily by the $21 million year-over-year increase in the change in estimated acquisition earn-out payables.\nOn the next slide, we will discuss our results, excluding this adjustment.\nOur net income increased by $18.4 million or 15.9% and our diluted net income per share increased by 14.6% to $0.47.\nOur effective tax rate for the third quarter was 15.5%, compared to 23.9% in the third quarter of 2019.\nThe lower effective tax rate, which was in line with previous guidance was driven by the tax benefit associated with the vesting of restricted stock awards.\nOur weighted average number of shares increased slightly compared to the prior year and our dividends per share increased to $0.085 or 6.3% compared to the third quarter of 2019.\nMoving on to slide number seven.\nThis slide presents our results after removing the change in estimated acquisition earn-out payables for both years.\nDuring the third quarter of 2020, the change in estimated acquisition earn-out payables was about $15 million, representing an increase of approximately $21 million as compared to the third quarter of 2019.\nRemember that we adjusted certain earn-out liabilities down in the first quarter of this year at the onset of the pandemic, based on our estimates at the time.\nSince then, certain businesses have rebounded faster than anticipating causing us to increase the estimated earn-out liabilities in the third quarter of this year.\nOn a year-to-date basis, the net impact of the change in estimated earn-out payables that they charge of about $5 million as compared to a credit of approximately $7 million for the same period last year.\nExcluding the change in acquisition earn-out payables in the third quarter of both years, our income before income taxes, grew $27.2 million or 18.6% growing faster than EBITDAC due primarily to lower interest expense.\nOur net income on adjusted basis increased by $35.3 million or 31.6% and our adjusted diluted net income per share was $0.52, increasing 33.3%.\nThese grew faster than income before income taxes due to the lower effective tax rate for the quarter.\nOverall, it was a strong quarter.\nMoving to slide number eight.\nThis slide presents the key components of our revenue performance.\nFor the quarter, our total commissions and fees increased by 8.7% and our contingent commissions and GSCs were substantially flat.\nOur organic revenues, which exclude the net impact of M&A activity increased by 4.3% for the third quarter.\nOver to slide number nine.\nOur Retail segment delivered total revenue growth of 6.5%, driven by acquisition activity over the past 12 months and organic revenue growth of 4.1%, which was driven by growth across most lines of business and slightly lower contingent commissions and GSCs.\nFor the quarter, retail realized about a 100 basis points of incremental organic revenue growth from the timing of new business and certain renewals we expected to recognize in the fourth quarter of this year.\nOur EBITDAC margin for the quarter increased by 250 basis points and EBITDAC grew 16.2% due to higher organic revenue growth and cost savings achieved in response to the pandemic, both of which were partially offset by a prior year gain on disposals, higher non-cash stock compensation cost and higher inter-company IT cost.\nOur income before income tax margin increased 50 basis points and grew slower than EBITDAC, due primarily to a change in estimated acquisition earn-outs.\nOver to slide number 10.\nOur National Programs segment increased total revenues by $25.1 million or 17.6% and organic revenue by 8.4%.\nThe increase in total revenue was driven by strong organic growth, recent acquisitions and an increase in profit sharing contingent commissions.\nEBITDAC growth of 12.7% was slower than total revenue growth due to the write-offs of certain receivables in one of our programs.\nCombined with higher inter-company IT charges, these items more than offset margin expansion from strong organic growth, as well as variable cost savings in response to COVID-19.\nIncome before income taxes increased by $600,000 or 1.3% with the growth primarily impacted by increased acquisition earn-out payables and higher intercompany interest expense.\nOver to slide number 11.\nOur Wholesale Brokerage segment delivered total revenue growth of 16.2% and organic revenue growth of 8.2%.\nTotal revenues grew faster than organic revenue due to recent acquisitions.\nEBITDAC grew by 21.1% and the margin improved by 160 basis points as compared to the prior year due to strong organic growth and the delivery of reduced variable expenses in response to COVID-19, which more than offset higher inter-company IT charges and higher non-cash stock-based compensation cost.\nOur income before income taxes, grew by 21.1%, substantially in line with EBITDAC growth.\nOver to slide number 12.\nTotal revenues and organic revenues for our services segment declined by 13.1%, driven by the items Powell mentioned earlier.\nFor the quarter, EBITDAC declined by 22.8%, driven by lower organic revenue and higher inter-company IT expenses.\nThese were partially offset by reducing certain variable expenses in response to the pandemic.\nIncome before income taxes decreased 59.5% due to a credit of $6.3 million recorded in the third quarter of 2019 for the change in estimated acquisition earn-out payables and there was no adjustment in the third quarter of this year.\nFew comments regarding cash conversion and outlook for certain items.\nRegarding cash flow from operations, as a percentage of revenues, it decreased as expected for the third quarter due primarily to about $50 million of second quarter taxes that were paid in the third quarter as permitted by the Cares Act.\nFor the first nine months of 2020.\nOur cash flow from operations as a percentage of revenue was approximately 27% as compared to 25% realized at the same period of the prior year.\nThe increase is driven by our expanded margins, lower cash taxes, and continuing to manage our working capital.\nRegarding liquidity and interest expense, Powell mentioned earlier that we issued $700 million of 10.5 year senior notes in late September with spread decreasing materially and the receptivity of the debt markets we thought it was prudent to access the additional capital at long-term rate materially below our prior issuances.\nOur incremental debt is $500 million as we repaid $200 million on the revolving line of credit.\nWith the additional debt, our interest expense will increase by approximately $3 million per quarter.\nWith this additional capital, our revolving line of credit and strong generation of cash, we are well positioned from a capital perspective to fund in a disciplined manner, additional investments to help further grow our business.\nThrough 10 months, we've seen 6.4 million acres burn in California, Oregon, Washington and Colorado with 4.3 million of those acres in California alone.\nThere have been 27 tropical storms and 10 hurricanes with five of these hurricanes hitting the Gulf Coast region and one may hit this week.\nRates are also increasing in most instances and interest rates are at historic lows.\nAll of this is in addition to COVID-19 and the related choppy economic environment.\nWe have customers laying off large numbers of employees and others are the busiest they've ever been.\nEven under these extraordinary circumstances, our diversified businesses performed very well.\nFor the first nine months, we grew our business 3.5% organically, delivered improving EBITDAC margins of 32.4%, adjusted earnings per share was up 21.4%.\nOverall, we'd say our performance and financial results have been strong.\nWith rates continuing to rise, you'll see new capital coming to the marketplace opportunistically.\nThis will be in certain lines of coverage, but not universally across the board.\nIn addition, very few senior leaders at insurance companies will discuss if rates are exceeding loss costs.\nWhen that happens, they usually point to rates moderating or flattening.\nWe're not sure if we've reached at this point yet.\nThe acquisition space continues to be hot.\nThere's a lot of competition between private equity and long-term strategics.\nWe don't see this competition slowing down anytime soon.\nOur ability to continue investing in our business was further bolstered by our recent bond offering.\nQuite honestly, I didn't think our cost of borrowing for 10-year money would ever be 2.375%.\nOur pipeline is good, but as you know, we don't count anything till it's signed.\nFinally, we continue to drive our technology agenda across the company through digitization, data and automation and prioritize technology investments around the following.\nOne, continually optimizing and enhancing our data and analytics program.\nTwo, expanding our digital delivery capabilities around products and services.\nAnd three, engaging an initiatives designed to drive greater efficiency and velocity through our underlying processes.\nWe are constantly thinking about how we can serve our customers better and faster.\nIn closing, we thought it was a really good quarter.\n", "role": "user" }, { "content": "compname announces quarterly revenues of $674.0 million, an increase of 8.9%, and diluted net income per share of $0.47.\nq3 earnings per share $0.47.\nq3 revenue rose 8.9 percent to $674 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: Q3 was another very good quarter for Brown & Brown.\nThis was a result of our nearly 12,000 teammates delivering creative risk management solutions for our customers.\nWe delivered strong top line growth driven by a combination -- by the combination of robust new business, good retention, rate increases and some expansion of exposure units.\nAt the same time, our team continue to drive profitable growth, resulting an impressive margin improvement and adjusted earnings per share expansion.\nWe're also very proud that last week our Board of Directors authorized an increase of 10.8% in our quarterly dividend.\nNote, we've now increased our dividend for the 28th year in a row.\nNow, let's transition to the results for the quarter, I'm on Slide 3.\nWe delivered $770 million of revenue, growing 14.3% in total, and 8.5% organically.\nI'll get into more detail in a few minutes about the performance of our segments.\nOur EBITDAC margin grew by 280 basis points to 35.6% versus the third quarter of 2020.\nOur net income per share for the third quarter was $0.52 on an as reported basis and $0.58, excluding the change in estimated acquisition earn-out payables.\nIn summary, we're really pleased with our strong performance for the third quarter and the first nine months.\nAs the year-to-date results are the best in our history, 10.8% internal growth year-to-date.\nI'm now on Slide 4.\nWe have customers that have done well throughout the pandemic and others that are struggling to fully reopen, mainly due to the inability to hire employees.\nWe're seeing this challenge in a number of industries and geographies, and as a consequence restricting how fast companies can become fully operational.\nIn addition to shortages of workers, supply chain issues and inflation are putting pressure on costs.\nFrom a placement standpoint, the themes are pretty consistent.\nCustomers with good loss experience are getting the best rates in coverage, while those with tough loss experience are seeing material rate increases or reductions in available limits or both.\nAs a result, customers continue to consider program modifications to manage their premium increases.\nRate increases remain relatively consistent with prior quarters, admitted market rates continue to be up 3% to 8% across most lines, the outliers or workers' compensation rates, which are down 1% to 3%, and commercial auto rates which were up 5% to 10%.\nFrom an E&S perspective, most rates were up 10% to 20% with some outliers.\nCoastal property both wind and quake, are up 10% to 30%, with this being a slightly broader range than we saw in the previous quarter.\nProfessional liability for most accounts remained very challenging with rates up 10% to 15%-plus, cyber-rates in some instances could increase dramatically depending on the security in place with the customer.\nSecurity protocols that were viewed as nice to have in the past are now viewed as a minimum expectations to obtain coverage.\nAlso, excess umbrella coverage remains very difficult to place.\nFor professional liability, cyber and umbrella, we're seeing carriers reduce limits while seeking significant rate increases.\nFlorida and California placements in E&S for personal lines remain the most challenging, due to losses or aggregate concentrations.\nWe expect the appetite for personal lines in CAT areas to continue to be constrained in 2022, which will likely put pressure on state sponsored programs and the cost of insurance for the consumer.\nFrom an M&A perspective, we were successful in closing seven transactions during the quarter, with annual revenues of approximately $21 million.\nWe've closed a total of 11 deals year-to-date with annual revenues of $65 million have already announced a couple of additional acquisitions in October.\nOur pipeline remains full and we feel good about our level of activity and engagement with prospective sellers on Slide 5.\nLet's discuss the performance of our four segments.\nRetail delivered great results with organic revenue growth of 8.3% for the third quarter.\nThe performance was driven by growth from all lines of business through a combination of strong new business, good retention, rate increases and exposure unit expansion.\nWe're leveraging our broad capabilities to benefit our customers and prospects.\nNational Programs delivered another outstanding quarter, growing 13.2% organically.\nOur growth was driven by the strong performance from most programs due to new business, good retention and rate increases.\nThe Wholesale Brokerage segment delivered 5.1% organic growth with commercial brokerage and binding performing well, driven by new business and continued rate increases for most lines of coverage.\nPersonal lines in coastal states continues to be a headwind as I mentioned earlier.\nThe Services segment delivered organic revenue growth of 0.5%.\nThe performance for the quarter was driven by claims processing revenue associated with recent weather events, which was substantially offset by external factors continuing to impact our advocacy business.\nOverall, it was a great quarter across the Board.\nWe're over on Slide 6.\nLike previous quarters, we'll discuss our GAAP results and certain non-GAAP financial highlights.\nFor the third quarter, we delivered total revenue growth of $96.3 million or 14.3% and organic revenue growth of 8.5%.\nIncome before income taxes and EBITDAC both increased by approximately 24%.\nEBITDAC margins expanded 280 basis points, driven by strong organic revenue growth and managing our expenses.\nNet income increased by $12.4 million or 9.3% and our diluted net income per share increased by 10.6% to $0.52.\nThe effective tax rate increased to 25.5% for the third quarter of this year as compared to 15.5% in the third quarter of last year.\nThe tax rate for the current quarter is in line with previous guidance, while the prior year was driven by the tax benefit associated with the vesting of restricted stock awards.\nWe continue to anticipate our full year effective tax rate for 2021 will be in the 23% to 24% range.\nOur weighted average number of shares increased slightly compared to the prior year and our dividends per share increased to $0.093 or 9.4% compared to the third quarter 2020.\nWe're over on Slide 7.\nThis slide presents our results after removing the change in estimated acquisition earn-out payables for both years, which we believe presents a more meaningful year-over-year comparison.\nThe change in estimated acquisition earn-out payables was a charge of $23.1 million in the third quarter of this year compared to $15.3 million for the same period last year.\nExcluding these non-cash items, income before income taxes on an adjusted basis, increased by 26.4%.\nOur net income on an adjusted basis increased by $16.7 million or 11.4%.\nAnd our adjusted diluted net income per share was $0.58, increasing 11.5%.\nThe lower growth of earnings per share and net income for the quarter as compared to the growth of income before income taxes was driven by the change in the effective tax rate.\nOverall, it was a very strong quarter on the top and bottom line.\nI'm going to move over to Slide 8.\nThis slide presents the key components of our revenue performance.\nFor the quarter, our total commissions and fees increased by 14.6% and our contingent commissions and GSCs increased by 27.1% as we qualify for certain additional contingents and GSCs this year.\nOrganic revenue, which excludes the net impact of M&A activity and changes in foreign exchange rates increased by 8.5%.\nOver to Slide 9.\nThe Retail segment delivered total revenue growth of 17.8%, driven by acquisition activity over the past 12 months and organic revenue growth of 8.3% with solid growth across all lines of business.\nEBITDAC margin for the quarter increased by 180 basis points and EBITDAC grew 24.6%, due to higher organic revenue growth, increased contingent commissions and GSCs, and managing our expenses even with slightly higher variable cost.\nThe growth in income before income tax, as compared to EBITDAC for all segments is impacted by changes in intercompany interest, amortization, depreciation, and estimated acquisition earn-out payables.\nOver to Slide 10.\nOur National Programs segment increased total revenue by 13.7% and organic revenue by 13.2%.\nIn conjunction with the onboarding of a new customer, we recognized approximately $5 million of incremental revenue this quarter that represents timing.\nWe expect the incremental revenue from this customer to more than likely be recognized within the first half of 2022.\nEBITDAC increased by $18.7 million or 28.5% with the margin improving 510 basis points, as a result of strong organic revenue growth, managing our expenses and the positive impact of the non-recurring write-off of certain receivables that occurred in the third quarter of last year.\nOver to Slide 11.\nThe Wholesale Brokerage segment delivered total revenue growth of 11.2% driven by acquisitions in the past 12 months and organic revenue growth of 5.1%.\nEBITDAC grew 4.7%, but the growth was impacted by incremental broker compensation driven by higher levels of performance, slightly higher variable cost and certain non-recurring intercompany IT charges.\nOur Services segment increased total revenue and organic revenue by 0.5% with EBITDAC growing 6.8%, driven by continued management of our expenses.\nFew comments regarding cash conversion and liquidity.\nWe experienced another strong quarter of cash flow generation and have delivered $628 million of cash flow from operations through the first nine months of this year, growing $88 million or 16% as compared to the first nine months of last year.\nOur ratio of cash flow from operations as a percentage of total revenue remained strong at 27% for the first nine months of this year.\nWith the combination of our cash generation and capital availability, we are well positioned to fund continued investments in our business.\nWe've had an outstanding first nine months of the year and believe we are well positioned to continue profitable growth.\nAs we look toward the remainder of the year and into 2022, we expect business confidence to improve and exposure units to expand.\nThe main influencers of increased confidence and business expansion will be one, the availability of employees across all industries.\nTwo, the resolution of supply chain constraints.\nIs it transitory or is it sustained?\nAnd four, the continued management of COVID.\nHow and when these play out over the coming quarters will influence the trajectory of the economy.\nFrom an underwriting perspective, we anticipate premium increases will continue to moderate for many lines with the exception of cyber, professional, access and automobile.\nThe M&A market will continue to be very active and valuations will remain at a heightened levels as a result of many buyers with a lot of available capital.\nWe feel that we're well positioned with a good pipeline to attract great companies to join the Brown & Brown team.\nWe will continue with our disciplined approach of focusing on culture and financial alignment as these have been key to our long-term success of delivering shareholder value.\nFrom an innovation standpoint, our focus is to constantly and consistently deliver creative solutions for the benefit of our customers, prospects and teammates.\nWe're making good progress and are continuing to align on common operating platforms for each division, enhancing our customer facing applications to make it easier to do business for Brown & Brown and leveraging our data to the benefit of our customers.\nIn summary, the results were outstanding for the third quarter and the first nine months of the year, and we are uniquely positioned to succeed in this ever changing marketplace.\n", "role": "user" }, { "content": "compname announces q3 earnings per share of $0.52.\ncompname announces quarterly revenues of $770.3 million, an increase of 14.3%, and diluted net income per share of $0.52.\nq3 earnings per share $0.52.\nqtrly adjusted earnings per share $0.58.\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 take a few minutes to make some high-level comments about our business and how we performed last year.\nWe came into 2020 with great momentum and this continued into the first quarter, delivering 5.6% organic growth, then COVID-19 hit the US economy and things changed dramatically.\nWhile there was significant uncertainty, we knew we had a great team and resilient responses and innovative with a focus on providing solutions to our customers.\nIn addition, we were able to move -- we were able to quickly transition over 10,000 teammates to a no working environment in less than a week.\nSo they could pivot and effectively serve our customers.\nAs you may remember, we didn't grow as quickly in the second quarter due to the impact of the pandemic on our new business and the recording of revenue adjustments for general liability policies, but we still expanded our margins.\nAnd in the third quarter, we delivered outstanding results with strong organic growth and margin expansion.\nThe results of the fourth quarter were similar to the third quarter as we finished the year strong and with good momentum going into '21.\nBased on what we were seeing, if you ask me, if it was likely that we would deliver full-year results with good organic growth and meaningful margin expansion, I would have said it was possible but unlikely that if you would ask me that in, let's say, April.\nWe are very pleased with our results for 2020.\nWe were able to deliver these results through the hard work of our teammates and their dedication to our customers.\n2020 was a testament to our laser focus on delivering innovative risk solutions.\nWe also thought the M&A landscape would cool off for several quarters until there was some sort of economic stability.\nThe slowdown only occurred for about one quarter and the industrywide activity is now rebounded a pre-COVID-19 levels.\nEven with the uncertainty this year, we're very pleased that completed 25 acquisitions and $197 million of acquired annual revenue.\nI'd like to highlight two strategic acquisitions, CoverHound that we completed in the fourth quarter, and O'Leary Insurances that we announced in the fourth quarter and closed on the 14th of January.\nRegarding CoverHound, this acquisition will help us in many ways.\nFirst, it will help us further our investment in technology, drive our innovation agenda and improve our carrier connectivity.\nSecond, it enables us to more effectively and efficiently provide quotes and bond coverage for our National Programs segment.\nThird, it enables us to better serve smaller customers within our retail segment.\nUltimately, these items are focused on enhancing the customer buying experience by delivering curated quotes that best meet the needs of our customers.\nWe believe these new capabilities are unique in the marketplace.\nWe started 2020 with the acquisition Special Risk in British Columbia and finished the year with our acquisition of O'Leary Insurances in Ireland.\nO'Leary was the largest independently owned retail brokers serving the Irish marketplace.\nThis acquisition strengthens our European operations, which we look forward to further developing in the years ahead.\nOur new teammates and capability to deliver many opportunities over the coming years.\nWe're extremely proud of our results in 2020 in the delivery of total shareholder returns in excess of 20%.\nAnd Steve Boyd will become our President of Wholesale.\nSteve's background in National Programs as an operator and in technology brings critical skills to the leadership team in Wholesale as we continue to grow this important business through innovative solutions.\nI'm excited that Tony and Steve will be working together to further drive this growth in the future.\nNow, let's transition to the results of the quarter and the full-year.\nI'm on Slide number 3.\nWe delivered strong results again this quarter, total revenue of $642 million, growing 10.9% in total and 4.7% organically.\nAgain into more detail in a few minutes about the performance of our segments.\nOur EBITDAC margin was 27.1%, which is up 10 basis points from the fourth quarter of 2019.\nPlease remember that the fourth quarter of '19 included a gain on sale of business that benefited the prior year margin by approximately 100 basis points.\nOur net income per share for the fourth quarter was $0.34, increasing 25% on an as-reported basis.\nOn an adjusted basis, which excludes the change in estimated acquisition earn-out payables, our net income per share was $0.32, an increase of 14.3% over the prior year.\nOur team did an outstanding job of continuing to profitably grow our revenue, as well as manage our expenses in response to the dynamics associated with COVID-19.\nDuring the quarter, we completed another nine acquisitions with annual revenues of approximately $80 million.\nFor the year, we grew total revenues of 9.2% and delivered organic revenue growth of 3.8%.\nThis is an outstanding performance given the economic headwinds experienced for most of the year.\nWe improved our EBITDAC margin for -- by 110 basis points to 31.1%, compared to 2019 as we leverage the growth in organic revenue and managed our expenses in response to the pandemic.\nOur net income per share for the full-year of '20 increased 20.7% to $1.69 from $1.40 in 2019.\nOn an adjusted basis, which excludes the change in acquisition earn-outs, net income per share increased 19.3%.\nLastly, we had another strong year of M&A activity, as I said earlier, closing 25 acquisitions with approximately $197 million of annual revenue, adding many excellent businesses and teammates.\nNow, on Slide 5.\nIn prior calls, we talked about factors that would impact the economic recovery, which included the elections, the approval of the vaccine and the timing of the rollout, as well as how much additional stimulus will be approved.\nThe timing of the vaccine rollout and the approval of additional stimulus will have the largest impact upon the recovery of the economy will influence business leaders confidence about rehiring and investing in their businesses.\nDuring the fourth quarter, we continue to see companies doing well and other struggling mightily.\nWe've seen improving new business and our retention remains good.\nHowever, we continue to believe it will be choppy -- a choppy recovery through at least the end of 2021 and maybe into early 2022.\nFrom a rate standpoint, the fourth quarter was very similar to the third quarter, most standard rates were up 3% to 7% with E&S rates up 10% to 25% as compared to the prior year.\nAs we've talked about before, the main driver of rate increases continues to be loss experience.\nCommercial auto rates remain up 10% or more and workers' compensation rates are not declining as fast as they were in previous quarters, but they are still negative.\nThere has been a lot of talk over the past few quarters that workers' compensation rates are turning positive.\nHowever, we're still not seeing it across the board yet.\nFor an E&S perspective, coastal property, both wind and quake are up 15% to 25%.\nProfessional liability is generally up 10% to 25%, depending on the coverage in the industry.\nWe continue to see outliers to be wanted to coverage.\nPersonal lines in California, Florida and the Gulf Coast states remain under intense pressure as carriers are seeking to reduce their exposure due to fires and tropical activity during 2020.\nWe expect the reduction in personal lines capacity continue throughout '21.\nPlacing coverage for many lines, certain industries or customers with significant losses continues to be challenging.\nThis includes excess or umbrella coverage, where a carrier or carriers will seek a combination of lower limit and higher premium rates.\nWe don't expect this trend to materially change in '21.\nNow, on Slide number 6.\nLet's discuss the performance of our four segments.\nOur Retail segment, organic revenue growth grew by 1.5% for the fourth quarter.\nAs we mentioned in our third quarter earnings call, we had about a 100 basis points of timing items that benefited the growth in the third quarter and negatively impacted the growth in the fourth quarter.\nOur fourth quarter performance was driven by new business, better customer retention and premium rate increases, but was impacted by lower exposure units resulting from the pandemic.\nWe view the performance for the fourth quarter as good, considering we delivered 7% organic growth in the fourth quarter of last year and taking into consideration the timing headwind mentioned earlier.\nOrganic revenue growth for the full-year was 2.4%, which we consider a good performance in light of the tough economic environment.\nOur National Programs segment grew 14.1% organically, delivering another stellar quarter.\nOur growth was driven by strong new business, retention and rate increases.\nSome of the top performing programs were our lender place, commercial and residential earthquake, wind and personal property, just to name a few.\nFor the full-year, our National Programs segment grew organically, an impressive 12.3%.\nOur Wholesale Brokerage segment grew 5.8% organically for the quarter.\nWe realized strong new business and continued rate increases for most lines of coverage.\nBrokerage was the fastest-growing again this quarter, while we continue to experience headwinds in our binding authority and personal lines businesses due to the economy and carrier appetite we mentioned previously.\nFor the full-year, our Wholesale Brokerage segment grew 5.5% organically, delivering another good year.\nThe organic revenue for our Services segment decreased 50 basis points for the fourth quarter, representing good improvement from the last few quarters.\nThe main drivers depressing growth continue to be lower claims volume for our Social Security and Medicare Set-aside advocacy businesses.\nThe decline was substantially offset by revenue generated by processing claims for weather-related events that occurred in the third and fourth quarters.\nFor the full-year, organic revenue decreased by 10.9%, driven by lower claims for our Social Security Advocacy business, certain terminated customer contracts and the impact of the pandemic.\nWhile not back in positive territory, we believe the fourth quarter was a turning point, and we anticipate delivering modest organic growth for 2021.\nI'm moving on to Slide number 7.\nLike previous quarters, I'm going to discuss our GAAP results, certain non-GAAP financial highlights, as well as our adjusted results, excluding the impact of the change in acquisition earn-out payables.\nFor the fourth quarter, we delivered total revenue growth of 61 -- $63.1 million, or 10.9% and organic revenue growth of 4.7%.\nOur EBITDAC increased by 11.3%, growing slightly faster than revenues as we are able to leverage our expense base and further manage our expenses in response to COVID-19.\nThese both offset the headwinds associated with the gain on disposal recorded in the fourth quarter of 2019, an increase in non-cash stock-based compensation.\nOur income before income taxes increased by 28.3%, outpacing EBITDAC growth.\nThis is primarily driven by the $15 million year-over-year decrease in the change of estimated acquisition earn-out payables.\nOn the next slide, we'll discuss our results excluding this adjustment.\nOur net income increased by $20.8 million or 27.2% and our diluted net income per share increased by 25.9% to $0.34.\nOur effective tax rate for the fourth quarter was 25.7%, substantially in line with the 25% we realized in the fourth quarter of 2019.\nOur weighted average number of shares increased slightly compared to the prior year and our dividends per share increased to $0.093 or 9.4% compared to the fourth quarter of 2019.\nOver on to Slide number 8.\nThis slide presents our results after removing the change in estimated acquisition earn-out payables for both years.\nDuring the fourth quarter of 2020, the change in estimated acquisition earn-out payables was a credit of $9.5 million as compared to a $5.5 million charge in the fourth quarter of 2019.\nThe credit was primarily driven by the reduction in estimated earn-out payables for an acquisition within the National Programs segment.\nExcluding the change in acquisition earn-outs in the fourth quarter of both years, our income before income tax grew $13.9 million or 12.9%.\nOur net income on an adjusted basis increased by $9.7 million or 12% and our adjusted diluted net income per share was $0.32, an increase of 14.3%.\nOverall, it was a great quarter.\nWe're moving over to Slide number 9.\nThis slide presents the key components of our revenue performance.\nFor the quarter, our total commissions and fees increased by 10.9% and our contingent commissions and GSCs was slightly down for the quarter.\nOur organic revenues was exclude the net impact of M&A activity, increased by 4.7% for the fourth quarter.\nOver to Slide number 10.\nOur Retail segment delivered total revenue growth of 7.2%, driven by acquisition activity and organic revenue growth of 1.5%.\nThe timing discussed above negatively impacted organic revenue by 100 basis points for the quarter.\nEBITDAC grew 5.3% due to leveraging organic revenue and cost savings achieved in response to the pandemic.\nThis growth was slower than the growth in total revenues, primarily due to a prior year gain on disposal that represented a negative year-over-year impact of approximately 150 basis points.\nOur income before income tax margin increased 130 basis points and grew faster than EBITDAC, due primarily to the change in estimated acquisition earn-outs.\nMoving on to Slide number 11.\nOur National Programs segment increased total revenues by $25.3 million or 18.9% and organic revenue by 14.1%.\nThe increase in total revenue was driven by recent acquisitions and strong organic growth across many programs.\nDue to that growth of 19% was in line with total revenue growth.\nThe leveraging of strong organic revenue in the management of variable cost was offset by higher intercompany IT charges and lower contingent commissions.\nIncome before income taxes increased by $20.3 million or 54% growing faster than EBITDAC due to decreased acquisition earn-out payables that was partially offset by higher intercompany interest expense.\nOver to Slide number 12.\nOur Wholesale Brokerage segment delivered total revenue growth of 19.2% and organic revenue growth of 5.8%.\nTotal revenues grew faster than organic revenue due to recent acquisitions with contingent commissions substantially flat year-over-year.\nEBITDAC grew by 17.1% with a margin decline of 40 basis points as compared to the prior year, while we delivered good organic growth and reduced variable expenses in response to COVID-19.\nThese were more than offset due to changes in foreign exchange rates and to a lesser extent higher intercompany IT charges.\nOur income before income taxes, grew by 6.2%, which was lower than total revenue growth, primarily due to higher intercompany interest expense.\nOver to Slide number 13.\nTotal revenues and organic revenues for the Services segment both declined by about 50 basis points, driven by the items Powell mentioned earlier.\nFor the quarter, EBITDAC increased by 9.7% due to increased weather-related claims and was partially offset by higher intercompany IT expenses.\nIncome before income taxes decreased 23.6% due to a credit of $2.5 million in the quarters in the fourth quarter of 2019 for the change in estimated acquisition earn-out payables that did not recur or occurred in 2020.\nOver to Slide number 14.\nThis slide presents our GAAP results for the full-year of 2020 and 2019.\nFor 2020, we delivered revenues of $2.6 billion, growing 9.2% and earnings per share of $1.69, growing 20.7%.\nOur EBITDAC increased by 13.5% and our EBITDAC margin grew by 110 basis points.\nFor the year, our share count increased slightly as compared to the prior year and our dividends paid during 2020 as compared to 2019 increased by 7.1%.\nOver to Slide number 15.\nThis slide presents our results excluding the change in estimated acquisition earn-out payables for both years.\nFor the full-year of 2020, on an adjusted basis, our income before income taxes grew 18.1%, which outpaced EBITDAC growth due to lower interest expense and our adjusted net income per share grew by 19.3%.\nIn addition to the strong income performance metrics, we also had another strong year for cash conversion due to the strength of our operating model and diversity of our businesses.\nWe delivered $721.6 million of cash flow from operations, representing a continued strong conversion rate of 27.6% as a percentage of revenue.\nWe also finished the year in a strong liquidity position, with $817 million of cash and cash equivalents, as well as $800 million of accessible capital on our revolver.\nWith this capital and the cash we will generate in 2021, we are in a good position to fund continued investment in our Company.\nWe got a few other comments regarding outlook for 2021.\nDuring the third quarter, we were asked the question about our potential margins for 2021 in relation to the COVID-19 savings we had in 2020.\nNow, with the year completed and a bit more visibility in 2021, we expect EBITDAC margins could be flat to up slightly considering our variable cost will more than likely increase as we're able to travel and see customers face-to-face.\nAs we've done in the past, our leaders will be focused on growing profitability.\nRegarding contingents, we are anticipating them to be relatively flat or maybe down slightly in 2021.\nAs it pertains to taxes, we expect our effective tax rate for 2021 to be in the range of 23% to 24%.\nThis does not take into consideration any potential changes in the federal tax rates that are being discussed by the new administration.\nFor interest expense, we're anticipating a $7 million to $9 million increase as compared to 2020 driven by the new bonds we issued in September of 2020.\nFrom a capital perspective, we are expecting our capex to decrease in 2021 to approximately $40 million to $45 million as we have substantially completed the development of our new Daytona Beach campus.\nIn my opening comments, I mentioned there are still a few items that need to be resolved over the coming quarters.\nWe will watch closely the successful rollout of the vaccine and additional stimulus to help those in need.\nBoth of these items will influence the pace of economic recovery over the coming quarters.\nFrom a rate perspective, we expect increases for the first six months of '21 to be similar to those seen in '20.\nUltimately, the rating -- the rate of increases will be driven by losses sustained in 2020 from the record setting number of tropical storms in the millions of acres that were burned.\nThe question remains for how much longer and at what pace the rates need to achieve the targeted returns.\nWe think the market is getting near an inflection point over the coming year for certain lines and will drive some rate moderation.\nThe acquisition pace seems to be active as ever and competition between private equity and long-term strategics remains.\nWe continue to believe the aggressive pricing for deals by PE will not abate any time soon.\nHowever, we're well positioned with our low leverage and the capital on our balance sheet, as well as access to additional capital to fund our M&A activity.\nOur pipeline remains good and we will keep our disciplined approach to M&A as it's proven to be very successful.\nBut as you know, we don't count anything until it's closed.\nFinally, technology innovation continue to be at the forefront regarding creation of new products and enhancing the experience of our customers.\nWe will continue to digitize our data, automate and prioritize technology investments around the following: optimizing and enhancing our data and analytics program; expanding our digital delivery capabilities around products and services; and engaging in initiatives designed to drive greater efficiency and velocity through our underlying processes.\nAs we deliver on these goals, we will see new opportunities for growth that will serve our customers even better.\nWe had a great 2020 on many fronts and have good momentum heading into '21.\nI am extremely proud of how our team has served our customers through extremely challenging times.\nWe have a great team and a highly diversified business, both that performed very well in the past and we expect they will in the future.\nUltimately, our financial performance is only possible through the combined efforts of our nearly 11,000 teammates and our commitment to serve our customers.\n", "role": "user" }, { "content": "compname announces quarterly revenues of $642.1 million, up 10.9%.\ncompname announces quarterly revenues of $642.1 million, an increase of 10.9%, and diluted net income per share of $0.34.\nq4 earnings per share $0.34.\nqtrly adjusted earnings per share $0.32.\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: Joining me on the call today are Tim Gokey, our Chief Executive Officer; and our Chief Financial Officer, Edmund Reese.\nA summary of these risks can be found on the second and third page of the slides and a more complete description on our annual report on Form 10-K.\nWe will also be referring to several non-GAAP measures, which we believe provide investors with a more complete understanding of Broadridge's underlying operating results.\nI'll begin with an overview of our key messages and an update on our third quarter results, including our performance against our strategic objectives.\nIt's an exciting time to be at Broadridge, and we have a lot to cover, so let's get started.\nI'm pleased to share that Broadridge delivered strong third quarter results.\nRecurring revenues and adjusted operating income both rose 8%.\nOur results in both ICS and GTO are being propelled by long-term trends, including increasing digitization, mutualization and the democratization of investing.\nThese trends are driving strong new business growth, record growth in the number of shareholders and higher trading volumes.\nWe're also executing well against our strategic growth plan across governance, capital markets and wealth and investment management.\nI'll highlight some of those initiatives in a few minutes.\nA combination of those strong results and continued execution against our growth plans is giving us the confidence to continue to invest in our business.\nWe've continued to fund attractive investments in our products, platforms and people, including the pending acquisition of Itiviti.\nWe're also substantially increasing our guidance for fiscal year 2021 on both the top and bottom line.\nWe now expect recurring revenue growth of 8% to 10% and adjusted earnings per share growth of 11% to 13%.\nWhile the new guidance reflects the impact of Itiviti, the bulk of this raise is organic, as Edmund will discuss.\nThe net result of all these points, our strong third quarter results, our continued internal and M&A investment and our outlook for fiscal 2021 is that Broadridge is executing well and is on track to deliver at the higher end of our 3-year financial objectives, including 8% to 12% adjusted earnings per share growth.\nWe remain focused on delivering long-term growth driven by secular trends and consistent investment across our governance wealth and capital markets businesses and, in turn, generate consistent, sustainable top quartile shareholder returns.\nBroadridge's ability to generate those attractive returns is driven by executing on our clear long-term growth plan.\nSo let me update you on some highlights of our recent progress on Slide five.\nI'll start with ICS.\nRecurring revenues rose 11% to $586 million driven by revenue from new sales and very strong equity record growth.\nThe biggest driver of ICS' strong growth was revenue from new sales, and I'm pleased to see the impact of recent investments on our results.\nLet me share two examples of our focus on product investment and strong execution are translating directly into increased revenue growth.\nThe first is the Shareholder Rights Directive II.\nOver the past two years, we've created a shareholder communications hub, linking millions of investors across the EU and with hundreds of wealth managers, winning almost 300 new clients along the way.\nNow as we enter proxy season, we're starting to see those efforts translate into new revenues helping to drive 80-plus percent growth in our international proxy business.\nVirtual shareholder meetings continue to be a great example of product investment translating into new revenues.\nOver the past year, we've upgraded our VSM capabilities to include the latest in virtual meeting capabilities, including state-of-the-art video and audio technology, improved Q&A functionality, one-click shareholder authentication and seamless proxy voting.\nThose upgrades have helped retain our existing clients and have driven additional growth.\nWe are now on pace to serve almost 1,900 virtual shareholder meetings this proxy season, up from 1,400 last spring.\nThe second factor driving ICS was very strong equity record growth, which was 20% for the quarter.\nIt's clear, the move to reducing trading commissions has triggered a significant expansion in the number of market participants, which contributed to the increase in equity record growth.\nThat strong growth has been broad-based across our broker clients but has been most pronounced at the online brokers.\nIt has also been broad-based across issuers with 20% growth across both widely held stocks and those with more medium-sized shareholder bases.\nWe did see large increases at a handful of names, including so-called meme stocks like GameStop.\nBut those increases only contributed one point of the overall growth.\nCommission-free trading is the latest step in a long-term trend.\nIt includes the rise of ETFs, lower trading costs across all participants and changes in investor interfaces that helps propel high single-digit equity and fund record growth over the past decade.\nBroadridge has invested to scale its capabilities to meet that rise in demand, increase the digitization of critical regulatory communications and ensure that both new and existing investors get the information they need to understand the risks and participate in the governance of their investments.\nLooking forward, we expect strong record growth to extend into the fourth quarter with our testing indicating 25% stock record growth for Q4.\nTo close off on governance.\nLet me touch briefly on regulatory.\nI want to congratulate Commissioner Gensler on his confirmation as SEC Chairman.\nAs we have with every chair and administration of both parties over the past 40 years, we look forward to assisting by investing in the next generation of technology, to help the SEC achieve its mandate to better inform and protect investors, all while reducing cost for registers and creating a fair return for our shareholders.\nLet's turn now to our capital markets franchise.\nCapital markets' recurring revenues slipped by 1% as steady international growth was offset as expected by lower license revenues.\nWe anticipate this period of flattish revenue to continue through the fourth quarter before picking up again in fiscal '22 as we onboard our very healthy backlog.\nOn the strategic front, our planned acquisition of activity represent a significant enhancement of our ability to drive value to our clients.\nFor those who may have missed our call a few weeks ago, let me remind you why we think this transaction is such an exciting step forward for our global capital markets franchise.\nAs a leading provider of order management and trade execution technology and connectivity solutions for financial institutions, Itiviti gives Broadridge a compelling opportunity to extend our capital market service offering.\nThe combination of Itiviti's front-office trading solutions, with Broadridge's leading post-trade back-office capabilities, will allow us to serve our client's entire trade life cycle from order to settlement.\nWith increasing high frequency and algorithm trading, it's increasingly important to serve clients across traditional boundaries.\nThis combination will bring critical data from the back to the front office to improve trading decisions, and it will enable our clients to simplify and improve their front-to-back technology stack and operating model.\nThe combination also strengthens our joint capabilities across equities, exchange-traded derivatives and fixed income, and it substantially extends our global reach, creating significant cross-selling opportunities and enhancing our relationships with blue chip clients.\nThe acquisition virtually doubles our business in APAC and further expands our reach in Europe.\nThat expanded footprint and scale positions us to take advantage of growing mutualization trends in both EMEA and Asia.\nItiviti adds more than $6 billion to Broadridge's total addressable market and will drive stronger growth, margins and earnings, as Edmund will discuss in his remarks.\nEarly feedback from our clients has been overwhelmingly positive, giving us added confidence that our front-to-back thesis and our near-term medium growth outlook are sound.\nAlso of note in our capital markets franchise is the continued development of our LTX fixed income trading platform.\nLTX recently completed the first-ever multi-buyer digital block trading.\nEnabling a single seller to simultaneously access the aggregated liquidity for multiple buyers is a milestone for the fixed income market, and I hope one of the many steps toward creating a more liquid corporate bond market.\nTo date, 10 dealers and over 40 asset managers have joined the LTX platform.\nAnd an additional 14 institutions are signed in the onboarding process, including one of the world's largest fixed income managers.\nLet's turn next to our wealth and investment management business, where revenues grew by 7%, driven by new client additions and higher equity trading volumes.\nA key part of our growth strategy is to expand our sales of component solutions.\nSo it's terrific to see new client onboardings across a full range of our wealth and investment management products.\nWe also continue to make progress on building our industry-leading wealth management platform, which will help clients with the digital transformation of their wealth business.\nWe're already live with our average daily balance billing solution and industry milestone.\nWe're currently in active testing of our phone office workstation with select advisors, setting the stage for a period of extensive testing of the broader platform before going live.\nOur sales and marketing efforts with several new clients to this platform are advancing well.\nClients see that using the Broadridge wealth platform to drive digitization by seamlessly connecting the back office functions we already provide, with additional select front and middle office capabilities, will drive a stronger top and bottom line by bringing new capabilities to advisors and clients while digitizing financial advisor, branch and back office interactions.\nAnother important part of our wealth strategy is developing a robust partner network to ensure that we can integrate cutting-edge capabilities from innovative partners.\nRecent partnerships include Fligoo for predictive analytics and Anchor Bank for securities-based lending; and, a wealth management fintech accelerator.\nThese partnerships and others represent ongoing steps in building a network that will enable our clients to rapidly adopt new technologies.\nWhen I spoke to you at the close of our fiscal third quarter a year ago, the economic outlook was deeply uncertain and from the New York area and much of the world was locked down.\nMy remarks at that time were focused on the steps we were taking to keep our associates safe and meet the needs of our clients in an unprecedented time.\nToday, after 12 long months, there remains significant challenges and thinking, in particular, of our more than 3,000 associates in India and of their families and friends.\nBut the global outlook is unquestionably brighter, with increasing economic growth marching, hand-in-hand with rising vaccination rates.\nThe pandemic has also accelerated many long-term trends, including digitization, mutualization and next-generation resiliency.\nAnd the lower cost and friction for investing is bringing in millions of new investors.\nThese changes are clearly having a significant impact across wealth management, governance and capital markets.\nThey're causing financial services leaders to rapidly adopt next-generation technologies.\nAnd Broadridge is building the suite of capabilities that will help them navigate and win this period of change.\nWe do so from a position of strength.\nWe started the fiscal year last July expecting 2% to 6% recurring revenue growth and 4% to 10% adjusted earnings per share growth.\nOur focus then was on driving enough expense savings to assure that we could continue to fund critical growth investments.\nFast forward nine months, and we are poised to deliver 8% to 10% recurring revenue growth, driven by a combination of strong new sales and healthy financial markets.\nAfter achieving our expense targets, we're now investing heavily in new product capabilities, enhancing our global post-trade platform and building next-generation capabilities across digital communications, wealth management and fixed income trading, among other investments.\nWe're also adding talent and investing in our people to make Broadridge the best place for the most talented associates in our industry.\nLast but not least, we're on the brink of closing our $2.5 billion acquisition of Itiviti, expanding our capital markets franchise and further strengthening our global footprint.\nAnd yet even after those investments and the near-term dilution from Itiviti, we're positioned to deliver 11% to 13% adjusted earnings per share growth.\nBroadridge is at its front foot and leaning into the opportunities we see ahead.\nIt has been a remarkable year.\nLooking further ahead, we're on track to achieve the higher end of our 3-year growth objectives, driving strong recurring revenue and double-digit adjusted earnings per share growth.\nWe see long-term trends continuing to drive demand for our services.\nAnd our investments are creating new avenues for growth long beyond our current 2-year objectives.\nThe future of Broadridge is brighter than ever.\nWe've asked a lot of our team over the past 12 months, and they're delivering.\nThey stayed focused on clients, and through them are helping to build better financial lives for millions.\nAs you can see from the Q3 financial summary on Slide seven, Broadridge delivered another strong quarter.\nRecurring revenue grew 8% to $900 million.\nAdjusted operating income also grew 8% to $284 million.\nMargins declined 60 basis points to 20.4% as we successfully made the investments that we discussed last quarter in our technology platforms, in our products, our people.\nOur operating income was partially offset by a higher tax rate in Q3 '21 as we grew over discrete tax benefits in Q3 '20.\nSo our adjusted earnings per share grew to $1.76 in the quarter, up 5% over Q3 '20.\nNow let's turn the slide and get into the details of the quarter, starting with recurring revenue growth.\nAs I said, recurring revenue grew 8% in the quarter, powered by 7% organic growth, and comfortably within our historic mid- to high single-digit growth performance.\ndemonstrating the strength of our sustainable recurring revenue growth model.\nAs a result of that strong organic growth and an increase in our outlook for the fourth quarter, we're raising our guidance for recurring revenue growth to 8% to 10% for the full year, up from our prior guidance of growth at the higher end of 3% to 6%.\nNow let's look at this quarter's recurring revenue growth by business on Slide nine.\nI'll start with our ICS segment, where revenues grew by 11% to $586 million.\nRegulatory revenues rose 20% to $290 million driven by the 20% equity record growth, higher mutual fund and ETF communications volumes and net new sales, including from our Shareholder Rights Directive II solution that Tim highlighted earlier.\nWe expect strong regulatory revenue growth to continue in the fourth quarter with, our current testing indicating 25% equity record growth.\nAfter a strong 12 months, we now have significant penetration of our VSM solution across the S&P 500, and we expect issuer revenue growth to ease going forward as we start to lap the increase of VSM activity that began in Q4 '20.\nFund solutions revenue was flat as double-digit growth in data and analytics was offset by lower interest income from custodied accounts in our funds processing business.\nCustomer communications revenues were also flat with double-digit growth in our high-margin digital products, offset by lower print volumes due in part to the pandemic-depressed activity levels.\nWe expect growth in both our data-driven solutions and customer communications business to pick up in the fourth quarter as these headwinds ease.\nWealth and investment management revenues rose 7%, driven by the onboarding of new component sales and higher retail trading.\nCapital markets revenues fell 1% of strong growth from international sales, was offset by $6 million in lower license revenues, which declined as expected.\nAs we said last quarter, this flat revenue growth will continue in the Q4 '21 before picking up in fiscal year '22.\nLet's turn to Page 10, where we show more detail on volume trends.\nBroadridge's recurring revenue growth benefits from underlying volume growth trends, including stock record growth.\nOver the past decade, record growth across equity, mutual funds and ETF has grown 6% to 8%.\nRecently, equity record growth has accelerated to 11% in Q4 '20 and continued to increase through the year to 20% in Q3 '21, surpassing the estimates from our January testing.\nAs I said, we expect these growth trends to continue and reach 25% in Q4 '21.\nMutual fund and ETF record growth picked up as well to 7%, more in line with our historical growth rates.\nWe are modeling a return to more moderate mid-single-digit growth across both equity, mutual fund ETF records for fiscal year '22, with stronger growth in the seasonally smaller first half and more moderate growth in the second half.\nTouching briefly on trade volumes, which you'll see on the bottom of this slide.\nThis is the fifth consecutive quarter of aggregate double-digit volume growth.\nThis growth reflects the increase in volatility in retail investor engagement over the past year, which continued to be quite strong well into the third quarter.\nMore recently, trading volatility subsided during the second half of March, and we expect tougher trading volume comps in Q4.\nLet's move to Slide 11 for a closer look at the drivers of our recurring revenue.\nOrganic growth at a very healthy 7% continues to be the largest component of our recurring revenue growth, and new sales remains the biggest driver with strong growth contribution from both ICS and GTO.\nWe also continued our long track record of revenue retention above 97%.\nInternal growth contributed another three points as growth in ICS regulatory volumes more than offset the decline in GTO license revenue.\nWe've now fully lapped all of our fiscal year 2020 acquisitions.\nLooking ahead to the fourth quarter, we expect Itiviti to add three points to fourth quarter recurring revenue growth.\nTotal revenue growth this quarter was stronger than usual, reaching 11%, with distribution revenue contributing three points due to the increased mailings that correspond with the high record growth and the increased event-driven activity this quarter.\nMoving forward, we continue to expect the low to no-margin distribution revenue to decline over time as we focus on increasing higher-margin digital revenue across our governance business.\nEvent-driven communications remain an integral part of our client offering.\nEvent-driven revenues have climbed over the past four quarters to be more in line with our historical norms of about $50 million a quarter and reached $74 million in the third quarter, well above last year's unusually low $39 million.\nBroadridge benefited from an increase in mutual fund proxy activity as well as a rebound in proxy contest volumes and capital markets transactions.\nWe expect fiscal '21 event-driven revenue to be more in line with the average that we've seen over the past seven years.\nFor modeling purposes, we're assuming $50 million to $60 million of event-driven revenues in the fourth quarter.\nTurning to Slide 13.\nAdjusted operating income grew by 8%.\nOur adjusted operating income margin declined by 60 basis points, reflecting the continued investments that we're making in our technology platforms and product capabilities that we highlighted on our last quarterly call.\nThese investments, which support our long-term growth, have a short-term impact on margin expansion, but we remain on track to deliver approximately 50 basis points of margin expansion for the full year, right in line with our fiscal year '21 guidance and 3-year growth objectives.\nThis formula, forgoing near-term margin expansion and consistently investing in our technology platforms and products to drive long-term sustainable recurring revenue growth, will continue to be an important part of how we manage our business.\nAs a Chief Financial Officer focused on long-term growth, it's encouraging to see us making these types of investments across all of our product lines, giving us momentum toward future growth.\nOur $124 million closed sales year-to-date are in line with our performance over the same period last year.\nWe continue to see strong demand for our ICS solutions, including regulatory and issuer communications and data solutions.\nWe remain on track to achieve our full year guidance of $190 million to $235 million for closed sales, which implies a fourth quarter range of $66 million to $111 million.\nHistorically, the closed sales performance in the last quarter of the year has been impacted by the timing of larger deals.\nA handful of larger signings could propel us to the top end of our guidance range, and conversely, delays could put us at the lower end.\nAnd I'll also note that we continue to feel good about our recurring revenue backlog, which was 12% of our fiscal '20 recurring revenues as of Q4 '20 and gives us great visibility into our top line growth.\nMoving to capital allocation on the following slide.\nWe generated $136 million of free cash flow year-to-date, up $54 million over the first nine months of fiscal year '20 driven by higher earnings and strong working capital management.\nDuring the first nine months of the fiscal year, we invested $205 million in building out our industry platforms and another $71 million in capex and software spending.\nOur M&A investment through the first nine months of the year was 0, but that will change with our announced $2.5 billion acquisition of Itiviti, which I'll touch on in a moment.\nEven after completing the Itiviti acquisition, Broadridge will remain committed to a balanced capital allocation policy, which prioritizes internal investment, growing our dividend, M&A and returning excess capital to shareholders.\nImportantly, we are also committed to maintaining an investment-grade credit rating, which means we'll prioritize debt paydown over share repurchases and expect to limit ourselves to smaller tuck-in M&A opportunities over the next several quarters.\nGiven our strong free cash flow, we believe that we can comfortably achieve our new 2.5 times leverage target by the end of fiscal year '23.\nTurning to capital returns on the right-hand side of the slide, our dividend has grown and remains in line with our historical 45% payout ratio.\nOn Slide 16, we are on track to close the Itiviti acquisition in the coming weeks.\nSo let me take a moment to give you some additional clarity about the expected impact that Itiviti will have on our financial performance.\nI'll start with fiscal year '21.\nWe expect Itiviti to add $25 billion to $30 billion or one point to our full year recurring revenue growth, which equates to three points to our fourth quarter growth.\nAnd the acquisition is expected to be modestly dilutive to our adjusted earnings per share growth.\nIn fiscal year '22, we expect Itiviti to add approximately $250 million or about eight points to our recurring revenue growth.\nAnd we expect the acquisition to be accretive by approximately two to three points or roughly $0.10 to $0.15 to adjusted earnings per share growth.\nPlease note that Itiviti's results in both fiscal year '21 and fiscal year '22 will be negatively impacted by the accounting treatment of acquired revenue, which will reduce revenue recognition by approximately $30 million in total with 2/3 of that impact in fiscal '22.\nThis revenue haircut is incorporated in the numbers that I just shared with you.\nFinally, I want to reiterate the commentary that I gave you when we announced the deal, about the impact on our 3-year growth objectives.\nWe expect Itiviti to add 2.5 to three points to our 3-year recurring revenue growth CAGR and, after interest, more than two points to our 3-year adjusted earnings per share CAGR.\nNow turning to guidance on Slide 17.\nWe are raising our outlook for fiscal '21 recurring revenue growth to 8% to 10% from the higher end of 3% to 6%, and that includes one point of growth from Itiviti.\nWe are raising our guidance for total revenue growth to 8% to 10% from the higher end of 1% to 4%.\nWe continue to expect our adjusted operating income margin to expand to approximately 18%, up from 17.5% in fiscal year '20 as we balance near-term returns with continued investments to sustain long-term growth.\nWe expect adjusted earnings per share growth of 11% to 13%, up from the higher end of 6% to 10%, and that includes a 1-point drag from Itiviti.\nFinally, as I noted earlier, we continue to expect closed sales in the range of $190 million to $235 million.\nThe Broadridge Financial model is working.\nWe are on track to deliver strong 8% to 10% recurring revenue growth.\nThat growth is fueling our ability to both invest and expand margins.\nAt the same time, our strong free cash flow business model enables us to pursue balanced capital allocation, commit to a rising dividend, fund investments in our platform and products and step up and make a significant M&A investment to grow our capital markets franchise.\nThe end result is that we're on track to deliver at the higher end of our 3-year financial objectives of 7% to 9% recurring revenue growth and 8% to 12% adjusted earnings per share growth.\nIt's a great example of how we manage our business to drive sustainable revenue growth, steady and consistent adjusted earnings per share growth and historically top quartile TSR.\n", "role": "user" }, { "content": "q3 adjusted earnings per share $1.76.\nsees 2021 total revenue growth of 8% - 10%.\nsees 2021 non-gaap adjusted earnings per share growth 11% - 13%.\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 summary of these risks, can be found on the second page of the slides, and a more complete description on our annual report on Form 10-K.\nWe will also be referring to several non-GAAP measures, which we believe provide investors with a more complete understanding of Broadridge's underlying operating results.\nI'll begin with our key messages and then provide an overview of our performance against our strategic objectives across Governance, Capital Markets and Wealth & Investment Management, then I'll close with some thoughts about our future before Edmund reviews the financials.\nI have four headlines.\nFirst, Broadridge delivered a strong fiscal year '21.\nRecurring revenues rose 10%; adjusted earnings per share rose 13% and our sales teams delivered a 10th consecutive year of record sales.\nOur results demonstrate how well positioned Broadridge is to take advantage of increasing investor participation and the growing need to digitize and neutralize Financial Services.\nSecond, we're executing against the strategic growth plan we laid out at our Investor Day in December.\nWe're building the next generation of Governance products, growing the scope of our Capital Markets business across the trade lifecycle, and building our Wealth Management franchise.\nThird, we remain committed to balanced capital allocation.\nIn fiscal '21, we increased our level of investment on our internal platforms, completed the largest acquisition in our history, and returned nearly $250 million in capital to shareholders.\nYesterday, our Board approved an 11% increase in our annual dividend per share.\nBroadridge has now increased its annual dividend every year since becoming a public company with double-digit increases in eight of the last nine years.\nFourth and last, we expect another strong year in fiscal '22.\nOur guidance calls for 12% to 15% recurring revenue growth, further margin expansion, 11% to 15% adjusted earnings per share growth, and another year of record sales.\nA combination of strong fiscal year '21 results and our guidance for fiscal '22 leaves Broadridge extremely well positioned to achieve the higher end of our three-year growth objectives.\nAs we close out the first year of our current three-year cycle, I want to give you an update on our progress against our strategic growth plans for each of our three franchise businesses, starting with Governance or ICS, on Slide 4.\nICS recurring revenue rose 11% in fiscal '21 to $2.1 billion, driven by both new sales and internal growth.\nStrength of our Governance franchise comes from its position at the heart of a network linking broker dealers, corporate issuers, asset managers, and tens of millions of individual and institutional investors.\nOur fiscal '21 results highlight how our strategy of innovating at the core while providing incremental value to all network participants drives incremental and sustainable growth for Broadridge.\nI'll start with our core regulatory business.\nThe big story here is the very strong position growth we're seeing across equities.\nEquity stock record growth, which is our measure of the number of positions held by shareholders grew 26% in fiscal '21 including 33% in the seasonally strongest fourth quarter.\nWe continues to be struck by the broad based nature of this growth.\nWe're seeing growth across large and small issuers not simply a handful of mega-cap tech or main stocks.\nLooking at industry sectors; tech and consumer cyclical stocks are leading the growth with 42% and 37% growth respectively.\nWe're also seeing double-digit growth across virtually other sector including 33% growth in healthcare needs and 20% plus in basic materials and industrials.\nThis broad based participation is a key reason why we believe that fiscal year '21's strong growth is an extension of the long-term trend that's been driving higher equity and fund position growth over the past decade and why we're forecasting continued growth in fiscal '22.\nAt Broadridge, we're able to meet this increased demand because we've invested in scaling our capacity.\nAfter the initial COVID surge last spring, we invested in new distribution capacity to build incremental flexibility across our network, enabling us to seamlessly ensure that holders of more than 500 million positions got the communications they needed to participate in corporate governance.\nWe've also invested in new digital capabilities, including QR codes that make voting on your mobile device easier than ever.\nOur Governance franchise is also increasingly global with gains from our Shareholder Rights Directive II solution and the continued expansion of our European Fund Communications business.\nWe're also expanding the suite of data driven solutions we provide for our fund clients, driven in part by another year of double-digit growth across our data and intelligence products.\nWe're growing our relationships with corporate issuers.\nWe conducted almost 2,400 virtual shareholder meetings in fiscal '21, up from 1,500 a year ago.\nWe become the clear choice for America's leading companies with more than 75% of S&P 100 companies using Broadridge to host their annual meetings in 2021.\nIn turn, increased demand for our VSM capabilities has enabled us to deepen our client relationships, leading to strong growth in our suite of other annual meeting services and Disclosure Solutions products.\nFinally in customer communications, our strategy is focused on using our print capability as a door opener for growing our digital business.\nSo, it was encouraging to see strong double-digit growth in digital revenues which offset lower print revenues and helped to drive higher earnings.\nAll in all, it is a very strong year for our Governance franchise.\nNow let's turn to Capital Markets on Slide 5.\nIn Capital Markets we're driving trading innovation across the front office, enabling our clients to simplify and improve their global post-trade technology, providing strong enterprise and data component solutions, and building new network enabled solutions using AI, digital ledger and other innovative technologies.\nCapital Markets revenue grew 8% to $701 million, driven by new client additions and the acquisition of Itiviti, which has given us a new capability to drive innovation across the trade lifecycle.\nWhile the Itiviti integration is only just beginning, I'm excited by the progress we've made.\nItiviti recently closed its largest-ever sale and we're on track to leverage Broadridge's relationships to drive more meaningful sales in the quarters ahead.\nClient feedback has continue to be positive and the sales pipeline, especially in EMEA and APAC, is strong.\nA key driver of our revenue growth is our continued success at bringing clients under our global platforms, enabling them to simplify their global technology.\nWe're also enhancing those platform capabilities.\nA great example is the exchange-traded derivatives platform onto which were on-boarding R.J. O'Brien.\nI'm also tremendously excited by the continued progress in developing new capabilities based on next-gen AI and DLT technology.\nOur LTX fixed income platform continues to progress well.\nWe have more than 70 buy and sell side users in the platform and we're adding more every week.\nAnd the average initiated trade is north of $3.5 million, indicating demand for increased liquidity in fixed income markets.\nWe also recently launched our Digital Ledger Repo platform and are averaging $35 billion worth of transactions daily, a number which will grow as more clients, including UBS, come onto the platform.\nWhile both of these products are small today, each is bringing an innovative and differentiated solution to a multi-billion dollar market.\nNow let's turn to Wealth & Investment Management franchise on Slide 6.\nIn Wealth, we're extending our services around our core back office capabilities, growing our suite of component solutions and building a modular platform that will link our individual capabilities across a modern technology architecture.\nThe biggest driver behind our 6% growth in Wealth & Investment Management revenues was revenue from new sales.\nDuring the year, we added new clients to both our core back office platform and saw strong demand for our digital solution suite.\nOur work with UBS on the digital transformation of the Wealth Management industry remains one of our most exciting initiatives.\nBroadridge -- the Broadridge Wealth Management platform is an important part of UBS' own multi-year transformation plan for its North American Wealth business.\nAs we line around UBS' goals around sequencing, we're already rolled out Select Components and we expect to rollout the additional platform components over the next 18 to 24 months.\nBased on the terms of our contract, we'll begin recognizing revenue when we complete the delivery of the full suite.\nMeanwhile, this platform continues to draw attention from other clients.\nWe are pleased to announce last month that RBC Wealth Management will become our second client on the Broadridge Wealth Platform.\nRBC is pursuing its own digital transformation journey and our platform will accelerate their ability to enhance the client experience, optimize advisor productivity and digitizes back office.\nWe're excited to be a key technology partner in that journey.\nBeyond our work in the Wealth platform, we continue to make progress in expanding our digital solutions with the AdvisorStream tuck-in acquisition and by extending our partner network.\nLastly, I was pleased to see strong growth in our Investment Management technology revenues, which grew by 12%; strong revenue from sales of existing solutions; continued platform development; and new product additions.\nWe're making solid progress on our Wealth & Investment Management growth strategy.\nAs I wrap up my strategy update, I want to highlight the common denominator behind our execution across Governance, Capital Markets and Wealth & Investment Management.\nBroadridge is investing in driving near, medium and long-term growth.\nWe've investing to process higher position counts, more virtual shareholder meetings and handle surges in trading volumes which are critical in fiscal '21 and will remain important in fiscal '22 and '23.\nAt the same time, we're investing in initiatives that will carry our growth momentum forward, including our data intelligence products, the emergence of a European governance hub, Itiviti, and our Wealth platform.\nAnd finally, I see tangible signs of products that have the potential to extend our growth runway well into the next decade like digital communications, Digital Ledger Repo and fixed income AI.\nThese are solutions that our clients value, as evidenced by the traction that we're gaining in the market for each of them.\nThis mix of near, medium and long-term growth businesses across the company are exciting.\nWhat does that mean for Broadridge?\nAs we enter fiscal '22, I've never been more optimistic about Broadridge's long-term growth prospects.\nWhen I look across our Company, I see a leadership team that's stronger than ever, focused on how we engage our associates, better serve our clients and create value for our shareholders.\nThat team is executing against our growth plans across Governance, Capital Markets and Wealth & Investment Management.\nWe're finding ways to help our clients accelerate digitization, drive mutualization benefits and enable the increasing democratization of investing.\nEven more tangibly, we are on track to deliver another strong year.\nOur strong backlog gives us visibility into new revenue over the next 12 to 24 months and we see continued position growth as new investors enter the market and current investors continue to diversify their portfolios.\nIn short, we see another year ahead of low teens revenue and adjusted earnings per share growth.\nThe net result of strong fiscal year '21 results, continued execution against our growth strategy and an outlook for continued growth in '22 means that Broadridge is well positioned to deliver at the higher end of our three-year growth objectives including, 7% to 9% recurring revenue growth and 8% to 12% adjusted earnings per share growth.\nLittle in the past 12 months has been easy, but they have found the way to adapt to the new virtual environment.\nThey stayed focused on our clients and they are helping drive the transformation of the financial services industry that is enabling better financial lives for millions.\nAs you can see from the financial summary on Slide 8, Broadridge delivered strong fiscal '21 results, capped off by a strong fourth quarter and demonstrating significant progress toward our three-year objectives.\nFiscal '21 recurring revenues increased 10% to $3.3 billion, driven by strong growth in both ICS and GTO.\nThat strong growth enabled us to make the near, medium and long-term investments in our technology platforms and our digital products while driving 60 basis points of AOI margin expansion for the year.\nHigher revenues and higher margins drove 13% adjusted earnings per share growth to $5.66.\nIn the fourth quarter, revenues rose 15% year-over-year to $1.1 billion, driven by growth in ICS and the acquisition of Itiviti.\nAdjusted operating income rose 4% as we continued our ongoing investments and adjusted earnings per share grew 2% to $2.19.\nOur results came in at the high end of our latest full-year guidance range and above our three-year recurring revenue and adjusted earnings per share growth objectives.\nAnd as Tim has highlighted, our sales team closed the year on a high note and pushed us modestly above our closed sales guidance range.\nSo let's get into the details of those results starting with recurring revenue on Slide 9.\nThe momentum in our business driven by the trends in increased investor participation in digital solutions continued into the fourth quarter and helped Broadridge post another year of 10% recurring revenue growth.\nOur recurring revenue growth was powered by 8% organic growth, which came in well above our 5% to 7% three-year growth objectives.\nThe combination of organic growth coupled with 2 points of growth from our acquisition of FundsLibrary and Fi360 in fiscal year '20, and then Itiviti in May, pushed our fiscal year '21 recurring revenue growth above our 7% to 9% objective as well.\nSo a strong start to our three-year recurring revenue growth objectives.\nNow let's look at this quarter's recurring revenue growth by business beginning with ICS on Slide 10.\nICS revenues grew by 17% to $719 million in the fourth quarter.\nAll of that growth, organic.\nThe biggest driver of that growth was in our regulatory business, which grew 27% to $381 million.\nFourth quarter stock record growth was 33% and mutual fund record growth was 11%, both key drivers of growth in regulatory.\nWe also benefited from strong growth in international and our investment in the Shareholder Rights Directive II solution is paying back and contributing to recurring revenue growth.\nFor the full year, regulatory revenues rose 20%.\nIssuer revenue also contributed to growth, rising 20% in the fourth quarter to $106 million and 21% growth for the full year.\nAs Tim noted, our continued success in providing virtual shareholder meeting services has helped drive revenue growth of our other annual meeting services and document disclosure products.\nFund solutions lapped the drag from lower interest income and recurring revenue grew 7% in the fourth quarter.\nFull year revenues rose 5% driven by the fiscal year '20 acquisitions mentioned earlier and revenue from net new business.\nCustomer communication revenues was down 1% in the quarter as declines in the low margin print revenue offset digital growth.\nFor the full year, customer communications revenue growth was slightly positive, but more importantly, higher margin digital revenues within customer communications grew by 15%.\nTurning to GTO on Slide 11; GTO recurring revenues rose 10% to $346 million in the quarter driven by 18% growth in our Capital Markets business and 1% growth in Wealth & Investment Management.\nAcross both Capital Markets and Wealth, solid revenue growth from new business was offset by $7 million of lower license revenue, which declined as expected, and modestly lower trading volume.\nOur acquisition of Itiviti closed in mid-May and contributed $29 million to revenue growth in the Capital Markets franchise.\nFor the full year, GTO revenues rose 7% to $1.3 billion, driven by 4 points of organic growth and 3 points from acquisitions.\nOrganic growth was driven by new sales and internal growth was essentially flat as the benefit of higher full year trading volumes was offset by lower license revenue, which declined relative to an unusually high fiscal year '20 level.\nWe expect modest growth in license revenues in fiscal year '22.\nSo Broadridge's recurring revenue growth benefited from strong volume growth both in ICS and our GTO business segments.\nEquity stock record growth rose to a record 26% in fiscal '21, well above the 6% to 8% trend in the past decade.\nFourth quarter proxy volumes which accounted for 55% of full year distributions benefited from 33% stock record growth.\nWe also saw strength in mutual fund and ETF regulatory communications, driven by strong fund inflows as we lap last spring's COVID driven withdrawals.\nLooking ahead to fiscal '22, we continue to model stock record growth growing at a healthy low-teens pace, though the seasonally light first half before reverting to more trend line mid-to-high single digit growth in the much more meaningful seasonal second half.\nWe're also expecting mid-to-high single-digit fund record growth.\nTurning to trading volumes in the bottom of the slide, fourth quarter volumes slipped 1% driven by a combination of tough year-over-year comps and lower overall market volatility.\nFourth quarter volumes also declined on a sequential basis as elevated levels in Q3, '21 driven by market volatility subsided.\nTrading volumes rose 12% for the full year.\nAs we look ahead to fiscal '22, we expect trading volumes to be essentially flat for the year with modestly higher volumes in the first half of the year offset by lower volumes in the third quarter.\nShifting to a view of growth drivers of recurring revenue on Slide 13, organic growth rose to 11% in the fourth quarter, driven by a combination of new sales and the seasonal impact of higher proxy volumes.\nNew sales contributed 6 points to growth with balanced contribution from both ICS and GTO.\nInternal growth of 7 points was primarily driven by proxy volumes as is typically the case in our fourth quarter.\nAcquisitions contributed 3 points, almost all of that came from Itiviti with only a modest contribution from our mid-June acquisition of AdvisorStream.\nClient losses subtracted 2 points of growth in both the fourth quarter and for the full year, marking another year of 98% client revenue retention rates.\nHigh retention rates reflect the value of the services we offer, our commitment to client services and/or a tangible outcome of our service profit chain culture.\nI'll round out our revenue drivers discussion on Slide 14 with a look at total revenue.\nTotal revenues rose a healthy 12% in the fourth quarter.\nRecurring revenue was the primary contributor to that growth and Broadridge received a further boost from an uptick in event driven revenues as well as 2 points of growth from higher distribution revenue.\nWhile higher distribution revenues contributed to our overall growth, their share of the full-year total revenues declined to 31%, down from 32% in fiscal year '20 and 38% five years ago.\nWe expect that the share of low to no margin distribution revenues will continue to decline as we remain focused on growing recurring revenues, FX was a modest positive, reflecting the weakening of the U.S. dollar.\nLooking down the slide, event driven revenues rose $5 million year-over-year in the fourth quarter to $73 million, driven by higher proxy contest activity.\nFor the full year, event driven revenues rebounded from a cyclical low to a healthy $237 million.\nThat rebound was broad based across the full range of event driven activities.\nHigher mutual fund communications contributed roughly a quarter of the growth as did higher revenues from proxy contest as well as higher revenues from capital markets activity and other communications.\nGoing forward, we're not forecasting that the major fund complex goes to proxy.\nAnd while there might be some quarterly cyclicality, we expect full year fiscal '22 event driven revenues to be approximately $220 million, in line with the fiscal year '15 through fiscal year '21 long-term average.\nTurning to Slide 15, for the full year, adjusted operating income margin expanded 60 basis points to 18.1%, slightly ahead of our latest guidance and multi-year objectives.\nAOI margin declined 180 basis points to 22.8% in the fourth quarter on the back of our planned fiscal year '21 investment spend.\nWe have a strong track record and high confidence in our ability to make growth accretive investments while still expanding margins and delivering near term profit growth in line with our adjusted earnings per share three-year growth objective.\nBefore I move to our uses of cash and our balance sheet, let me touch on closed sales in our revenue backlog on Slide 16.\nI was especially pleased to see strong growth in our smaller sales, those under $2 million in annualized values which rose 11%.\nThese small sales represent the bread and butter of our long-term growth and reflect the broad demand we are seeing across our businesses.\nOur sales performance pushed our overall backlog, a measure of past sales that have not yet been recognized into revenue, to $400 million, up from $355 million last year and steady at 12% of recurring revenue.\nAs a CFO, I appreciate the added visibility into our future revenues that our backlog gives me.\nMoving to capital allocation on the next slide.\nBroadridge remains committed to a capital allocation policy that balances internal investment, M&A and capital return to shareholders.\nIn fiscal year '21, we generated $557 million of free cash flow, up $58 million from fiscal year '20.\nGiven the size of the market opportunity we see in front of us, we're continuing to prioritize making investments in our business, both internal and external.\nThe biggest use of our cash was the $2.6 billion acquisition of Itiviti, which was completed in the fourth quarter.\nLate in the fourth quarter, we also completed the additional tuck-in acquisition of AdvisorStream.\nSince the close of the quarter, we've made two more very small tuck-in acquisitions for the assets of Jordan & Jordan and the remaining share of Alpha Omega.\nWe invested almost $300 million in continued platform build-outs, as we add to our capabilities across Wealth Management and Capital Markets, and another $100 million in capex and software development.\nTotal capital returned to shareholders was $248 million.\nThe 11% increase in our annual dividend approved by our Board was in line with our long-term 45% pay-out ratio policy and will increase capital returns in fiscal year '22.\nAs a result of the Itiviti acquisition, our total debt rose to $3.9 billion, up from $1.8 billion at the end of fiscal year '20.\nOur leverage ratio at year end was 3.5 times.\nWe remain focused on an investment grade credit rating and target a 2.5 times leverage ratio by the end of fiscal '23.\nOur guidance for fiscal '22 calls for low teen recurring revenue growth, healthy margin expansion and another year of strong adjusted earnings per share growth.\nLet's take each point in turn starting with recurring revenues.\nWe expect to grow recurring revenues by 12% to 15% in fiscal year '22.\nThat includes organic revenue growth of 5% to 7% with growth balanced across both ICS and GTO.\nWe're not modeling in any revenue contribution from the UBS contract in fiscal '22.\nAs Tim noted, we expect to complete the rollout of the full Wealth Management platform suite over the next 18 to 24 months and will begin to recognize revenues at that time.\nWe expect the contribution from acquisitions to add an additional 7 points to 8 points, with most of that coming from Itiviti.\nOur more recent acquisitions of AdvisorStream, J&J and Alpha Omega should contribute less than $10 million combined to fiscal '22 recurring revenues.\nAs always, we do not forecast the impact of any future tuck-in acquisitions that we might make.\nIn addition to recurring revenue, we expect mid-single digit distribution revenue growth, driven in part by a postal rate increase.\nEvent driven revenues should, as I indicated earlier, be more in line with our fiscal '15 to '21 seven-year average level of approximately $220 million.\nFor modeling purposes, between recurring revenue, distribution and event-driven revenues, total revenue growth should be in the range of 9% to 13%.\nWe are expecting our adjusted operating income margin of approximately 19%, up from 18.1% in fiscal year '21, driven by a combination of incremental scale, digital, and efficiency gains as well as the addition of the higher margin Itiviti business.\nFinally, we expect adjusted earnings per share growth to be in the range of 11% to 15%.\nIncluded in our earnings per share outlook is an expectation that our tax rate will essentially be flat at approximately 21% and that we'll see a modest increase in our overall share count.\nOn our last guidance point, we expect another year of record closed sales.\nOur outlook calls for closed sales in the range of $240 million to $280 million.\nThis guidance emphasize the strength of our financial model and our ability to drive sustainable revenue growth, expand our margins while maintaining a balanced capital allocation policy in delivering steady and consistent adjusted earnings per share growth.\nThat concludes my remarks on our fiscal year '22 guidance.\nI have one more final administrative note.\nBeginning with our first quarter results, we'll be updating how we report foreign exchange.\nAs you know, we've historically used a fixed exchange rate for our segment revenues and for recurring revenue.\nThe difference between the fixed internal rate and the actual rate are recorded in our FX revenue line, which was negative $132 million in fiscal year '21.\nWith the continued growth in our international revenues, especially after the acquisition of Itiviti, the time is right to adjust our reporting.\nGoing forward, we will be changing our internal rate to one that is much closer to the actual rate.\nThis will have the impact of shrinking our reported negative FX revenue to a much smaller number and lowering our segment and recurring revenue numbers by the same amount.\nThese changes will have no significant impact on our reported recurring revenue growth rate nor will they have any impact on our reported total revenue or profitability metrics.\nWe intend to publish our historical revenue results at a restated rate ahead of our first quarter earnings so that you have a chance to adjust your models.\nAgain, this is a change that will begin with our first quarter earnings report.\nIt will lower our reported recurring revenue with little if any change to growth rates and will have no impact on total revenue, operating profit or adjusted EPS.\n", "role": "user" }, { "content": "quarterly adjusted earnings per share $2.19.\nsees fy 2022 recurring revenue growth 12%-15%.\nsees fy 2022 adjusted earnings per share growth - non-gaap 11% - 15%.\n", "role": "assistant" } ]

[ { "content": "You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. \nText: We have posted a copy of that release as well as reconciliations of the non-GAAP measures used in today's call to the Investor Relations section of our website under the heading Financials and Filings.\nMike will focus his comments on Q2 performance, largely compared to 2019 [Technical Issues] impact from COVID as well as future catalysts and the outlook for our business including Q3 and full year '21 guidance.\nDuring today's Q&A session, Mike and Dan will be joined by our Chief Medical Officers, Dr. Ian Meredith and Dr. Ken Stein.\nBefore we begin, I'd like to remind everyone on the call that operational revenue growth excludes the impact of foreign currency fluctuation and organic revenue growth further excludes acquisitions and divestitures, for which there are less than a full period of comparable net sales.\nRelevant acquisitions for organic growth versus 2020 and 2019 include Preventice which closed March 1, 2021, and Vertiflex and BTG Interventional Medicines, which closed in May and mid-August of 2019 respectively.\nDivestitures include BTG Specialty Pharmaceuticals, which closed on March 1, 2021 and the global embolic microspheres portfolio and Intrauterine health franchise, which were divested in mid-August 2019 and second quarter of 2020, respectively.\nFinally growth goals of 6% to 8%, ex-COVID, represent comparisons between time periods in which results are not materially impacted by the COVID-19 pandemic.\nThey include, among other things, the impact of the COVID-19 pandemic upon the Company's operations and financial results, statements about our growth and market share, new product approvals and launches, acquisitions, clinical trials, cost savings and growth opportunities, our cash flow and expected use, our financial performance, including sales margins and earnings, as well as our tax rates, R&D spend and other expenses.\nFactors that may cause such differences include those described in the Risk Factors section of our most recent 10-K and subsequent 10-Qs filed with the SEC.\nThese statements speak only as of today's date and we disclaim any intention or obligation to update them.\nI'm pleased to report very strong Q2 financial results today as the resumption of elective procedures strengthened in the US and improved in many, but certainly not all regions, across the globe.\nWe are well positioned for the second half of 2021 and beyond as we continue to execute our category leadership strategy, driven by our innovative pipeline, expansion into faster growth markets, globalization efforts and enhanced digital capabilities.\nTotal company second quarter operational sales grew 50% versus 2020.\nOrganic sales grew 52% versus 2020 and 9% versus 2019, exceeding expectations as recovery from the pandemic occurred more quickly than expected, particularly in the US.\nImportantly, six out of our seven businesses grew double digits organically versus 2019 and we estimate that five of our business units grew faster than their respective markets.\nWe are pleased with our ongoing and new product launches and we are now enrolling our clinical trials at pre-COVID run rates.\nQ2 adjusted earnings per share of $0.40 grew 378% versus 2020 and 3% versus 2019, exceeding the high end of guidance by $0.02 primarily due to sales outperformance and lower spend.\nAdjusted operating margin of 25.1% was slightly ahead of our expectations as we continued to balance investment with the sales recovery.\nWe continue to be pleased with our free cash flow, with second quarter free cash flow generation of $541 million and adjusted free cash flow of $838 million.\nGiven the second quarter outperformance, we are increasing and narrowing our guidance ranges for both sales and EPS, which assumes a manageable level of COVID impact in the second half of this year.\nCompared to 2020, we target Q3 '21 organic revenue growth of 12% to 14% and full year 19% to 20%.\nCompared to 2019, we target Q3 '21 organic revenue growth of 5%- to % and for the full year, growth of 6% to 7%.\nOur Q3 '21 adjusted earnings per share estimate is $0.39 to $0.41, and we are updating full year adjusted earnings per share to a revised range of $1.58 to $1.62.\nDan will provide more details on both sales and earnings per share performance and outlook, including the revenue contribution from Preventice.\nWe continue to expect a Q3 close for Farapulse, and an second half '21 close for Lumenis Surgical.\nI'll now provide additional highlights on Q2 '21 results, along with comments on our Q3 and 2021 outlook.\nWithin the regions, on an operational basis versus Q2 2019, the U.S. grew 22%, Europe/Middle East/Africa grew 9%, AsiaPac grew 4%, and Emerging Markets sales grew 11%.\nOrganically, in the U.S., U.S. grew 12% versus 2019 as strength was supported by faster than anticipated recovery of procedure volume levels, along with ongoing new product launches across the entire portfolio.\nOperationally, EMEA delivered an excellent Q2 with broad based growth across nearly all major markets and franchises, even as some countries experienced COVID related lockdowns and procedural delays.\nThe EMEA region also had double digit growth in PI, EP, Endo and Neuromod, driven by products such as ACURATE Neo2, TheraSphere, POLARx, AXIOS and WaveWriter Alpha with notable strength in Middle East and North African countries.\nIn Asia Pacific, although Q2 results included approximately 600 basis points of negative impact from the China tender pricing versus 2019, five of our businesses grew double digits, with strong growth in China, Australia, and Korea.\nWhile Japan's Q2 results were impacted by COVID, we are seeing success with ongoing and new product launches such as Ranger DCB, Stablepoint, and Watchman FLX.\nChina sales grew 16% versus 2019, with strong double-digit growth within all business units with the exception of Intervention Cardiology, which included the negative impact of tender pricing.\nWe continue to be pleased with our strong growth in Complex PCI and Imaging, enabled by both our innovative portfolio and by the tender win.\nWe continue to expect full year 2021 double-digit growth from China versus both 2019 and 2020.\nI'll now provide some comments on business units.\nStarting with Urology and Pelvic Health, sales were very strong, growing organically 16% versus 2019, with balanced growth across our Stone, Prostate Health and Pelvic Health franchises.\nStone, which is the largest franchise grew double digits, as enthusiasm continues ahead of the Lumenis acquisition, which will expand our category-leading Urology portfolio with this differentiated laser technology.\nThe Prostate Health franchise grew strong double digits, with continued strength in our Rezum and SpaceOAR businesses.\nRezum growth was driven by further traction of its direct to patient efforts in the United States, global expansion and continued appreciation for the long term durability and cost benefits of this minimally invasive therapy.\nWithin our SpaceOAR business, growth was supported by the ongoing launch of next generation SpaceOAR Vue hydrogel in the U.S. and our recent launch in Europe.\nSpaceOAR Vue is visible under CT and negates the need for physicians to use MRI, an important step to optimizing treatment planning for patients undergoing prostate radiation therapy.\nOur Endoscopy team delivered an excellent Q2 with sales growing organically 15% versus 2019.\nWithin the quarter, we completed CE Mark for Exalt B and are pleased with early launch feedback highlighting differentiated visualization and suction and remain on track to launch in the US in the second half of 2021.\nWe continue to make progress with Exalt D, with a physician peer training program launched in Q2 as well as the resumption of more normal market development activities as access to hospitals improves.\nIn Cardiac Rhythm Management, sales were down 6% organically versus 2019.\nWe believe that our CRM performance was slightly below the overall market, inclusive of a temporary impact from the recent EMBLEM S-ICD physician advisories.\nImportantly, we recently began launching our enhanced SICD electrode and anticipate improved performance in overall CRM in the second half, as we expect SICD revenues to rebound.\nIn our diagnostics franchise, our Lux-Dx implantable cardiac monitor continues to perform very well and gain market share in the U.S.\nWe are also pleased with the strong growth and execution of the Preventice team and continue to anticipate full year growth in that business of at least 20% on a pro forma basis versus 2020.\nElectrophysiology sales were up 10% versus 2019.\nStrong international sales growth of 29% were driven by the ongoing success of POLARx in Europe and Stablepoint Force-Sensing catheter in Europe and Japan.\nUS EP sales will likely lag market growth until we receive approval for these therapies, which are currently enrolling in their respective U.S. IDE trials.\nWe also exercised our option to acquire Farapulse, which is a leader in pulsed field ablation, an emerging field that has the potential to improve safety, efficacy, and ease of use for cardiac ablation procedures.\nFarapulse is the only company with a commercially approved pulse ablation product in Europe and is actively enrolling its US IDE, ADVENT trial.\nWe are excited to bring this differentiated therapy into our EP portfolio in Q3 2021.\nIn Neuromodulation, organic revenue grew 14% versus 2019.\nOur Pain Management franchise growth accelerated in Q2, supported by the ongoing launch of our next gen WaveWriter Alpha SCS System with Cognita digital solutions and continued clinical evidence generation.\nAt the NANS mid-year meeting, we released the one-year follow-up data for our COMBO study demonstrating a sustained, high level of clinical and functional success at 84% responder rate.\nWe have also started reporting on the real-world results of the FAST therapy, which is designed to provide profound and immediate pain relief.\nBeyond advancing outcomes for our existing indications, we are also pleased with the progress of our SOLIS Study, which is focused on non-surgical back population, which started in Q1 of this year and look forward to beginning our diabetic peripheral neuropathy study by the end of the year.\nIn Deep Brain Stimulation, the business continues to gain share globally and delivered strong double digit growth, driven by the launch of the Vercise Genus platform, the expansion of our commercial infrastructure, and partnership with Brainlab.\nIn Interventional Cardiology, organic sales grew 10% versus 2019 with double digit growth in Structural Heart Valves, WATCHMAN and Complex PCI and Imaging franchises.\nThe growth of the WATCHMAN franchise accelerated sequentially.\nThe impressive growth was driven primarily by increasing hospital and physician utilization rates in the US and some share gains in Europe.\nImportantly, nearly all US accounts have fully transitioned from WATCHMAN 2.5 and are now using FLX exclusively.\nAdditionally, we're pleased with the two year results of PINNACLE FLX, featured as a late-breaker at TVT, which reinforced our positive one year primary outcomes and met its secondary effectiveness endpoint.\nWe remain excited about the outlook for the WATCHMAN franchise with our next generation FLX device, global expansion, and continued work toward indication expansion with ongoing clinical trials.\nNotably the OPTION trial, comparing WATCHMAN FLX to first-line oral anticoagulants for patients with non-valvular afib who also undergo a cardiac ablation procedure, recently we completed enrollment ahead of schedule, in spite of challenges presented by the pandemic.\nIn TAVR, our ACURATE neo2 launch continues to do well in Europe supported in part by the real-world data presented at Euro PCR which demonstrate that the low ACURATE neo2 PVL rate is comparable to contemporary TAVI devices, with continued low permanent pacemaker implantation rates.\nThese outcomes were reiterated in the Early Neo2 Registry, also presented last week at TVT as a late-breaker.\nSentinel, our cerebral embolic protection device, achieved its highest quarterly sales to date with strong new account openings globally and we continue to enroll in the PROTECTED TAVR randomized clinical trial.\nCoronary therapies declined mid-single digits versus 2019, attributable to Drug-Eluting Stents, which include the impact of China tenders and global price pressure.\nWe continue to see strong growth in Complex PCI and Imaging, with particular strength in RotaPro and IVUS.\nImportantly, our global complex PCI and imaging business is now 50% larger than our DES business.\nWe're advancing opportunities for future growth drivers and within the quarter began enrollment in our AGENT DCB trial, which is a first in the U.S. study of coronary in-stent restenosis.\nPeripheral Interventions delivered organic sales up 10% versus Q2 2019.\nWithin Interventional Oncology, TheraSphere grew over 30% versus 2019 on a pro forma basis in its first full quarter post PMA approval.\nIn Venous, Varithena continues to grow double digits and gain share in the varicose vein market.\nWithin Arterial, our Drug-eluting portfolio achieved record sales in Q2, supported by global expansion along with the sector's continuing recovery.\nWe are pleased to have started enrollment on the Elegance registry, a study that will gather clinical evidence on the risk of PAD in previously underrepresented patient populations.\nThe study will also look at long-term outcomes of patients being treated with Eluvia DES or Ranger DCB.\nI'd also like to highlight Boston Scientific's recent inclusion on the JUST Capital Top 100 list of Companies Supporting Healthy Families and Communities along with our recognition as a Best Place to work for Disability Inclusion.\nWe are proud to be recognized for providing our employees an inclusive and supportive environment and remain committed to global sustainable practices.\nOverall, we are pleased with our performance through the first half of this year and we remain bullish on the long-range outlook for Boston Scientific.\nWe look forward to sharing our strategic plan objectives at our hybrid Investor Day event on September 22nd.\nSecond quarter consolidated revenue of $3.077 billion represents 53.6% reported revenue growth versus the second quarter 2020 and reflects an $81 million tailwind from foreign exchange.\nOn an operational basis, revenue growth was 49.6% in the quarter.\nSales from the Preventice acquisition contributed 240 basis points, more than offset by the divestiture of Specialty Pharmaceuticals, resulting in 52.4% organic revenue growth, above our guidance range of 44% to 48% growth versus 2020.\nCompared to second quarter 2019, organic growth was 8.9%, above our guidance range of 3% to 6%.\nThis 8.9% growth excludes $15 million in 2019 sales of divested intrauterine health and embolic beads businesses, as well as $178 million in 2021 sales of acquired businesses, which consists of two months of Vertiflex, and a full quarter of BTG Interventional Medicines and Preventice.\nTop line results drove Q2 adjusted earnings per share of $0.40, representing 378% growth versus 2020, 3% growth versus 2019, and exceeding our guidance range of $0.36 to $0.38.\nAdjusted gross margin for the second quarter was 70.5%, slightly above our expectations driven by sales outperformance in higher margin businesses.\nAs expected, we have materially worked through the COVID-driven negative manufacturing variances capitalized on the balance sheet in 2020, and as a result expect slight improvements in second half gross margin compared to the first half, though still not at full year 2019 levels as other headwinds remain, in particular, the lingering cost of running plants with COVID-specific measures, as well as some impact from inflation.\nNot unique to us, this inflation includes items like increased freight costs, selective wage pressure and some price increase on direct materials.\nSecond quarter adjusted operating margin was 25.1%, slightly above our expectations driven by sales outperformance and balanced investment, and also includes a reserve for a legal settlement that we expect will improve access to additional markets for some of our cardiovascular technology.\nGAAP charges within the quarter additionally include $298 million in litigation-related expenses to account for incremental costs to resolve newly estimable claims, as well as known claims and corresponding legal fees within our legal reserve.\nMaterially all U.S. claims remain settled or in the final stages of settlement.\nOur reserve assumptions are based on full global resolution now in 2023 given recent claim activity and expected litigation.\nOur total legal reserve was $617 million as of June 30, an increase of $162 million versus March 31 driven by the mesh reserve increase and cardiovascular settlement, partially offset by payments to close out majority of the state attorneys general mesh settlement as well as continuing mesh product liability payments.\nMoving to below-the-line, adjusted interest and other expense totaled $107 million, in line with expectations.\nOur tax rate for the second quarter was 11.1% on an adjusted basis, also in line with expectations.\nAdjusted free cash flow for the quarter was $838 million and free cash flow was $541 million, with $643 million from operating activities less $102 million net capital expenditures.\nOur goal remains to deliver adjusted free cash flow in line with 2020, approximately $2.0 billion, as we continue to expect increased working capital headwinds in inventory and accounts receivable during the remainder of the year.\nAs of June 30, 2021, we had cash on hand of $2.7 billion.\nOur top priority for capital deployment remains tuck-in M&A and we continue to expect to close the acquisition of Lumenis Surgical in the second half of the year, and Farapulse in Q3.\nWe have capacity to pursue additional business development opportunities while continuing to remain active with our venture capital portfolio and consider opportunistic share repurchase.\nWe ended Q2 with 1.432 billion fully diluted weighted-average shares outstanding.\nI'll now walk through guidance for Q3 and full-year 2021.\nFor the full year, we expect 2021 operational revenue growth to be in a range of 18.5% to 19.5% versus 2020, which includes an approximate net 50 basis point headwind from the divestiture of our intrauterine health franchise and Specialty Pharmaceuticals, partially offset by the acquisition of Preventice.\nExcluding the impact of acquisitions and divestitures, we expect organic revenue growth to be in the range of 19% to 20% versus 2020, and 6% to 7% versus 2019.\nFor the organic comparison to 2019, full year 2019 sales exclude $50 million in sales of our embolic beads portfolio and intrauterine health franchise, as well as $81 million in Specialty Pharmaceutical sales; and at the midpoint of guidance, 2021 sales exclude approximately $490 million in sales from recent acquisitions, including Vertiflex through May, BTG Interventional Medicines through mid-August, and Preventice as of March, as well as $13 million of Specialty Pharmaceutical sales prior to divestiture.\nFor Q3 2021, we expect operational revenue growth to be in a range of 11% to 13% versus 2020, which includes an approximate net 100 basis point headwind from the divestiture of Specialty Pharmaceuticals, partially offset by the acquisition of Preventice.\nExcluding the impact of acquisitions and divestitures, we expect organic revenue growth to be in a range of 12% to 14% versus 2020, and 5% to 7% growth versus 2019, which includes a 300 basis point sequential comp headwind from Q2 to Q3 2019.\nTherefore, the midpoint of guidance assumes results in line with Q2 with a continued manageable level of COVID impact.\nFor the Q3 organic comparison to 2019, 2019 sales exclude $35 million in sales of our embolic beads portfolio, intrauterine health franchise and Specialty Pharmaceuticals and at the midpoint of guidance, 2021 sales exclude approximately $110 million in sales from the acquisitions of BTG Interventional Medicines through mid-August and Preventice.\nFor adjusted operating margin, we continue to target an average of 26% in the back half of the year while simultaneously investing to more normalized operating expense levels as the first half of 2021 remained below what we would expect for a near-term run rate.\nWe continue to forecast our full year 2021 operational tax rate to be approximately 11% and our all-in tax rate to be approximately 10%.\nWe continue to expect adjusted below-the-line expenses, which include interest payments, dilution from our venture capital portfolio, and costs associated with our hedging program, to be approximately $400 million to $425 million for the year.\nWe expect fully diluted weighted-average share count of approximately 1.437 billion shares for Q3 2021 and 1.435 billion shares for full-year 2021.\nWe are raising full year 2021 adjusted earnings per share guidance to a range of $1.58 to $1.62, which includes our update to sales guidance and considers Q2 results, which removed additional uncertainty from our previously wider range.\nFor the third quarter, adjusted earnings per share is expected to be in a range of $0.39 to $0.41.\nPlease check our investor relations website for Q2 2021 Financial and Operational Highlights, which outlines more detailed Q2 results.\nCongratulations, Lauren, very well deserved, who will moderate the Q&A.\nIn order to enable us to take as many questions as possible, please limit yourself to one question and one related follow-up.\n", "role": "user" }, { "content": "sees net sales growth for 2021 to be about 19% to 20% on organic basis (adds source).\nq2 sales $3.077 billion versus refinitiv ibes estimate of $2.94 billion.\nq2 adjusted earnings per share $0.40.\nsees net sales growth for 2021 to be about 21%-22% on a reported basis.\nboston scientific-sees q3 earnings per share on a gaap basis in a range of $0.20 to $0.22 and adjusted eps, excluding certain charges (credits), of $0.39 to $0.41.\nboston scientific - co sees net sales growth for fy 2021 to be in range of 21-22 percent on a reported basis & 19 - 20 percent on an organic basis.\nsees net sales growth for q3 to be about 12% to 14% on both a reported and organic basis.\nsees 2021 estimates earnings per share on a gaap basis of $0.79-$0.83, adjusted earnings per share excluding certain charges (credits) of $1.58-$1.62.\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: Please see the Events section of our Investor Relations homepage for a full list.\nOur actual results may differ significantly from the matters discussed today.\nWhen you hear us say on a comparable basis, that means excluding the impact of FX, net M&A and other noncomparable items.\nWhen you hear us say adjusted, that means excluding noncomparable items.\nWhen you hear us say organic, that means excluding the impact of FX and net M&A.\nWe will also refer to our market.\nWhen you hear us say market, that means the change in light and commercial vehicle production weighted for our geographic exposure.\nOur outgrowth is defined as our organic revenue change versus the market.\nWe encourage you to follow along with these slides during our discussion.\nWe're very pleased to share our results today for the first quarter of 2021 and provide an overall company update starting on Slide number five.\nI'm very proud of our strong start of the year despite the components supply headwinds.\nWith just over $4 billion in sales, our first quarter revenue increased over 18% organically.\nThis compares to a market being up less than 13%.\nSo our outgrowth was about 570 basis points for the quarter, which was ahead of our expectation and our guidance for the year.\nWe saw strong outgrowth in North America and Europe.\nOur earnings per share increased year-over-year due to the impact of our higher revenue.\nOur incremental margin performance was in line with our expectations, with an even strong free cash flow of $147 million for the quarter, a good strategy toward our full year guidance.\nWe also secured additional new business awards for electrified vehicles, which I speak about in a moment.\nAnd finally, during the quarter, we announced our planned acquisition of AKASOL.\nThe key strategic elements of the AKASOL acquisitions are detailed on Slide number six.\nBased on the last couple of years of experience we have in this space, we're believers in the prospect of easy bet resistance and are very familiar with the industry players.\nAs a leader in this space, AKASOL had been on our radar for a long time as a potential partner.\nWe're confident that AKASOL is an excellent strategic fit for BorgWarner, and we are really excited about adding their capabilities to our portfolio.\nIn particular, we're attracted to AKASOL's following strength.\nFlexible battery technology across multiple cell architectures, proven technology and products with established manufacturing facilities already in serial production today, strong order backlog of about $2.4 billion, primarily from leading OEMs and a focus on bus, CV and off-highway applications.\nWe're extremely excited and expect to complete the transaction during the second quarter.\nNext I would like to highlight a significant new program win for electric vehicles on Slide seven.\nBorgWarner's Integrated Drive Module, or as we call it, our IDM, was selected by a major non-Chinese Asian OEM for its upcoming global S segment electric vehicle production planned to start in mid-2023.\nThis is a significant program for the company as it is our first IDM award combining BorgWarner's and legacy Delphi Technologies portfolio.\nIt is a validation of the potential we saw in bringing our two companies together.\nAnd there is more to come.\nThis IDM features our electric motor, our box and our integrated power electronics.\nIt operates at 400 volts and has exceptional peak power of 135 kilowatts.\nThe IDM weight and space are reduced by integrating our gearbox, our 400-volt silicon inverter and our motor.\nThis results in a maximized power density and functionality.\nThe IDM also offers a scalable and modular inverter design making it easily adaptable to customer requirements.\nThis is an important step for the company with a great partner.\nNext, on Slide eight, let me summarize our new strategical project charging forward that we unveiled at our Investor Day in late March.\nWith successful execution of this strategy, we expect to deliver over 25% of our revenue from electric vehicles by 2025 and approximately 45% by 2030.\nThat compares to under three percent of revenue today.\nProject charging forward as three pillars: one, we plan to profitably scale ELVs through our continued integration of Delphi and our ability to capture synergies.\nThe new IDM win is a great example.\nWe would also pursue other organic and inorganic actions; two, we intend to expand more aggressively into ECVs.\nWe will do that by leveraging our strong intimacy with CV customers as well as our position in ELVs.\nWe're building out a go-to-market product portfolio and operation capabilities organically and inorganically.\nOur AKASOL acquisition is a key part of this expansion.\nAnd three, we plan to optimize our combustion portfolio, reducing our exposure by disposing parts of the portfolio that we believe are lower growth that don't ever pass to product leadership or that are not expected to deliver strong margins.\nWe believe we can fund the EV growth underlying project charging forward, primarily from the capital generated by our existing operations.\nThis is not a certain change in the company's direction.\nIt is a logical extension to what we've been building since 2015.\nWe're excited about the acceleration of the market toward electrification and about the momentum that we are building with our customers.\nNext, on Slide nine.\nI'm proud to announce that BorgWarner achieved The Great Place to Work certified status for the second consecutive year.\nGreat Place to Work is the global authority on workplace culture.\nThis certification validates BorgWarner's positive work environment.\nI've said before that the BorgWarner secret sauce starts with our people: to lead, develop and attract the best talents.\nWe strive to be an employer of choice where we operate around the world.\nWe cultivate a workplace environment that is collaborative, transparent, inclusive and that promotes continuous learning and excellence.\nSo let me summarize our first quarter results and our outlook.\nThe first quarter was a good start to the year, particularly considering the supply challenges currently impacting the industry.\nWe delivered strong top line growth, and we believe we're tracking well toward our full year margin and free cash flow objectives.\nOur first quarter performance has led us to increase our full year revenue and adjusted earnings per share guidance despite a lower industry production outlook, as Kevin will detail.\nAs we look beyond 2021, I'm extremely excited about our long-term positioning.\nWe are continuing to take significant steps that we believe will help us to secure our profitable growth well into the future.\nWe are winning, in line with our expectations in the electric world, both from a component standpoint like inverters and heaters, for example, and also from a latest generation system standpoint with our IDMs. We're focusing on a disciplined inorganic investment approach, like the planned acquisition of AKASOL, which adds great technology to our portfolio while supplementing our growth profile.\nBefore I review the financials in detail, I'd like to provide a quick overview of the two key takeaways from our first quarter results.\nFirst, our revenue came in stronger than we were expecting going into the year.\nThis was driven by the fact that we delivered solid outgrowth with both the legacy BorgWarner and former Delphi Technologies businesses performing better than expected.\nSecond, our margin and cash flow performance in the quarter were strong, driven by the top line results as well as our cost-saving measures.\nAs we look at our year-over-year revenue walk for Q1, we begin with pro forma 2020 revenue of $3.2 billion, which includes $945 million of revenue from Delphi Technologies.\nYou can see the foreign currencies increased revenue by about six percent from a year ago.\nThen our organic growth year-over-year was over 18% compared to a less than 13% increase in weighted average market production.\nThat translates to 570 basis points of outgrowth in the quarter, which breaks down as follows: in Europe, we outperformed by mid- to high single digits, driven by growth in small gasoline turbochargers and strong performance in multiple former Delphi Technologies businesses, most notably fuel injection.\nIn North America, we outperformed the market by high single digits as we saw a nice benefit from the ramp-up of the new Ford F-150 and other new business launches.\nIn China, we underperformed the market by mid-single digits against very strong outperformance in the first quarter of 2020.\nAlso keep in mind, Q1 was a very unusual quarter last year in the face of COVID-19, primarily in China.\nThe sum of all this was just over $4 billion of revenue in Q1, which was a new quarterly record for the company.\nNow we do believe that some of the strong outgrowth we delivered in Q1 was a result of the production of build and hold vehicles by our customers in multiple regions of the world.\nThat means it's likely that some level of our reported outgrowth in Q1 is inflated due to a pull forward of production into the quarter.\nThis will have an offsetting impact on our expected outgrowth later in the year.\nHowever, our outgrowth for the full year is still expected to be above our prior guidance, as I'll discuss further in a moment.\nWith all that background in mind, we're pleased with the strong start to 2021.\nNow let's look at our earnings and cash flow performance on Slide 11.\nOur first quarter adjusted operating income was $444 million, compared to the pro forma $274 million in the first quarter of 2020.\nThis yielded an adjusted operating margin of 11.1%, which was up compared to the 10.3% margin for BorgWarner only in the first quarter of 2020.\nOn a comparable basis, excluding the impact of foreign exchange, adjusted operating income increased $145 million on $591 million of higher sales.\nThat translates to an incremental margin of roughly 25%.\nThis solid performance was driven by conversion on higher volumes, restructuring savings and Delphi Technology synergies in excess of purchase price amortization.\nWe are particularly pleased with this performance given elevated supplier costs that we experienced during the quarter.\nMoving on to free cash flow.\nWe're proud of the fact that we generated $147 million of positive free cash flow during the first quarter, which was roughly flat year-over-year despite increased investment in working capital.\nAs a reminder, our market assumptions incorporate our view of both the light vehicle and on-highway commercial vehicle markets.\nAs you can see, we expect our global weighted light vehicle and commercial vehicle markets to increase in the range of nine percent to 12%, which is down from our previous assumption of an 11% to 14% increase.\nThis reduction to our prior market outlook reflects the ongoing impact of the semiconductor shortage on industry production.\nLooking at this by region, we're planning for North America to be up 17% to 20%.\nWe see the largest incremental impact of the semiconductor shortage in North America with our market expectations down approximately 500 basis points from our initial assumptions.\nIn Europe, we expect a blended market increase of nine percent to 12%, with that range being down approximately 200 basis points from our earlier planning assumption.\nAnd in China, we expect the overall market to be roughly flat year-over-year similar to our previous estimate.\nNow let's talk about our full year financial outlook on Slide 13.\nStarting with our pro forma 2020 sales, which includes $2.6 billion of revenue from the first three quarters of Delphi Technologies in 2020.\nAs you know, those revenues were not part of our P&L last year.\nBut to provide year-over-year comparability, we thought this pro forma revenue approach for the 2020 baseline would be useful.\nYou can see that our end market assumptions from the prior slide are expected to drive an increase in revenue of roughly $0.9 billion to $1.3 billion.\nNext, we expect to drive market outgrowth for the full year of approximately 300 to 500 basis points, which is a meaningful step up from our previous guidance of 100 to 300 basis points.\nBased on these assumptions, we expect our 2021 organic revenue to increase about 12% to 17% relative to 2020 pro forma revenue.\nThen adding a $400 million benefit from stronger foreign currencies, we're projecting total 2021 revenue to be in the range of $14.8 billion to $15.4 billion.\nThat's up from our prior guidance by about $100 million at both ends of the revenue range.\nEven with weaker end market outlook, our stronger revenue outgrowth is driving an overall increase in our revenue guidance from the guidance we gave last quarter.\nAlso, you should note that we're maintaining a wider-than-typical revenue range at this point of the year due to the wide range of potential production scenarios that I discussed on the previous slide, which stems from the volatility and uncertainty in end markets, arising from the industrywide semiconductor issues.\nFrom a margin perspective, we expect our full year adjusted operating margin to be in the range of 10.1% to 10.5% compared to a pro forma 2020 adjusted operating margin of 8.3%.\nThis contemplates the business delivering full year incrementals in the low 20% range before the impact of Delphi related cost synergies and purchase price accounting.\nFrom a cost synergy perspective, our margin guidance includes $70 million to $80 million of incremental benefit in 2021.\nThat puts us right on track to achieve 50% of our total expected cost synergies in 2021.\nAnd based on our year-to-date performance, we believe that we're tracking at the high end of this range.\nBased on this revenue and margin outlook, we're expecting full year adjusted earnings per share of $4 to $4.35 per diluted share, which is an increase from our prior guidance of $3.85 to $4.25 per diluted share.\nI would point out that this guidance now assumes a 31% tax rate versus our prior guidance of 32% as a result of the successful execution of certain international tax planning initiatives.\nAnd finally, we continue to expect that we'll deliver free cash flow in the $800 million to $900 million range for the full year.\nThis is flat with our prior guidance as we expect the higher sales outlook to drive an increase in working capital that largely offsets higher adjusted operating income.\nThis would still represent a record annual free cash flow generation for the company.\nThat's our 2021 outlook.\nOn the acquisition front, we believe we remain on track to complete the AKASOL acquisition in the second quarter.\nWe've now received regulatory approvals in all required jurisdictions.\nThe tender offer is in progress with the final acceptance period expected to be completed later this month and then with the closing shortly thereafter.\nAKASOL represents an important part of Project CHARGING FORWARD as it represents approximately 20% to 25% of the estimated 2025 revenue from acquisitions underlying our plan and it significantly increases our exposure to the ECV space.\nAs it relates to portfolio optimization, we continue to target combustion-related dispositions with annual revenue of approximately $1 billion to be executed over the next 12 to 18 months.\nThe process for these dispositions is under way.\nWe would expect to update you on our progress there as we get closer to executing those transactions.\nSo let me summarize my financial remarks.\nOverall, we had a really solid start to the year despite the industry supply headwinds.\nWe delivered 570 basis points of market outgrowth, an 11.1% adjusted operating margin and $147 million of free cash flow.\nAnd we increased our full year revenue and earnings guidance despite moderating our industry production assumptions.\nLooking beyond our near-term results, we're taking the necessary steps to accelerate the company's progression toward electrification.\nThe AKASOL acquisition and today's IDM announcement are great examples of our progression.\nAnd importantly, we're executing our strategy from a position of financial strength.\nUltimately, we expect that the successful execution of our strategy will drive value creation for our shareholders.\n", "role": "user" }, { "content": "sees fy sales $14.8 billion to $15.4 billion.\nfor full-year 2021, net sales are expected to be in range of $14.8 billion to $15.4 billion.\nborgwarner - full year 2021 free cash flow is expected to be in range of $800 million to $900 million.\nborgwarner - expects its weighted light and commercial vehicle markets to increase in range of approximately 9% to 12% in 2021.\n", "role": "assistant" } ]